OPINIONPeople Daily

Industries bearing brunt of intricate trade in fakes

Flora Mutahi

Illicit trade and counterfeit goods will be the biggest impediments to Kenya achieving its economic goals.The perception that illicit trade only affects businesses and government revenue is misleading as it understates the extent which the vice permeates, degrading  all levels of society.

The nature of counterfeiting and illicit trade is such that it tends to thrive where graft and corruption is entrenched. Not only does it take away citizens right to quality and genuine products, it also puts their lives at risk by infiltrating markets with substandard and, in many cases, dangerous goods.

The extent to which the vice has morphed is quite alarming. Two years ago, rogue traders were arrested after months of selling fake yoghurt made of corn flour and henna at a bus terminus in Nakuru.

Last year, a cargo container with counterfeit drugs valued at Sh6 million  was seized at the Mombasa Port! In February this year, goods worth Sh100 million were also seized at the same port and just two weeks ago, we witnessed the seizure of 400 tonnes of illegal sugar.

However, these examples are just a drop in the ocean compared to the vast network of illicit trade that continues to evade detection and capture. In fact, most of these illegal operations have own armed “protection”, making it impossible for  security agencies to act on them. 

This is all despite the intense collaborative efforts by both the government and manufacturers to curb the vice. In 2008, Parliament enacted the Anti-Counterfeit Act and subsequently, the Anti-Counterfeit Agency was formed.

In 2014, National Council on the Administration of Justice and Kenya Association of Manufacturers (KAM) partnered to develop a manual titled Enforcement Manual to Combat Illicit Trade in Kenya.

Last year, KAM launched the Intellectual Property Rights study, which is a useful tool for law enforcement agencies involved in the prosecution of crimes related to counterfeits and piracy. 

Many of these initiatives exist and continuously work to strengthen their collaborative efforts but somehow, the vice still outsmarts them. This is why the recent move by President Uhuru Kenyatta to appoint officers mandate to deal with counterfeits is a welcome relief and a much needed intervention for industry. 

The Big Four agenda pillars are already hard hit by the vice, and if we are to realise our objectives in the next five years, we must take tough measures against fakes.

Many counterfeit products evade taxation, hampering national revenue collection. This explains the recent upsurge of fictitious invoicing, which has been flagged by the Kenya Revenue Authority, as a common avenue used for tax evasion. 

The Government has declared loss of billions of shillings to this racket which, in addition to inflating the cost of sales and aiding in the under-declaration of imports, catalyse the smuggling of uncustomed goods.

According to a 2012 study on counterfeiting in Kenya, it is estimated that manufacturers are losing at least 40 per cent of market share to fake goods. They also approximate $42 million (Sh30 billion)per year, while the government loses Sh6 billion in tax. And with the statistics increasing annually, our vision to industrialise is in peril. 

The appointment of deputy Head of Civil Service Wanyama Musiambu to spearhead the fight against illicit trade will go  a long way in strengthening the existing initiatives. – Writer is the chairperson, Kenya Association of Manufacturers—[email protected] 

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