Hurdles agency faces in tackling counterfeiting issue

In this interactive series, we invite readers to send in questions to selected public figures. This week Anti-Counterfeit Agency Executive Director Elema Halake responds to your questions.

1. How do counterfeit products get into the country when we have a port authority, customs and yourselves checking the goods coming in? Could it be a case of the agencies charged with the task, including the Anti-Counterfeit Agency (ACA) failing to do their work as expected? Githuku Mungai, Nairobi

Kenya has slightly over 40,000km of land border, without including air and sea borders. Most of it is porous. At the same time, there are around 44 designated land border entry points with some not manned by all the relevant agencies.

Counterfeiting is a covert business. At the gazetted border points, we use intelligence-based targeting and profiling tools to seize counterfeits.

More often than not, it is challenging to have 100 percent verification of goods as this will lead to slow clearance of goods and further congestion at the ports.

2. There have been suggestions that counterfeiting should be treated as a transnational crime. The argument is that counterfeits often follow the same shady routes as the other transnational crimes. Wouldn’t it be appropriate, therefore, to classify counterfeiting as such so as to make the fight global? Sebastian Owaga, Kisumu

Counterfeiting is a global, transnational and organised crime. Our response to this problem, therefore, must equally correspond; be organised, transnational, and highly sophisticated.

It is a must win battle. We wish to appeal to all Kenyans of goodwill to support the government in its endeavour to make Kenya a counterfeit-free country in pursuit of the Big 4 Agenda.

3. Is there any correlation between tax regimes and a rise in counterfeits or lack thereof? Some people have suggested that the prohibitive taxes on certain goods in Kenya creates room for counterfeits to thrive and since the people behind the counterfeits spend little in the cost of production, they therefore sell cheaply. Brenda Shivachi, Kaimosi

Counterfeiters avoid paying taxes at all levels of their operation. They have low costs of production since they don’t pay taxes on production input, they have not invested in research and development, and marketing.

Moreover, they underdeclare their income. This gives them undue advantage over the brand owners leading to a thriving counterfeit business and decrease in tax revenues.

4. What permanent measures has ACA put in place to protect Kenyans from counterfeits? As a country would you say we are safe with the products in the market? Joshua Nalisi Mwabali, Nairobi

Yes, we are indeed safe as a country. The government has invested heavily in having the requisite legal and institutional frameworks in the fight against counterfeits.

We have heightened consumer awareness campaigns to address the demand aspect of counterfeiting.

We have scaled up our enforcement measures at the border points, market surveillance and enhanced our collaboration with other law enforcement agencies and the private sector, especially the Kenya Association of Manufacturers.

We are also in the process of amending the Anti-Counterfeit Act to make it more prohibitive and deterrent.

5. To mount a successful campaign against manufacturing, supply, usage and consumption of counterfeits, it requires a multiagency collaboration. In respect to that, what synergies have you put in place working with Kenya Revenue Authority, Treasury, Kenya Bureau of Standards, Pharmacy and Poisons Board, Nacada and the National Police Service? Dan Murugu, Nakuru

In May 2018, the President appointed Deputy Head of Public Service Wanyama Musiambo to coordinate a multiagency task force to combat illicit trade.

Through a rapid results initiative, we have seen over Sh8.5 billion worth of illicit goods seized and close to Sh1.5 billion so far destroyed.

This enforcement collaboration is complemented by a Multiagency Public Awareness against Illicit Trade, a framework of government agencies coordinated by Trade Principal Secretary Chris Kiptoo.

6. Among the four pillars of the Big Four Agenda it is manufacturing that stands to be adversely affected by the flooding of counterfeits. What measures have you put in place to sensitise, especially traders and consumers, on poor quality and risk factors of such goods? Dan Murugu, Nakuru

We are currently implementing robust public awareness campaigns. We are talking to all stakeholders both in the public and private sectors and the whole supply chain of products ranging from manufacturers, distributors, retailers and consumers, among others.

7. While a lot has been done in the fight against counterfeits, there are still concerns of some of your staff being compromised to turn a blind eye to activities of counterfeiters. Why are some of your staff predisposed to being easily compromised? Joseph Onziro, Maseno

The agency is aware of the danger posed by corruption in its operations and has initiated measures to deal with the menace.

