Kenyan tycoon Tabitha Karanja’s Keroche Breweries shut down for sixth time

Kenya Revenue Authority (KRA) has shut down Keroche Breweries, a Kenyan brewer and alcoholic beverage manufacturer led by Kenyan businesswoman and liquor tycoon Tabitha Karanja, for failing to settle Ksh322 million ($2.74 million) in tax arrears.

This is the sixth time in a year that the KRA has shut down Keroche Breweries’ Naivasha factory, causing the company to incur losses in the millions of dollars and directly and indirectly displacing thousands of workers.

Karanja, who founded the Kenyan brewer in 1997, said the recent shutdown has put the future of its employees in jeopardy, noting that the brewery’s closure will result in beer worth over Ksh350 million ($3 million) going to waste.

“Thousands of innocent, hard-working Kenyans are undergoing the indignity and injustice of unemployment, poverty, and hunger,” she said. “I specifically request once more to be given a moratorium on the enforcement action that shut down our operations, and on the unsustainable payment plan that we agreed to under unbearable pressure.”

“I therefore also humbly request for further engagement to consider a way for the company to meet its due obligations without sacrificing it and the livelihoods of countless Kenyan households,” she added.

Her most recent request for a grace period came nearly three months ago when she asked for 12 months to begin paying tax arrears incurred as a result of the COVID-19 pandemic, which harmed the company’s operations and earnings.

Karanja stated in March that it had to cut back on significant activities to survive, and that it only retained workers who provided vital services like maintenance, while remarking on the strategic decisions made thus far to survive despite the pandemic’s impact on Keroche’s operations.

After protracted negotiations involving the alcoholic drinks manufacturer, an agreement was reached and signed on March 14, 2022, under which Keroche agreed to pay Ksh957 million to the tax authority over a 24-month period beginning in January 2022.

Karanja accused the government of issuing a warning to 36 banks not to lend to Keroche, a move that she said exacerbated her company’s financial woes.

With a 29-percent market share in Kenya’s alcoholic beverage industry, Keroche is the country’s second-largest alcoholic beverage manufacturer and a key competitor to the British-controlled EABL. The brewer has been at odds with the government since 2015 over tax returns for one of its most well-known products, Vienna Ice vodka.

Karanja and her husband were arrested in August 2019 for Ksh14 billion ($126.18 million) in tax evasion. They were accused of “mis-declaring” tax and VAT between 2015 and 2019. They were released on Ksh12-million ($108,156) bail.