BY DOMINIC WABALA
In May 2018 Kenya rejected a free trade area agreement between East African Community (EAC) and China in a bid to protect its manufacturing industries.
There has been concern that cheap Chinese imports are flooding the Kenyan market at the expense of local manufacturing industries that are also struggling with high power tariffs and idle workforce.
During his State of the nation speech in early May, President Uhuru Kenyatta revealed that the Anti Counterfeit Agency in 2017 seized goods worth over Sh1.7 billion and destroyed others worth over Sh700 million.
Kenya, he said, has been loosing over Sh30 billion revenue annually in tax evasion, unlicensed goods and counterfeit leading to loss of jobs and negatively affecting foreign direct investments.
“The impact of counterfeit goods spans a very broad scope ranging from consumer goods, cosmetics, automotive parts and pharmaceutical products among others,” the President said in his statement in Parliament.
A manual developed by the Kenya Association of Manufacturers (KAM) ranked Kenya as the largest market of counterfeits in East Africa.
The report reveals that cross border cartels target fast-moving consumer goods that are highly profitable including food, electronics, cosmetics and pharmaceuticals, which are readily counterfeited in China and imported in Kenya to be sold to unsuspecting consumers.
British American Tobacco (BAT) head of security John Evans recently revealed that 700 million counterfeit cigarettes with Kenya Revenue Authority (KRA) stamps were in 2017 sold locally.
Mastermind Tobacco (Kenya) Limited’s Jason Njenga revealed that the company spends over Sh70 million combating counterfeit cigarettes marketed as their brand.
Although the government has established a multi agency counterfeit committee comprising of the Kenya Revenue Authority, Kenya Industrial Property, Anti Counterfeit Agency, Kenya Plant Health Inspectorate Service and the Pests Control and Products Board among many other organisations, the menace continues to haunt manufacturers in the country.
The networks then distributed them to the same retailing chain systems established by the genuine product manufacturers across the country. Industrialization and Enterprise Development Cabinet Secretary Adan Mohammed says counterfeit goods are the biggest threat to local industries.
“Counterfeited goods are among the biggest threats to our industries, with lost revenues running into billions and posing myriad health dangers,” the CS says.
On several occasions, both Chinese and Kenyan security and customs agents have seized counterfeit goods from China destined for the Kenyan market.
The Kenya Revenue Authority (KRA) in early March flagged Chinese counterfeit construction material flooding the country.
Most of the counterfeited construction materials flagged include pipe, and pipe fittings, electric fittings, valves, roofing material, fasteners and cement mostly from China.
A United Nations report released in June 2017 ranked Kenya as a major fake pharmaceutical and veterinary drugs trafficking hub.
Both the World Customs Organisation (WCO) and the International Institute for Research Against Counterfeit Medicines (IRACM) study lists Mombasa as being among the largest trafficking ports for counterfeited medicines in Africa.
Kenya was third after Nigeria and Benin in the 113 million illicit medicines seized in Africa worth Sh6 billion most of them from China and India.
Twelve million (12,509,823) items of the 113 million seized were intercepted in Mombasa. The study further says that of the 243 containers searched during the operation 150 were confirmed to have counterfeit and illicit medicine.
In early 2018, KRA seized several containers with counterfeit goods including sugar, tobacco, shoes and electric cables worth over Sh100 million from China.
The Anti-Counterfeit Agency (ACA) agents say that fake and counterfeit goods are smuggled into the country through consolidated cargo because of the hectic process of verification.
The 100% Verification of consolidated cargo process is challenging for law enforcement agents because of shortage of personnel, machinery and time.
Sources in the sector say the influx of counterfeit Chinese goods into the country began when former President Mwai Kibaki’s Narc and later Party Of National Unity (PNU) governments turned East to China and other Asian countries in its economic blueprint with disastrous consequences as is evident today.
Most local manufacturing entities have bore the wrath of unscrupulous businessmen both Kenyan and Chinese who take samples of genuine products and counterfeit them in China before bringing them back to compete with locally manufactured products.
ACA Executive Director Elama Halake says counterfeiters have devised sophisticated operations to beat government agencies monitoring systems.
So rampant has the counterfeit menace been that the Kenya Bureau of Standards (KEBS), the government agency mandated with the responsibility to check quality of products has introduced a mobile application that can be used by consumers to verify the authenticity of goods before purchase.
The Kenya Medical Supplies Agency (KEMSA) and the Kenya Pharmacy and Poisons Board are among the many agencies that have introduced product verification systems to counter fakes.