Illicit trade in tobacco costs African governments an estimated $3 billion annually in lost tax revenues, according to a 2025 Vital Strategies report. Experts warn that these losses not only weaken fiscal space but also derail the health benefits of excise taxes meant to curb noncommunicable diseases.

Health financing experts and government officials are warning that illicit cross‑border trade in tobacco, alcohol, and sugary products is eroding the effectiveness of health taxes across Africa, depriving states of vital revenue and undermining public health goals.

At a recent roundtable on domestic health financing, convened by Willow Health Media and Nigeria Health Watch, participants stressed that while excise taxes on harmful products are among the most cost‑effective tools to reduce noncommunicable diseases (NCDs), their impact is being blunted by smuggling networks and weak enforcement.

The Stakes: NCDs and Shrinking Fiscal Space

• NCDs now account for more than a third of deaths in Africa, with tobacco alone killing over seven million people globally each year.
• Fiscal pressures are mounting as aid flows decline and debt servicing consumes national budgets.
• Health taxes are touted as “best buys” by the World Health Organization, but experts say illicit trade is siphoning away their potential.

Voices from the Forum

Speakers including Dr. Victor Asare Bampoe (Ghana’s NHIA) and Taiwo Oyedele (Nigeria’s Fiscal Policy and Tax Reforms Committee) emphasized that health sovereignty depends on credible domestic financing.

“The promise of health taxes is real,” one participant noted, “but unless governments confront illicit trade, the numbers will never add up.”

On the Ground: KRA’s Perspective

In a sideline interview, Lydia A. Otieno of the Kenya Revenue Authority’s Customs & Border Control Department explained how smugglers exploit tax differentials between neighboring countries.

“Illicit trade is not just about lost revenue,” she said. “It undermines public health objectives. Untaxed harmful products become cheaper, driving consumption and worsening the NCD burden.”

Otieno pointed to KRA’s adoption of digital systems — electronic cargo tracking, taxpayer IDs, and real‑time analytics — as tools to fight corruption and improve compliance. But she stressed that regional harmonization of tax regimes is essential: “Smuggling thrives where policies diverge. Cooperation is the long‑term solution.”

Lessons and Recommendations

Case studies from South Africa, Nigeria, and Kenya showed both promise and pitfalls:

• South Africa’s sugary drink tax cut purchases by 29%, but industry lobbying remains strong.
• Nigeria’s tobacco excise reforms raised revenue, yet porous borders diluted impact.
• Kenya’s alcohol taxation faced enforcement gaps, fueling illicit brews.

From these experiences, participants outlined key recommendations:

• Invest in enforcement capacity and digital customs systems.
• Harmonize tax regimes regionally to reduce smuggling incentives.
• Ensure fiscal transparency and earmark revenues for health systems.
• Build coalitions across government, civil society, and media to counter industry resistance.
• Launch public awareness campaigns on the health and economic costs of illicit trade.

Why It Matters

Behind the policy debates are human stories: border traders navigating survival, consumers lured by cheaper untaxed goods, and enforcement officers battling corruption and resource constraints.

For Africa, the stakes are clear. Without tackling illicit trade, health taxes risk becoming symbolic rather than transformative. With coordinated enforcement and political will, they could instead become a cornerstone of health sovereignty — reducing NCDs while financing resilient systems.