Mastermind Tobacco Kenya To Lay Off 1,000 Workers Over Huge Debt

• Kenyan employers warned of increased job cuts in the coming months, citing increased operational costs exacerbated by high taxation
• Mastermind Tobacco Kenya is the latest company to lay off workers, announcing more than 1,000 job cuts
• The company ran into liquidity challenges after losing a tax case against the Kenya Revenue Authority (KRA)

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

About 1,000 workers will lose their jobs at Mastermind Tobacco Kenya before the end of the year.

The cigarette manufacturer announced redundancy after closing its operations in June 2023.

Why is KRA shutting down Mastermind Tobacco?

This followed a lost battle with the Kenya Revenue Authority (KRA), forcing it to pay the taxman KSh 517 million in tax penalties.

The company, which is under the receivership of I&M Bank, ran into a huge undisclosed debt that saw it fail to pay employees' salaries in 2018.

In 2019, the company also lost a tax case against KRA, forcing it to sell its top assets worth KSh 2.9 billion.

Mastermind Tobacco Kenya joins more than 75 other firms that have been liquidated in the past two years.

The Kenyan indigenous firm, which started its operations in the country in 1987, succumbed to economic pressure that has seen many businesses close their operations.

What Kenyans said about Mastermind job cuts

The majority of Kenyans have sympathised with the group of employees affected by Mastermind Tobacco job cuts.

@OnimboMichael said:

"This is devastating news for the 1,000 employees and their families. Losing a job during the holiday season is particularly tough. I hope they receive adequate support and can find new employment soon."

@munenejere10 noted:

"And this is just the start. Wait until they fail to collect half of their targeted tax. Good policies are everything."

@bernardwachir14 lamented:

"We don't have a country here," government policies" bringing down companies to the knees."

@BWattanga said:

"Things getting from bad to worse each passing day."

@EmmanuelLemali explained:

"The company's financial struggles leading to acquisition by I&M Bank highlight broader economic and industry challenges. Such situations underscore the need for sustainable business practices and financial responsibility to safeguard both companies and their employees."

@NeverBrokeAgen asked:

"Why would a govt close a company for failure to pay taxes??? honestly why? sorry to the 1000 to be laid off may God provide and open other doors."

@SuisFre claimed:

"Our able president will give them jobs abroad... In Germany, India, USA and Canada + France"

Employers warn of further job cuts

The rise in tax rates significantly affected companies' operational costs and overall profitability.

Kenya manufacturers, facing rising operational costs from taxes, fuel, and energy, are compelled to consider downsizing as a strategy to stay financially afloat.

Companies are exploring alternatives to downsizing, including energy and water conservation measures and reductions in employee fringe benefits.