Who’ll rescue the country from counterfeit goods and services?

Suspected contraband sugar which was seized in Kitui, Matuu and Mwingi towns on June 16, 2018 after police raided warehouses belonging to Mt Kenya Wholesalers. FILE PHOTO | NATION MEDIA GROUP

What you need to know:

  • The biggest scandal now is about sugar that has illegally been imported, some of it reportedly contaminated.

  • It’s presumed that the proceeds from the illegal trade could be part of a wider political finance scheme.

The law enforcement agencies have finally woken up to the reality of just how much Kenya has become a popular playground for trade in fake products.

Even though there’s no reliable, current data on the scale and extent of the contraband and counterfeit market, the government and private sector are increasingly being hit where it hurts most.

The government loses an estimated Sh30 billion annually in tax revenue and enterprises are besieged as their market is dominated by contraband and counterfeits.

The biggest scandal now is about sugar that has illegally been imported, some of it reportedly contaminated, when sugarcane growers are suffering for lack of payments from millers crumbling under mounting debt. It’s presumed that the proceeds from the illegal trade could be part of a wider political finance scheme.

There’s potential danger that they could be used to finance illegal activities that threaten our security and stability.

ILLICIT TRADE

Reports of politicians and government officials being involved in the illicit trade, after the maize and National Youth Service supply scandals, leaves a bitter taste about the challenge how hard it is to exorcise the money-minting cartels in the commodities trade.

The crackdown on the contraband sugar exposes the weaknesses of the agencies involved in combating the vice.

The multi-agency chain, including the Anti-Counterfeit Agency, the Kenya Bureau of Standards and the Kenya Revenue Authority, are making headlines chasing the pirates around the country instead of arresting them before they venture into the field.

Regular surveillance and being firmly vigilant would have prevented the sugar from entering through the port of Mombasa or the inland border posts.

Tracking and impounding the commodity in the retail shops in towns and villages is an exercise in futility.

SLOW RESPONSE

The slow response of the agencies to the rapid rise of illegal activities poses major economic and social risks.

It compromises President Uhuru Kenyatta’s ‘Big Four’ agenda. Growing the manufacturing sector is difficult when local producers are forced to fight for space with fake and sub-standard goods, some of which are adulterated and labelled in the names of popular brands.

The Kenya Association of Manufacturers estimates that the local industry loses 40 per cent of its potential annual sales to counterfeits.

Fixing the illicit trade, including copyright infringement and imitations, could easily expand the annual manufacturing value added from Sh650 billion to over Sh1 trillion.

The sector would expand its contribution to the national output from 10 per cent to 15 per cent in a few years.

FOOD SECURITY

Contraband has a negative impact on food security as domestic producers cannot compete with the cheaper imports while contaminated ones pose a health risk. The universal healthcare agenda is vulnerable to the massive supply of fake drugs.

The construction industry is expected to deliver the affordable housing agenda but its progress is being checked by fake building materials. New houses are decaying from within after only a few years.

The global market for fake goods and services is huge and expanding. It’s estimated at over $650 billion and could rise to $2.8 trillion by 2022. China is reported as the largest source of counterfeit and pirated goods.

The challenge for Kenya, which has strong trade ties with China, is to fight the problem before it consumes and destroys local economic activities. Besides invading the market for regular producers, counterfeits are substantially sub-standard, hence increase economic waste that litters the country.

TRADE LAWS

Combating the problem isn’t easy, particularly where the buccaneers conspire with officials to circumvent trade laws and regulations. Counterfeits and contraband also thrive in markets where consumers are less aware of how to differentiate between fake and genuine products.

Poverty is a contributing factor, particularly in the consumption of illicit alcohol and drugs, where consumers make choices based on the price.

The Anti-Counterfeit Agency should scale up public awareness campaigns to reduce consumers’ appetite for illicit goods and services.

It should educate them that even acquiring fake certificates online, or from unscrupulous colleges, is contributing to the illicit trade in knowledge and technology products.

A more conscious, ethical society would make a difference in the war against illicit trade. It would protect the engines of economic growth and social transformation.

Mr Warutere is a director of Mashariki Communications Ltd. [email protected]