Industry captains impeding war on fakes, State says

Wednesday March 18 2020

Investment and Industry principal secretary Betty Maina. FILE PHOTO | NMG

Some industry captains are the biggest impediments to the war against fakes for condoning dishonest deals that rob the government of billions of shillings every year, the government says.

Investment and Industry principal secretary Betty Maina is now turning the spotlight on leading players after State compliance agencies impounded illicit goods worth more than Sh8.5 billion in a five-month operation through last October.

Ms Maina says the value of illicit goods confiscated is an indictment on the business community for not complying with trade laws and rules.

A multi-agency team, led by deputy head of Public Service Wanyama Musiambo, launched an operation from May last year, seizing counterfeit, sub-standard and smuggled goods worth billions.

Estimates have pointed to a loss of Sh200 billion every year in potential government revenue as a result of dealing in illicit goods, although no scientific study has been done in recent years.

“We are aware it has been disruptive because we have seen reduction in some activities in some sectors. But it is an indictment on the business community with reduced activity because it shows you have been making money from dodgy business,” Ms Maina said.

The multi-agency team comprises Anti-Counterfeit Agency (ACA), Kenya Bureau of Standards (Kebs), Kenya Revenue Authority (KRA), the Immigration Department, the Office of the Attorney-General, the Office of the Director of Public Prosecutions, Inspector-General of Police, Financial Reporting Centre (FRC), National Intelligence Service, among others.

Mr Musiambo on Tuesday said most of the confiscated goods held at the port of Mombasa and in the capital Nairobi have been destroyed, while others are at different stages of determination by the courts.

President Uhuru Kenyatta led the destruction of the first batch of illicit goods confiscated by the multi-agency team worth Sh1.5 billion in Athi River on August 31, last year.

Another destruction was done in Eldoret last December.

“Going forward, nobody should imagine the fight against illicit goods is about to end because we know there are still some of them out there,” Mr Musiambo said.

The Kenya Association of Manufacturers (KAM) has estimated about 70 per cent of counterfeits are imports, the bulk of which are sourced from China and India where low cost of production has encouraged bulk manufacturing.

“As manufacturing sector, we are the ones who have been championing that illicit trade should be addressed over the years. From the statistics we have had over the years, about 40 per cent of the market has had illicit goods which has prevented the manufacturing sector from growing as fast as it should,” KAM chief executive Phyllis Wakiaga said in an interview.

“Because of thoroughness of the scrutiny (by the multi-agency team), there have been some delays at port and some of them have led to increased cost for the sector, but it is good for the economy in the long run.”

ACA, the State body formed in 2008 to combat dealings in fake goods, last year said it planned to propose stiffer, deterrent penalties for offenders through an amendment to the current law.

A person convicted of trading, manufacturing, hiring out, exhibiting for sale, importing or transiting fake goods through Kenya is liable for a fine of not less than three times the value of the prevailing retail price of each counterfeit item or article under the current law.

The fine can be substituted or accompanied with up to a five-year jail.

Repeat offenders face a maximum of 15 years imprisonment or to a fine of at least five times the value of the prevailing retail price of the counterfeited goods under section 35 of the Anti-Counterfeit Act, 2008.

ACA wants a new clause to fix minimum fine at Sh200,000 for first-time offenders and Sh500,000 for repeat culprits.