A new study has revealed that Uganda is losing an estimated Shs 30 billion in annual revenue due to the escalating illicit cigarette trade, with smuggling across the Uganda-Kenya border emerging as a major driver of the illegal activity.
The research, conducted by global market research firm Kantar, highlights a worrying trend: by the end of 2024, 34% of cigarettes sold in Uganda were illicit—a five-point increase from two years prior. The findings paint a troubling picture of growing tax evasion, undermining government revenue and threatening legitimate businesses.
The study also shows a similar surge in Kenya, where the share of illicit cigarettes jumped from 28% in 2023 to 37% in 2024, with many of the contraband products traced back to smuggling routes from Uganda.
Commenting on the findings, BAT Uganda Country Manager, Arthur Bagenze, warned that the situation threatens both economic stability and national security: “Illicit trade is robbing Uganda of billions in tax revenue while endangering jobs and livelihoods across legal value chains. It also strengthens criminal networks that profit from this underground economy.”
Bagenze acknowledged ongoing government efforts to curb illicit trade but emphasised that the latest data calls for urgent and coordinated action between Uganda and Kenya to strengthen border security, improve law enforcement, and modernise anti-smuggling legislation.
“Authorities must act decisively to close cross-border loopholes. This means enhancing existing anti-illicit trade laws, ramping up enforcement, and ensuring that penalties are severe enough to deter offenders,” Bagenze added.
The economic impact of illicit trade extends beyond lost tax revenue. It disrupts market integrity, undercuts compliant businesses, and reduces government capacity to invest in critical public services such as health, education, and infrastructure.
With organised smuggling networks adapting rapidly, the study underscores the need for a regional approach to enforcement. Bagenze called on policymakers, enforcement agencies, and business leaders from both countries to form a united front against the growing illicit economy.
“Only through cross-border collaboration and a commitment to accountability can we dismantle these networks and restore a fair and competitive market environment,” he concluded.
