Illicit alcohol 'costs Tanzania Sh1.2trillion annually'

Dar es Salaam. Consumption of alcohol that’s sourced from illicit and informal markets is costing the government about Sh1.2 trillion in uncollected excise duty each year, Tanzania Breweries Ltd (TBL) said yesterday.

The brewer’s new managing director, Jose Moran, told editors yesterday that the presence of illicit, informal market was costing the country dearly in a country where consumers were price-sensitive.

“The illicit market constitutes approximately 55 percent of the overall beer market in Tanzania,” he said, quoting from a 2019 research by Ernst & Young.

Tanzania’s alcohol market, TBL says, stands at approximately 729,619 hectolitres. But out of the volume, authentic companies take up only 330,617 hectolitres, leaving the other 399,011 hectolitres to illicit and informal beer makers. Imbibers prefer homebrewed alcohol and smuggled brands because they are relatively cheaper compared to trusted brands.

He said the government was trying hard to arrest the situation, including through the use of technology such as using Electronic Tax Stamps (ETS).

“The ETS has helped to bring the informal into formal but the price for the stamps is expensive,” said Mr Moran.

Through the ETS - which the government adopted in January 2019 - contain a tracking and tracing system that enable both the taxman and the consumer to easily and effectively tell whether the stamp fixed on a product is original or fake, Tanzania Revenue Authority (TRA) said recently. Apart from enabling the government to use modern technology to obtain production data timely from manufacturers, the ETS also discourages the entry of counterfeits into the market.

On the role of TBL in Tanzania’s economy, Mr Moran said the country’s oldest brewer massively contributes to the economy in a number of ways.

Apart from sourcing 74 percent of its raw materials locally - thereby injecting Sh130 billion into pockets of farmers each year - the brewer is also the largest taxpayer, having paid a total of Sh3.7 trillion in the past ten years.

The company’s annual economic output stands at Sh1.755 trillion.

“Its value added to the economy stands at Sh613 billion which is equivalent to 0.5 percent of the national gross domestic product,” he said.

The company directly connects with farmers for sorghum, barley and grapes who supply it with raw materials for production of beer and wine.