Friday, April 23, 2010

Ethanol In Kenya Is Not Just For Automobiles

The Alcohol industry came to the spotlight in Kenya when advertisement companies were asked to pull down bill boards near schools and colleges. Barely a few months thereafter, an alcoholmeter-‘alcoblow’ or ‘vuta pumzi’ came on the scene scattering beer consumers in all directions away from the city’s famous ‘watering holes.’ Before Kenyans could recover from what was reported to have been a faulty law with good intentions, the Kenyan chapter of Transparency International released a damning report indicating that the use of alco-blow to tame drunken driving led to a sharp increase in corruption among the police forces.

Ever seen an advertisement for changaa? Changaa (traditional whisky) enjoys a significant market share despite the fact that it is categorized as illegal. By coded word of mouth, consumers are able to trace areas where it is being served. The government spends millions policing and diverting security forces from fighting crime to cracking down against illicit brews across the country. Despite all these efforts, the illicit brew industry is booming, sometimes to fatal results when overzealous brewers lace it chemicals that make consumers lose their eye sight and others die.

A construction worker earns has to balance a series of demands from his daily income. For instance, one that earns 100 shillings in a day has to opt to walk to the workplace, purchase food and medicine, pay for the child’s fees, pay rent, and send some money to his family in the rural area. When it comes to alcohol, a cheaper option, which entails drinking while on the look-out for police raids, drinking under poor sanitary conditions and sometimes under the threat of either losing life or becoming blind due to laced chemicals; makes such an undertaking more treacherous.

On the other hand, consuming ‘certified’ beers by middle and upper income earners in the city, gives them a consumers traceability aspect. For moderate drinkers, it is safe and secure; for those that ignore the label ‘excess consumption is dangerous’ also end up in a treacherous position through drunken driving and any other irresponsible actions to accompany excessive consumption of alcohol.

Beer consumption in Kenya has proved to be one of the best ways for government to squeeze more coins from its active working class through indirect taxation. Last year, the East African Breweries limited earned recognition for being the highest tax payer in the country. Is Kenya importing developed country cliché of ‘if it grows tax it, if it fails, subsidize it?’ The contribution of beer and spirits to the governments through excise tax and value added tax has increased over the years. The excise revenue on beer and spirits in the non-oil commodities increased significantly from 14.2 per cent in 1990 to 61 per cent in 2001. Kenyan beer attracts excise duty of 85 percent and 18 percent Value Added Tax.

For developing nations, the upsurge in alcohol consumption raises concerns on whether a drinking nation can develop or collapse in a drunken stupor. Alcohol consumption has both positive and negative side effects. For instance, retail outlets such as bars, hotels and restaurants not only offer entertainment but also hire thousands of workers. Kenyan farmers who supply the barley and sugar used in brewing earn their living from this industry. Distributors, stockists, transporters, suppliers to the beer plant such as printers, advertisers, detergent manufacturers among others all profit from the alcohol industry.

What lessons can Kenya learn from failed regulation against illicit brews? That simply regulating without addressing reasons why consumers manage to get to the illicit brews is not a solution. Regulating consumption of alcohol by declaring it illicit and or through high taxes simply serves to drive the industry underground. High consumption of illicit brews is a true testimony to the effect that increased beer prices due to taxes, forces Kenyans to go under ground in search of cheap liquor.

In the past, wives have demonstrated against local brews that allegedly cause impotence in their men. The men on the other hand have argued that they cannot access the ‘clean’ brews because they are too expensive. The government on its part targets the ‘cleaner’ alcohol industry for purposes of generating revenue and regulation, the resultant effect has been the mushrooming of the informal brewers who are constantly clashing with the police.

The government ought to reconsider its taxes against beers and spirits and encourage local players to join the industry. Leading brewers such as the East Africa Breweries limited ought to be given tax incentives to enable them participate in public health activities that will encourage public health standards such as clean bars, restaurants and hotels, and public education on responsible drinking. High taxes will only mean brewers forego the aspect of investing in healthy and productive consumers leaving it the government already bogged down with other responsibilities.

To drink or not to drink is not the question. The question is whether the government can create tax incentives for brewers to ensure that the already consuming population is not harmed by either illicit or excessive consumption of alcohol. The government can still increase its taxation base by ensuring that beer consumers have a little more money in their pockets to engage in other productive activities by reducing beer prices. Let brewers and consumers keep more money to ensure beer taking does not become a danger to the future of this country.

1 comment:

  1. Good article. But you left out the cultural, loyalty and the likely failure of "regulation especially if it increases the cost of the drinks.

    Consumers Federation of Kenya