- The towns of Busia, Kenya’ and Busia, Uganda are very busy border towns on Kenya’s common border with Uganda.
- Beer lovers for instance on the Kenyan have to fork out as much as Sh250 ($2.5) while just a stone's throw away from the Kenyan border, the same beer bottle costs as low as Sh80 (Sh0.8).
- Never mind that Uganda is landlocked and imports its goods through Kenya, where it is transported around 1,000 kilometres to reach the border, it is still cheaper to buy goods from there than in Kenya.
Situated about 430km from Nairobi along a highway that connects Kenya to central Africa, lies a busy town called Busia, the largest town and County headquarters of Busia County.
The same town under the same name strandle between Kenya and Uganda. The towns of Busia, Kenya’ and Busia, Uganda are very busy border towns on Kenya’s common border with Uganda.
The main economic activity here is trade with neighbouring Uganda, with Busia Kenya being a cross-border centre.
That is as far as similarities between the two border towns go. Prices of the same commodities between the two border towns are like night and day despite being meters away from each other..
Beer lovers for instance on the Kenyan have to fork out as much as Sh250 ($2.5) to enjoy a cold bottle of their favorite drink. Just a stone's throw away from the Kenyan border, the same beer bottle costs as low as Sh80 (Sh0.8) on the Ugandan side.
So why is beer so cheap in Uganda?
It all boils down to taxation. Never mind that Uganda is landlocked and imports its goods through Kenya, where it is transported around 1,000 kilometres to reach the border, it is still cheaper to buy goods from there than in Kenya.
For one litre of beer, the Uganda Revenue Authority taxes anything between Sh18 ($0.18) and Sh51 (in Kenya shillings) depending on the content. That essentially means that save for the bottle, beer from Uganda could be retailing for as little as Sh9 ($0.09).
In Kenya, the taxman is not as easy on beer manufacturers as in Uganda and in the past five years has gone out of its way to milk every drop of beer. The latest figure according to data from the Kenya Revenue Authority, is at Sh110.62 for every litre.
A bottle of beer in Kenya would, therefore, comprise up to Sh55 in excise taxes only, more than seven times the Ugandan rate if you add the 16 percent Value Added Tax.
This KRA’s hunger for revenue has since driven hundreds of thirsty revellers across to Uganda and other border areas to down cheaper alcohol. Some business minded individuals have also started smuggling it to the Kenyan side, a move that is giving local brewers and border-based law enforcement agencies sleepless nights.
Bar owners on the Kenyan side have also been left with no option but to buy from Uganda in order to stay in business.
90 percent of their stock now comes from Uganda as they fight a losing battle to keep the customer in Kenya from straying across the border.
“We only stock a few bottles of Kenyan beer in the fridges for formality but all bars here sell beer from Uganda. If I don’t sell at the same rate as it is sold the other side of the border, I will lose all these customers. I have children to educate and I will not just close my business and watch others continue,” James, a Bar owner in Busia told Daily Nation.
KRA, however, says it is not worried that the tax difference especially on beer is working in favour of Uganda. Guess only time will tell.