6 February 2017

Uganda Loses $172 Million Though Illicit Alcohol

Photo: Daily Monitor
Women take Kwete, a local brew. The licensed brewers want attention to be put on illicit brewers so that they can be taxed.

Kampala — Uganda loses US$172m about Shs616bn in taxes annually to trade and production of illicit alcohol, a study released by Euromonitor International on the Alcohol Beverage Market in Uganda 2015, has revealed.

"Illicit alcohol production is larger than legal production in both volume and value terms. Illicit homebrew remains the largest category in volume and value terms," said Onapito Ekomoloit, Corporate Affairs Director, Nile Breweries.

The study released by Euromonitor International indicates that Uganda has a total alcohol market volume of 110, 647,900 litres of which the total market volume for licit/legitimate alcohol stands at 43,020,300 litres while 67,627,600 litres of illicit alcohol accounts for the total market volume of alcohol in the country.

63% of spirits of the total market volume of alcohol on the Ugandan market is illicit, only 37% of the total market volume of spirits is legitimate. While 79% of wine/fruit wine is legitimate, 21% of wine/fruit wine is illicit, and whereas 6% of opaque beer is legitimate, 94% opaque beer is illicit. Therefore, illicit spirits and powered opaque beer volumes are larger than legal production.

Similarly, the total licit alcohol market value in Uganda stands at US$2,126m about Shs7.6trillion while the total illicit market value of alcohol US$676m about 2.4 trillion.

Onapito said until now, lack of a consistent or proper enforcement, inspection and registration of traders and transactions has allowed illicit production to flourish. "Authorities are now starting to address this. For example the taxpayer registration expansion project has contributed to widening the taxpayer base," Onapito said.

The study further reveals that counterfeit and illicit brands are the largest segment of the illicit market. Counterfeit production according to the report appears in all segments of the market. This was attributed to access to correctly moulded bottles security closures as a key enabler and these are reported to be either smuggles or genuine bottles that are refilled.

It's revealed that ethanol and molasses, either by products of sugar industry (smuggled into Uganda) feed much of the illicit distilled products.

The study highlights that spirits dominate the illicit market with customers preferring the high Alcohol Beverage Volume of a cheap product. The most common distilled spirit is Waragi, which although banned by law, is widely produced and sold.

The report found that there is a clear correlation between affordability and high rates of unrecorded alcohol. Widespread poverty, lack of gainful employment and a long cultural tradition of domestic production of alcohol has contributed towards illicit production becoming the mainstay of household income in both rural and urban settings.

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