Our staff are required to adhere to a strict code of conduct. We have in place a Corruption Prevention Policy to mitigate risks associated with corruption.

Any staff found culpable of any wrongdoing is dealt with according to the laid down administrative procedures and the law.

Our officers go through regular training on integrity and ethics and have the streamlined the Ethics and Anti-Corruption Commission guidelines.

In addition, we have an anonymous reporting framework through a dedicated telephone number: 020-2280111, in-house corruption reporting boxes as well as a portal in our website (www.aca.go.ke).

8. Last week Kenyans watched the destruction of counterfeits in Eldoret and recently it was discovered that there is large quantity of plastic rice in our country. Other than the destruction of the counterfeits, what other punitive actions do you take? Have you considered withdrawing licences of traders found with counterfeits? Okulo Andrew Guya, University of Nairobi student

Though we are aware of the alarming plastic rice rumours, so far we have not had any case reported to us.

Increased destruction of counterfeits means that we are prosecuting counterfeit matters more successfully amid the litigious defence we encounter in the course of prosecution.

We will increase our enforcement action, including prosecution, to wipe out the menace.

On withdrawal of trade licences, we have no mandate since we don’t issue them; but it is an idea to explore with the relevant competent authorities.

9. Approximately how much does the country lose per year as a result of counterfeiters taking over the markets? Has the loss been going up or declining? Joy Murile, Kisumu

There are no current authoritative figures on the scale of counterfeits in the country since no nationwide research has ever been done.

However, we are currently in partnership with the Kenya Institute of Public Policy Research & Analysis to embark on a national survey with the kind support of DFID through Trademark East Africa.

Based on incidental reports from KAM, 40 percent of their market share, which is approximately Sh200 billion, is lost due to illicit trade annually.

The covert nature of this business makes it difficult to determine the actual size and volume of the trade.

10. Some reports have suggested that the issue of counterfeits is so bad that we might as well accept that it is beyond us. Is there any truth in this and what can be done? Francis Njuguna, Kibichoi

It is not true since we don’t have empirical evidence to suggest that this matter is beyond our control.

I am personally encouraged by the government’s commitment and efforts to stamp out this problem once and for all.

11. Some SME owners recently protested in Nairobi, blaming the government for holding their goods in Mombasa under the guise of the fight against counterfeits. From their statements, it was apparent they are not aware of the dangers caused by counterfeits. Which are some of the glaring damages brought about by these goods? Komen Moris, Eldoret

Kenyans, including the SME owners, are within their rights to express their grievances.

But on cases that touch on illegality, it is impossible for the government to lessen the application of the law.

Other than the moral aspects, the economic consequences to our manufacturers and the lost taxes and jobs make counterfeits an anathema.

Additionally, they make the country very unattractive to investors.

12. Recent reports reveal that counterfeits are many and the mwananchi has no capacity to distinguish them from the real merchandise. What advice would you give us as consumers in order to protect ourselves and also help in the fight against them? Komen Moris, Eldoret

There are salient characteristics of counterfeiting — the 4P’s: they are lowly-priced (Price), they are sold in the unconventional outlets like in the open streets (Place), the Packaging and description details are questionable with spelling and description mistakes, and lastly, the consumers Personal experience with the product — they know the smell, the design, the taste and other features of a product.

13. ACA has in the past been accused of mistakes in handling the seized goods, neglect of procedures and weak investigations which have often allowed suspects to get off the hook and even win compensation from the government. With such mistakes and oversights, can the war against counterfeits really be won? James Kamau, Mount Kenya University

It is not true that the government has paid any damages arising out of our enforcement actions.

We have not breached any procedure to warrant any form of liability. Furthermore, the law indemnifies the agency from any liabilities arising from our lawful actions.

14. Lately, Chinese products have flooded the Kenyan market and are slowly choking home-grown manufacturers. For how long will our factories suffer and hundreds be retrenched before ACA steps in to rein in on some Chinese who bring in sub-standard products to kill factories? Simiyu Barasa, Mombasa

We have arrested, charged and prosecuted and even argued for deportation of non-citizens implicated in counterfeiting.

It is important to note that not all Chinese are involved in illicit trade. In fact China is a great trading partner not only in Kenya, but also globally.