- Price point remains a key magnet for fakes across East Africa. Counterfeit products are often cheaper than their genuine counterparts, making them easy picks for people shopping for a bargain.
- Some of the most counterfeited products in the region include pharmaceuticals, pesticides, electronics, cosmetics, alcohol, and cigarettes.
- According to the East African Business Council, counterfeit products, primarily fast-moving consumer goods, are costing East African states between US$500 million and US$1 billion per year.
Counterfeiting sticks like a sore thump or a bad hangover causing a big headache for governments and policymakers across East Africa as rising number of products including pesticides, cigarettes, and alcohol become deeply affected by the menace.
Some of the most counterfeited products in the region include pharmaceuticals, electronics, cosmetics, liquor, and cigarettes. Other products that are often counterfeited are clothing, shoes, and accessories, as well as automobile parts such as batteries.
The illegal trade of fake products not only causes significant financial losses to legitimate businesses and jaw dropping revenue losses to the governments but also poses a serious risk to the health and safety of millions of consumers across the bloc of over 400 million people.
Experience shows that there are several reasons why people in East Africa buy counterfeits. One of the main attractions is the price point. Counterfeit products are often cheaper than their genuine counterparts, making them more affordable for millions of buyers in the lower cadre of incomes.
Further, counterfeit products are often widely available and easily accessible, even in villages and neighborhood kiosks while the genuine products may be harder to find or only available in certain areas and buyers have to pay an arm and a leg for the particular good.
Interestingly, some consumers may not be aware that they are purchasing counterfeit products, or may be willing to take the risk in exchange for a lower price. Finally, there may be a lack of enforcement of intellectual property laws by various watchdogs, making it easier for counterfeiters to produce and sell their products without facing legal consequences.
According to the East African Business Council (EABC), counterfeit products, primarily fast-moving consumer goods, are causing East African states to lose between a whopping US$500 million and US$1 billion. The rising trade in counterfeit and contraband goods in East Africa has remained a significant challenge due to ever porous borders and a lack of strict enforcement of anti-counterfeit laws by dozzy cross-border government officials.
Three countries in the region, Kenya, Uganda, and Tanzania, have yet to fully align their national laws with the East African Community Anti-Counterfeit Act, a regional instrument adopted ten years ago. Rwanda and Ethiopia, on the other hand, have implemented stringent laws that have helped annihilate the trade in counterfeit medicines.
Joint war on counterfeits
Tanzania and Kenya have recently joined forces to combat the importation of counterfeit goods, in an effort to protect investors and traders dealing in legitimate products even as the need to collect revenue remains front and centre for customs officials.
The Tanzania Fair Competition Commission (FCC) recovered Sh15 billion worth of counterfeit goods during the previous fiscal year, while Kenya’s Anti-Counterfeit Authority (ACA) estimating that the illicit trade in their country was worth US$5,961,414,400 billion (Ksh800 billion) in 2020, with (US$745,176,800 ) or Ksh100 billion being contributed by counterfeit goods. In light of these alarming statistics, the two nations have decided to take action to address this issue and protect the interests of consumers and investors.
Tanzania’s FCC Director-General, William Urio, declared they are committed to working together in areas such as strategy, law, and execution to combat the counterfeit goods problem. Kenya has already taken steps to address this issue by implementing a recordation system, which aims to prevent the production of counterfeit items at the source before they hit the market shelves.
All importers of products entering Kenya are required to provide the anti-counterfeit authority with information about those commodities for verification of compliance with the set industry standards. Tanzania intends to borrow a leaf from Kenya’s experience and evaluate the system’s efficacy and efficiency before adopting it.
The two governments recognize the importance of expanding trade between their countries in a way that provides equal opportunities for all.
According to the Central Bank of Kenya, bilateral commerce between Tanzania and Kenya reached US$905.5 million from January to November 2021. Mr Urio stressed the importance of stepping up efforts to combat trade in fake goods to safeguard the reputation of both countries among investors and further increase enterprise activity between the two nations.
Kenya’s initiatives
Kenya, the largest economy in East Africa is a regional business hub, and has taken a step in implementing Anti-Counterfeit Recordation Regulations to tackle the consumption of counterfeits. The significance of this new regulatory requirement is that the Anti-Counterfeit Authority (ACA) has taken a proactive approach to fighting counterfeits through the record of intellectual property rights.
Besides, Kenya’s ports, which are a gateway for international trade for neighbouring countries, are heavily relied on for steady flow of imports. Stakeholders, however, agree that the country still needs to do more to control and prevent counterfeit and other forms of illicit business that is often sanctioned by compromised State officials.
The Kenya Association of Manufacturers (KAM) estimates that Kenyan manufacturers have lost at least 40 per cent of their market share to counterfeiters.
Factors such as the absence of effective border control, increasing tax regimes, and lenient penalties for illegal traders have created a favourable environment for the sale of contraband tobacco products. This poses a significant threat to our top-line growth and overall profitability.
The situation is particularly worrying in Kenya, where the illicit tobacco trade is growing rapidly and the government’s efforts to combat this criminal activity have not been sufficiently strict. As a result, this issue continues to be a major concern for our domestic growth prospects.
Read: Kenya losing billions annually to counterfeit
For instance, in 2020, cigarette maker British American Tobacco (BAT suffered a major setback due to the rise of the illicit tobacco trade, which resulted approximately 24 percent year-on-year decline in domestic volumes.
Similarly, a recent research report by the Confederation of Tanzanian Industries (CTI) found that the majority (92 per cent) of the 17 companies interviewed indicated a 10-30 per cent market share loss, as well as a loss of annual turnover due to the counterfeiting of their products.
The significance of counterfeiting is that it not only affects the local economy but also poses risks to local consumers. Despite measures taken by governments, counterfeit goods continue to pour into East African markets, compounded by a lack of awareness among consumers, particularly in rural areas.