The Effect Closure of Bars Has Had to Kenyan Budget
Kevin Namunwa  |  Sep 15, 2020

Among sectors that have been affected by the coronavirus pandemic, the liquor sector is among the top affected ones.

Restrictions put in place by the government to curb the spread of the virus meant that bars and restaurants could not operate normally. In fact, bars have not been operational in the period that the pandemic has hit the country.

The closure of bars has had a major effect to the Kenyan economy as well.

The prolonged closure of bars and night clubs has forced the Treasury to cut its excise tax projections by Ksh 45.8 billion.

This gives the government a fresh revenue collection headache three months since the start of the financial year.

Treasury Cabinet Secretary Ukur Yatani has lowered the excise duty target, the bulk of which comes from the sale of alcohol and cigarettes to Sh195.6 billion from the Sh241.4 billion set in June despite a scheduled raise on the tax from October 1.

According to the Treasury, the cut is linked to the effects of Covid-19 restrictions, including the closure of bars and curbs on mass gatherings.

. More than 30 products attract excise duty, including bottled water, fuel, and juices. But alcohol and cigarettes, largely sold in bars and restaurants, account for more than 75 percent of the tax collection.

When Kenya recorded its first coronavirus case, bars and restaurants were closed with immediate effect with public gatherings prohibited. However, a few months later, restaurants were reopened with bars being allowed to sell liquor alongside food.

The decision was made in an attempt to save the economy that was fast deteriorating. The government came to later regret the decision as coronavirus cases skyrocketed immediately after the restrictions were eased.

This forced the government to bring back the restrictions closing bars again only allowing liquor to be sold on a take-away basis. The government further banned public consumption of liquor only allowing Kenyans to drink from their houses.

After the restrictions were restored, coronavirus cases plummeted. However, there is less hope of opening up bars again since they seem to raise the rate at which the virus spreads.