Cigarrettes from Kenya are now flooding the Ugandan market

Alex Magezi, BAT official

BAT's Trade and Development Manager Alex Magezi told the BBC that in the first week since the new taxes were introduced weekly sales of cigarettes from their Jinga factory have dropped from 22 million to a mere 9.4 million.

But the decrease of nearly 58% in sales is apparently not simply because people are cutting down on their smoking.

Flooded market

Uganda smokers are going to the black-market to escape the high prices in the shops.

BAT production is being reduced

Mr Magezi said smuggling of similar brands of cigarettes from neighbouring Kenya continues unchecked.

He said the practice has mostly hit the eastern region, which borders Kenya, but the flooding of the Ugandan market with Kenyan cigarettes has now spread into western and north western regions of the country.

The capital Kampala has seen an estimated drop of 60% in sales for BAT.

He said his company has already reduced working hours at the factory and most of the workers will be laid off if sales do not increase.

Vehicles impounded

Officials from the Special Revenue protection services, a law enforcement organ set up by President Yoweri Museveni to fight smuggling acknowledge there has been rampant smuggling.

But they said they have impounded vehicles carrying smuggled goods since they resumed work following a break for the country's general election.

Mr Magezi said that BAT was demanding that government set in place a special unit to directly deal with the smuggling of high-value tax goods including cigarettes, spirits and textiles.