Manufacturers protest State alcohol crackdown as costly and punitive 

Manufacturers protest State alcohol crackdown as costly and punitive 
Economy

Manufacturers protest State alcohol crackdown as costly and punitive 

Wednesday March 13 2024

Interior CS Kithure Kindiki (center) speaks flanked by (from left) Juma Mukhwana PS State Department for Industry, PS Raymond Omollo, Japhet Koome, Inspector General NPS and Mary Muthoni, PS Health during a press briefing after a meeting with alcohol manufacturers at GSU Training School Nairobi on March 12, 2024. PHOTO | WILFRED NYANGARESI | NMG

Alcohol manufacturers have protested the suspension of their licenses and the introduction of new tough measures by the government, saying it would lead to revenue losses and increase the cost of business. 

The Kenya Association of Manufacturers (KAM) said the directive by the State that its members install quality control laboratories as a pre-condition for reinstatement of their permits is expensive to implement. 

“While there is certainly a need to ensure safety in the alcohol that is locally produced, there is a need to be cognizant of the cost for compliance to manufacturers,” said KAM. 

The lobby said a requirement that manufacturers acquire gas chromatography machines to test the quality of their products is punitive because the equipment is expensive and will require them to reconfigure their existing production plants. Gas chromatography is an analytical technique used to separate and detect the chemical components of a sample mixture in a product.

“This means that manufacturers will need to invest in at least two machines, which is an additional cost barrier,” it said. 

KAM, which represents 12 alcoholic beverage manufacturers, also protested against the government directive to increase the minimum alcohol size from 250 millilitres (ml) to 750ml. 

The lobby said that a new minimum packaging would lead to losses for manufacturers as the current plants and machinery would be rendered obsolete or unproductive.

Read: Bars warn of Sh50bn loss in alcohol ban

“Further, due to affordability challenges, it is anticipated that retailers will be tempted to break the bulk of the 750ml which presents the risk of sale of adulterated or contaminated alcoholic drinks,” said KAM. 

This comes a week after the Ministry of Interior suspended the licenses of second-generation alcohol manufacturers and distillers to enable fresh vetting. The government also suspended the licenses that were issued to the manufacturers by the Kenya Revenue Authority and the Kenya Bureau of Standards. 

Interior Cabinet Secretary Kithure Kindiki said all existing licenses would be re-examined within three weeks. 

KAM has, however, asked the State to define what it means by second-generation alcohol to clear confusion. It said the lack of definition creates ambiguity which would result in disruption of trade and subjectivity of enforcement actions. 

KAM said the uses for these (first-generation ethanol and second-generation ethanol) also differ as the second generation is primarily used for fuel. 

Prof Kindiki last week also directed that no bar or alcoholic beverage outlet would be allowed to operate beyond the stipulated operating hours as provided for in Section 34 of the Alcoholic Beverages Control Act. 

KAM has, however, requested the government to appoint one legal reference point prescribing the hours of operation such as counties or the National Authority for the Campaign Against Alcohol and Drug Abuse (Nacada). 

“Further, we propose the deletion of the restriction on distribution of alcohol after 6 pm as this directive will encourage daytime consumption and will affect bodaboda last mile deliveries, inter-county trade, and e-commerce platforms,” it said. 

Prof Kindiki also instructed the National Treasury to conclude the incorporation of a new taxation model based on alcohol content and review the taxation framework for beer and other non-spirited alcoholic drinks within 60 days to mitigate the risk of harmful effects.

He also instructed the mandatory adoption of digital Kebs/KRA stamps for all alcohol and alcohol-based products and the withdrawal of physical stamps. 

KAM has opposed this move, arguing that excise duty taxation in the alcoholic subsector is at peak levels and any other additional taxation may lead to a reduction in collections.

“This will be an expensive undertaking for SMEs in the sector and will be difficult to incorporate in the production process for micro-distillers which differs from that of compounders. Therefore, we recommend that the physical stamps be maintained,” said the lobby. 

Read: Drinkers face Sh20,000 penalty for breach of alcohol ban

KAM also protested against the ban on the operation of alcohol businesses or outlets in residential areas and now wants the government to specify areas considered to be residential. 

They also want the government to exclude clubhouses located in residential areas as well as wholesalers and distributors in mixed-development buildings from this directive.

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The post Manufacturers protest State alcohol crackdown as costly and punitive  first appeared on Investorempires.com.

 

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