This archive report was first published on 26 June 2020.
On Thursday, BAT shareholders ratified a Ksh30 final dividend for 2019, bringing the total dividend for the year to Ksh33.50 per share.
During the electronic Annual General Meeting (AGM) held due to COVID-19 restrictions, BAT Kenya announced a Ksh2.5 billion investment in a modern oral nicotine factory aimed at reducing the health impact of its business.
The factory, set to open in Q3 2020, will be the first of its kind in Africa and serve as a potential export hub for East African Community (EAC) partner states and beyond.
According to BAT Kenya's Managing Director, Beverley Spencer-Obatoyinbo, the new factory will support the government's Big Four Agenda and increase the company's manufacturing and exports footprint, reduce risk, and create more jobs.
However, the company remains concerned about the impact of illicit trade in Kenya, where one in ten cigarettes smoked is illegal. Ms. Spencer-Obatoyinbo noted that the recent decline in illicit cigarettes originating from Kenya has been offset by the increase in tax-evaded cigarettes coming into Kenya from Uganda, which now accounts for approximately 90% of all tax-evaded cigarettes sold in Kenya.
These cigarettes are predominantly comprised of non-Kenyan tobacco leaves, adversely impacting government revenues, local manufacturers, and Kenyan tobacco farmers by reducing demand for Kenyan leaf.
Ms. Spencer-Obatoyinbo also highlighted that tobacco taxes declined in 2019, despite a significant increase in excise duty, confirming that increased tobacco excise is no longer translating into increased government revenues in Kenya.
Instead, it is increasing the incentive for smugglers to bring in duty-evaded products from neighboring countries and for affordability-stretched consumers to purchase smuggled products.
Kenya's ratification of the WHO's Illicit Trade Protocol (ITP) was an important step towards combatting the illicit trade, and BAT Kenya urges the Kenyan authorities to increase border controls and enhance their cooperation with Ugandan counterparts to stem the flow of these products into Kenya.
On sustainability, BAT Kenya's Chairman, George Maina, emphasized that the company's evolved strategy places sustainability at the forefront of all its activities, prioritizing environmental, social, and governance (ESG) measures.
He noted that the company has maintained its status as a zero-waste manufacturer, achieved a 100% waste recycling rate, and planted over 2 million trees in the first half of 2020, adding to the more than 50 million trees planted since 1978.
Mr. Maina also highlighted the company's commitment to Kenyan agriculture, partnering with approximately 4,300 local farmers to supply tobacco for its existing cigarette business.
