Kenya: Manufacturing Sector Losing Over Sh800 Billion Annually to Counterfeits

Nakuru — Combating the proliferation of counterfeit goods will expand Kenya’s annual worth of manufacturing valued added products from Sh 650 billion to over Sh 1 trillion.

According to Anti Counterfeit Authority (ACA) Director of Enforcement Yusuf Osman, effective check on illegitimate trade has the potential of expanding the manufacturing sector’s output from 10 per cent to 15 per cent within a few years.

Speaking during a sensitization program on counterfeits held for security agencies and departmental heads at the Regional Commissioner’s Plenary Hall in Nakuru Osman called on law enforcement personnel to tackle the trade in counterfeits in a similar manner that human trafficking, corruption, money laundering and terrorism are being dealt with, because of its harsh effect on the economy and people’s health.

Osman said though Kenya had one of the best business-friendly policies, laws and environment, local industries were losing more than 40 per cent of their potential annual sales to counterfeits.

“We need to step up efforts to intercept counterfeit and contraband goods in the country as proliferation of counterfeit goods are threatening our security, jobs and livelihoods,” observed the Director.

He revealed that Kenya’s manufacturing sector was losing at least Sh826 billion annually from purchase of counterfeits and other forms of illicit trade.

According to the Director, 70 per cent of imported goods were counterfeits, eating into 40 per cent of local manufacturers’ market share.

Osman observed that illicit goods not only endanger Kenyans’ health but also deny the government the much-needed revenue.

“The universal healthcare agenda is vulnerable to the massive supply of fake drugs. A staggering 30 percent of alcoholic drinks in the market are counterfeit. Counterfeit agricultural inputs that include fertilizer and pesticides remain a threat to food security,” he said.

The construction industry that is expected to deliver affordable housing is also affected by counterfeit electrical goods, cement and other materials. That is one of the reasons we see buildings collapsing” he revealed.

Osman noted that besides invading the market for regular producers, counterfeits are substantially sub-standard, hence increasing economic waste that litters the country.

He singled out agricultural inputs, electronics and foodstuffs as the most affected goods, as greedy counterfeiters changed tact to distribute fakes in the country.

To curb the trend, the authority said it would invest in technology used for monitoring, in line with its mandate of protection of intellectual property owners.

“We are strengthening our capacity to detect counterfeits at the ports of entry through use of modern technology and automation as well as leveraging multi-agency collaboration approaches, which are bearing fruit”, added Osman.

Rift Valley Regional Commissioner Maalim Mohammed said with Kenya occupying a strategic trading position because of the port in Mombasa and international airports, it was vulnerable to those who deal in illicit trade.

Maalim said besides posing serious public health and safety challenges counterfeiters do not pay tax and thus deny legitimate players a level-playing ground and economy the much-needed revenues to grow.

Statistics from the Kenyan Revenue Authority (KRA) indicate that local manufacturers lose $42 million (Sh5.1 billion) to counterfeiters while the government loses $80 million (9.75 billion) as potential tax revenue yearly.

The Regional Commissioner indicated that some of these illegal businesses further drive other forms of crime such as money laundering, drug trafficking and terrorism.

He indicated that undesignated border points are some of the major hotspots that unscrupulous dealers use to sneak goods into the country. He indicated that some of the counterfeits are repackaged locally in industries and residential premises.

He also asked Kenyans not to be driven by cheap prices of counterfeit goods, but mind their health and economy first by buying quality products even if at slightly higher prices.

ACA is part of the Multi-Agency Anti-Illicit Trade Outreach (MAAITO) that is made up of the Kenya Revenue Authority, Kenya Police and the Kenya Bureau of Standards.


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