Revealed: The gaps in illicit alcohol fight

High tax regime, corruption and illegal ethanol smuggling through porous borders with multiple recognised illicit entry points are some of the issues that fuel the illicit alcohol market, a new parliamentary report has shown.

Key among the illicit entry points identified were Isibania, Shimoni, Busia, Mbale, Malaba, Lwakhakha, Namanga, Lunga Lunga and Moyale, and a crackdown within Kenya.

This, coupled with the current legal framework gaps, allows for the proliferation of counterfeit products, in addition to a high tax regime, corruption amongst enforcement agencies, weak regulatory enforcement and smuggling of ethanol across borders.

This was part of the findings of a report tabled in the House by the National Assembly committee on Public Petitions, chaired by Runyenjes MP, Karemba Muchangi, which was looking into the rampant production, distribution, and consumption of illegal alcohol in the country.

In particular, the committee has said that the National Police Service (NPS), Kenya Bureau of Standards (KEBS) and Kenya Revenue Authority (KRA) bear the greatest responsibility.

The Committee recommended that, within 90 days, the Inspector General of Police and KRA Commissioner General should give a report to the National Assembly on the action they have taken to increase surveillance at the ethanol smuggling border points and crackdown in the country.

Similarly, Managing Director KEBS will be expected to submit to the National Assembly a strategy paper on revamped enforcement, quality assurance and inspection, and market surveillance measures.

“The petition is timely and presents an opportunity to address production, distribution and consumption of illegal alcohol in a manner that respects the functional and institutional integrity of each level of government. The fight against illicit alcohol requires a coordinated whole-of-government approach involving both National and County Governments,” the committee stated. 

The petition was presented to the House by Deputy Speaker, Gladys Boss, on behalf of the residents of Uasin Gishu County.

The petitioner sought that the Public Petitions Committee investigate the status of implementation of regulations in place to curb production, distribution and consumption of illegal alcohol, and determine the cause of the rampant production, distribution, and consumption of illegal alcohol in the country.

She also wanted the committee to recommend a multi-agency approach to curb the production, distribution and consumption of illegal alcohol and make any other recommendations appropriate to address the plight of petitioners. 

The Committee has since recommended that within 90 days of adoption of the report, the Interior Cabinet Secretary should submit to the National Assembly draft legislation to anchor the Multi-Agency Taskforce into law.

The taskforce should comprise the Ministry's National Government Administration Officers (NGAO), NPS, National Intelligence Service (NIS), KRA, KEBS, NACADA, Anti-Counterfeit Authority (ACA), Council of Governors (CoG), Ministry of Health, Office of the Director of Public Prosecutions (ODPP), Ethics and Anti-Corruption Commission (EACC) and any other relevant government agency.

The Committee found that the alcohol industry accounted for about 4.1 per cent of Kenya's nominal Gross Domestic Product (GDP) in 2024, valued at approximately Sh660.01 billion and a major contributor to tax revenue through excise and import duties.

Alcoholic beverages were estimated to generate approximately Sh48.61 billion in excise revenue in 2024 (beer: Sh29.07 billion; wines and spirits: Sh19.53 billion).

In 2025, the total size of illicit trade in Kenya was estimated at Sh826 billion, while illicit alcohol comprised approximately 59 per cent by volume and 21 per cent by value of the total alcohol market in Kenya in 2022.

The fiscal loss attributable to the illegal-alcohol economy was estimated at approximately Sh71 billion in 2022.

The committee also established that, of the illicit categories, illicit artisanal brews accounted for 66 per cent of total volume, tax leakage for 16 per cent, counterfeit and illicit brands for 15 per cent, and contraband/smuggling for 4 per cent.

On average, the report states 18 per cent of products in surveyed sectors are counterfeited, with alcoholic beverages experiencing a prevalence of 19 per cent, second only to automotive spare parts at 21 per cent.

“Within the alcoholic drinks segment, gin and vodka emerged as the most affected products at the firm level, while at the consumer level wine (50.12 per cent), beer (47.44 per cent), whiskey (42.68 per cent) and vodka (36.95 per cent) were reported as the most counterfeited categories.

The report recommends that the excise duty (Remission of Excise Duty) Regulations 2026 be fully operationalised and the national-county alcoholic drinks regime be harmonised.

Similarly, they have called for the need to amend laws to prescribe stiffer fines for breaches of the law, monitoring and reporting on local ethanol production, enhanced border surveillance, inspection and market surveillance and the anchorage into law of a multi-agency taskforce.

During the public participation with various stakeholders, including Deputy Inspector General of Police Eliud Lagat, who appeared before the Committee in June.

He told the committee that the problem of illicit alcohol is compounded by its intersection with organised crime, drug trafficking, money laundering, corruption and gender-based violence.

“Illicit brews are often manufactured under unsafe conditions using unregulated ingredients and are distributed through illegal networks that evade licensing and regulatory controls,” Lagat told the committee.

He submitted to the committee that the fight against illicit brews has evolved and is currently guided by the Alcoholic Drinks Control Act, 2010 and the Liquor Licensing Act (Cap. 121), which provide the legal framework for regulation, licensing and enforcement.

However, persistent bans have inadvertently driven production underground, creating illicit markets operating in unsafe and unregulated conditions. Some producers use dangerous additives including ethanol, formaldehyde, herbicides, Anti-Retroviral drugs (ARVS) and aflatoxins, all of which pose grave risks of death, blindness and chronic illness.

Lagat said the NPS conducts intelligence-driven operations targeting illicit brews, drugs and unlicensed second-generation liquor across the country.

The operations target manufacturing dens and retail outlets in informal settlements, including distribution hubs in urban and rural areas.

But he also cited the limited number of Government Chemists, who have facilities in only three counties (Nairobi, Mombasa and Kisumu), as a major challenge that has created a bottleneck in testing and prosecution of cases across the remaining parts of the country.

Similarly, the DIG regretted lenient penalties, saying classification of illicit alcohol offences as petty crimes results in fines and sentences that fail to deter offenders, adding that some rogue law enforcement, regulatory and administrative officials facilitate the continued trade in illicit alcohol.

KRA told the committee that weak control of strategic raw materials (molasses and ethanol), inadequate regulation, tracking and reconciliation of molasses and industrial ethanol, the primary inputs in alcohol production, create significant upstream vulnerabilities.

KRA also cited diversion at source, particularly from sugar mills and within the ethanol supply chain, feeding unregulated manufacturing with limited real-time oversight and fragmented inter-agency coordination.

“Robust consumer demand for low-cost alcohol, driven by affordability constraints, sustains the illicit market. At the same time, weak and inconsistent enforcement outcomes, including delays in prosecution, compromised evidence chains and penalties that do not outweigh illicit gains limit the overall deterrent effect,” KRA told the committee, as contained in the report.

Alcoholic Beverages Association of Kenya (ABAK), on its part, told the committee that although illicit artisanal homebrews represent 67 per cent of the illicit alcohol market, most of its value lies in smuggling, counterfeit and tax leakage.

“Illicit alcohol continues to dominate segments of the market due to a significant economic imbalance. Legal alcohol is heavily taxed and regulated while illicit alcohol is untaxed, unregulated, and cheaper. Tax leakage is the largest contributor to illicit alcohol value sales at Sh73 billion, followed by counterfeit and illicit brands at Sh64 billion,” ABAK said.

ABAK said illicit alcohol accounts for approximately 60 per cent of the Kenyan market, resulting in preventable deaths, serious health crises, and annual tax revenue loss exceeding over Sh120 billion.

These products undercut legitimate producers on price while evading all quality and excise controls.