Tanzania loses 1.7tri/- to illicit trade yearly

DAR ES SALAAM: COUNTERFEIT goods are increasingly undermining Tanzania’s economy, with estimates indicating that the government loses over 1.7tri/- annually in uncollected excise duty from the alcohol and cigarette industries.

According to investigations by beer and cigarette manufacturers, illicit trade is most prevalent in border regions such as Kigoma, Songwe, Katavi, Mbeya, Musoma and Kagera, as well as in major urban centres including Dar es Salaam, the Coast region, Mtwara and Zanzibar.

The staggering figures were revealed yesterday during a stakeholders’ workshop convened by TCC Plc. Stakeholders referenced a 2019 study by Ernst & Young alone deprives the government of approximately 1.7tri/- in excise duty annually, while counterfeit cigarettes contribute to a further 20bn/- in lost tax revenue.

The Minister for Industry and Trade, Dr Selemani Jafo said that the challenge of illicit trade poses a threat to public health by contributing to the rise of noncommunicable diseases, national security and the well-being of the business sector.

In a speech delivered on his behalf by the Acting Director General of the Fair Competition Commission (FCC), Khadija Ngasongwa, Dr Jafo explained that illicit trade, particularly in cigarettes and alcohol, continues to undermine Tanzania’s economy by depriving the government of vital tax revenue and weakening overall tax collection.

According to Dr Jafo, the government loses an estimated 16.5bn/- each year due to untaxed illegal cigarette products. By the end of 2025, he said the losses are projected to exceed 18bn/-.

He added that beyond tax loss, illicit trade distorts market prices through under-pricing, fuels unfair competition and stifles the growth of local industries.

As a result, legitimate producers lose both market share and the incentive to invest further.

The Minister urged the Tanzania Bureau of Standards (TBS) and the Fair Competition Commission (FCC) to intensify market surveillance in order to identify and remove such products.

“This will be supported by stronger law enforcement, increased investment in technology and enhanced cooperation between public institutions and the private sector,” said Dr Jafo.

He called upon all Tanzanians to continue supporting the government’s efforts by purchasing legitimate products and demanding EFD receipts to ensure that taxes are paid and the nation’s economy is built.

TRA’s Electronic Tax Stamps (ETS) Project Manager, Mr Abyud Tweve said the authority has initiated various solutions to address the situation, including the Hakiki Stamp Application as well as an inspection device that has been distributed to inspectors across the country.

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Tweve said TRA is also continuing to conduct awareness campaigns and to use Artificial Intelligence in combating counterfeit products in Tanzanian markets.

He explained that after applying these modern approaches, TRA has been able to obtain crucial information and analyses that have helped address the issue in the country.

“We have already identified many tax evaders, some of whom have been taken to court for involvement in these counterfeit operations,” he stated.

The Confederation of Tanzania Industries (CTI) representative, Ms Neema Mhondo said the workshop has provided an opportunity for stakeholders to discuss and come up with recommendations that will contribute to and drive the fight against the illicit trade of cigarettes and alcohol in the country.

“These recommendations will help the government to develop appropriate policies and strategies to address this problem, which could otherwise affect investment and trade, while also continuing to cause a loss of revenue that could have supported the strengthening of key sectors such as education and healthcare for Tanzanians,” she said.

Tanzania Cigarette Public Limited Company CEO, Roy Manalili, said that fake cigarettes in Tanzania rose from 2.9 per cent in 2023 to 4.1 per cent this year, resulting in an estimated 20bn/- in tax losses.

“We must commit to stronger enforcement at our borders and markets, come up with smatter collaboration between government, industry and enforcement agencies and ensure sustainable efforts to dismantle illicit networks that threaten our nation’s stability,” he said.

He added that illicit trade is a major global challenge and that it generates between 3 trillion US dollars and 5 trillion US dollars annually.

The TBL CEO, Michelle Kilpin said illicit alcohol poses a severe threat to public health and Tanzania’s economic stability.

“With over half of alcohol consumed coming from unregulated sources, the government loses significant excise revenue that should fund vital public services. Instead, these funds slip into the informal market, fuelling unsafe practices and widening the fiscal gap,” he said.

Addressing the crisis, Kilpin urged strengthened enforcement through dedicated task forces and tighter regulatory controls to dismantle illicit networks and protect revenue streams.

Serengeti Breweries Managing Director, Mr Obinna Anyalebechi said the workshop comes six months after manufacturers issued recommendations to combat illicit trading, including stronger government-private sector collaboration, commissioning an independent study on illicit alcohol and elevating national awareness.