Kampala — OVER sh11.2b is lost each year through illegal tobacco trade, a report released by the British American Tobacco (BAT) Kenya, has said.

According to the report, Kenya loses $21m (about sh22m), Burundi $7m (about sh13b), Uganda $6m (11.2b), while Rwanda loses $1m (sh1.8b) annually.

The report on the theme "Illicit trade: A threat to sustainable growth in the East African Community (EAC)," was released during the East Africa International Business Forum held in Kigali, Rwanda, recently.

It attributed illicit trade in tobacco in the region to the high taxes, people taking smuggling as a minor crime, which one get can away with and poor law enforcement.

It said the quest by smokers for lower priced illicit products fuels the trade.

"Cross border illicit trade flourishes on product pricing gaps between the markets in each country.

"These gaps are created by varying excise structure applications and excise rate calculations," the report said. It proposes the harmonisation of custom tariffs and excise duty to discourage the trade.

"Non-tariff barriers such as quantitative restrictions, barriers to market entry, administrative and legal barriers should be removed," it said.

The report called on the governments to improve enforcement at the borders and within the different countries.

"EAC members should impose heavy fines and treat counterfeiting as a serious criminal offence.

"Enforcemnt agencies must also destroy seized goods, machinery and materials used to discourage the practice."

It added that brand owners should be compensated by the culprits.