Counterfeiters have a field day as State flip-flops on import controls

Wednesday March 18 2020
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Some of the products police in Busia County seized on September 8, 2019 in an operation against contraband goods. PHOTO | FILE |NATION MEDIA GROUP

By EDWIN OKOTH

A cartel of counterfeiters could be behind the government regulatory flip-flops on whether imported goods should be inspected locally or at the country of origin.
Sources in the agencies working at the port have intimated to the Nation that the crafty businessmen work with some port officials to create artificial crises at the port and influence favourable rules to open loopholes to dump counterfeits and substandard goods in the country.

Backed by an influential ‘small traders’ lobby machinery, the schemes involve demonstrations over delayed cargo clearance and market disturbance that arm-twists the government into relaxing rules and shooting its local manufacturing in the foot with floods of counterfeits.

LOCAL INSPECTION
Last year, the government banned local inspection to facilitate smooth cargo clearance at the port but has since reversed the order, with importers now free to clear cargo locally at a lower fee and with less scrutiny.

The new order is said to have been celebrated by officers from the select port agencies after a directive last year that saw several other agencies kicked out of the ports in a surprise move meant to “improve efficiency”.

One of the key institutions kicked out of the port was the Anti-Counterfeit Agency, the body tasked with fighting counterfeits mainly coming into the country through the ports in what has complicated the fight against the multibillion shillings fakes industry.

“First, there was no backlog last year at the port, some agencies simply delayed inspecting the cargo to create the backlog when they noticed many of the goods were being flagged for counterfeits. Now most goods are going to be inspected locally and there in no anti-counterfeit agency at the port. This is well-planned scheme as you can see,” said a senior source at one of the key agencies at the port of Mombasa.

PENALTY FEES
From revising the penalty fees for non-compliance with the pre-shipment cargo verification in December to 20 per cent, then 15 per cent and finally 5 per cent in under two months, the fast flip-flop, according to stakeholders, has also disrupted trade planning in the region, with EAC partner states having started the processes of harmonising the Certificate of Conformity (CoC), on which Kenya has now made about-turn.

Kebs confirmed to the Nation that the rate being charged on goods to be inspected locally has been reduced to 5 per cent but downplayed concerns that the agency would not have the capacity to carry out inspections and clearance given the expected increase in cargo arriving without CoCs.

The plan to have goods examined by agencies abroad before being shipped to Kenya was to hasten the cargo-clearance process and curb tax evasion, as the Kenya Revenue Authority would rely on the manifest data to net tax cheats way before the ships arrive.

The June 2019 circular by Head of Public Service Joseph Kinyua had envisioned an enhanced check on the goods before they are imported, but lack of collaboration among the key agencies at the port has failed the plan, according to insiders.

MORIBUND TASK FORCE
KRA, which was meant to share its Integrated Customs Management System with the Anti-Counterfeit Agency, failed to do so almost a year later just as the Kenya Ports Authority refused to open its Kilindini Waterfront Automated Terminal Operations System for use in monitoring cargo getting into the country.

The situation effectively left the thinly staffed ACA to hunt for the goods once they have entered the market and guess into warehouses to crack down on the fake goods.

The famous multi-agency team tasked with fighting fakes is also said to have fizzled out as the connected counterfeiters pulled a powerful political plug on it.
Deputy Head of Public Service Wanyama Musiambo did not respond to text messages and calls about the existence of the task force but multiple sources intimated that it was moribund.

A confidential letter addressed to Mr Musiambo by the manufactures pleaded for the reversal of the latest move to have the goods inspected abroad, with claims that the local inspection order will reverse the gains his team had made in fighting fakes.