How illicit trade is harming Tanzania’s economy, security

According to investigations by major producers of beer and cigarettes, counterfeit goods continue to flood these markets through porous borders, informal networks, and weak enforcement systems.

The issue took centre stage at a stakeholders’ workshop organised by TCC Plc, where participants painted a grim picture of the rising illicit trade.

Stakeholders referenced a 2019 Ernst & Young study, which revealed that alcohol sourced from illicit markets costs the government about Sh1.7 trillion in excise duty each year. Counterfeit cigarettes are estimated to result in nearly Sh20 billion in unpaid taxes annually.

In a speech delivered on behalf of the Minister for Industry and Trade, Dr Selemani Jafo, by Fair Competition Commission (FCC) Acting Director General Khadija Ngasongwa, the minister warned that illicit trade poses multiple threats — eroding government revenue, harming public health, and fuelling unfair competition that undermines the local manufacturing sector.

“Illicit trade, particularly involving cigarettes and alcohol, continues to weaken the economy due to loss of tax revenue while exposing citizens to harmful products.

This problem also distorts market prices, discourages investment, and opens doors to wider organised crime,” Dr Jafo said.

He said that the government remains committed to tackling illicit trade, noting that the Tanzania Bureau of Standards (TBS) and FCC must intensify surveillance and ensure anyone found guilty faces the full force of the law. “The government will strengthen law enforcement, invest in technology, and encourage greater collaboration between public institutions and the private sector to combat this menace,” he said.

Speaking on behalf of the Regional Commissioner, Dar es Salaam Principal Trade Officer Mohamed Tajiri, recognised the city’s role as Tanzania’s economic hub and pledged support for multi-sector efforts to root out counterfeit goods.

“Our security organs are strong, but this is a challenge that requires unity. This workshop is an opportunity to set a roadmap to safeguard legitimate businesses and protect government revenue,” he said.

The Tanzania Revenue Authority (TRA) also outlined steps it has taken to curb the practice. Electronic Tax Stamps (ETS) Project Manager, Mr Abyud Tweve, said TRA is deploying tools such as the Hakiki Stamp application and a new inspection device distributed nationwide. Artificial Intelligence (AI) is also being used to target high-risk markets.

“AI helps us profile risks, direct inspections, and identify repeat offenders. We have already detected many tax evaders, and some are facing trial for involvement in counterfeiting.

This has reduced the need for blanket inspections, allowing us to focus on high-risk areas like the Lake Zone, the Northern Zone, and Dar es Salaam,” Mr Tweve explained. From the private sector, industry leaders called for greater government–business collaboration.

Confederation of Tanzania Industries (CTI) representative Neema Mhondo said the workshop was timely in developing recommendations to drive reforms. “If unchecked, illicit trade will not only drain government revenue but also discourage investment, weaken industrial growth, and limit funding for critical services such as education and healthcare,” she said.

TCC CEO Roy Manalili revealed that counterfeit cigarettes in Tanzania increased from 2.9 percent in 2023 to 4.1 percent this year, resulting in an estimated Sh20 billion in tax losses. He warned that counterfeiters exploit porous borders and urban informal markets, often smuggling small consignments or concealing goods within legitimate cargo.

“We must close all avenues through which illicit trade fuels smuggling, trafficking, and organised crime. This is not just a business challenge but a national security issue,” he said, calling for stronger enforcement and more robust border controls.

TBL CEO Michelle Kilpin underscored the public health risk, noting that over half of alcohol consumed in Tanzania comes from unregulated sources. “Illicit alcohol not only robs the government of vital excise revenue but also endangers lives due to poor quality and unsafe practices.

Strengthened enforcement and stricter controls are urgently needed,” she said. Similarly, Serengeti Breweries Managing Director Obinna Anyalebechi reminded participants that manufacturers had previously issued recommendations, including commissioning an independent study on illicit alcohol and intensifying public awareness.

“As responsible producers, we are committed to contributing data, sharing insights, and engaging constructively with the government to tackle this crisis,” he said.

Globally, illicit trade is estimated to generate between $3 trillion and $5 trillion annually. Counterfeit cigarettes account for 15 percent of global consumption, while illicit alcohol represents nearly 26 percent. Both have devastating economic and social impacts, a reality now acutely felt in Tanzania.

Stakeholders at the meeting agreed that a coordinated, multi-agency approach combining enforcement, awareness, and investment in modern technology is the most viable path forward.le path forward.