Kenya is losing Ksh.100 billion in revenue to counterfeit businesses, report
The Anti-Counterfeit Authority released the findings of a National Baseline Survey on the extent of counterfeit and other forms of illicit trade in Kenya. The purpose of the study is to determine the extent and magnitude of illicit trade in the country.
The launch of the baseline survey report coincides with the unveiling of the National Illicit Trade Observatory (NITO), a tool that will enable monitoring of illicit trade in Kenya.
According to the study conducted between October 2019 and February 2020, the Government revenue lost in 2018 stood at Ksh 102.99 billion up from Ksh 101.23 billion in 2017. The study was done in partnership with TradeMark East Africa (TMEA) through funding from the Department for International Development (DFID).
From the 16 sectors of the economy that the study concentrated on, building, mining and construction were heavily affected by counterfeiting with a share of 23.37% in value of total illicit trade, followed by energy, electrical and electronics with a share of 14.67% in 2018. The sector with the most government revenue loss was food, beverage and non-alcoholic drinks with a share of 23.19%, followed by textile and apparel at 20.09%.
30% of the firms were aware that their products were being counterfeited and sold in the market, whereas 56.4% of the sampled firms were not aware that their products are being counterfeited and sold in the market. Between 2016 and 2018, 7,484 jobs were lost in Kenya due to illicit trade with counterfeiting accounting for 32.59% of the jobs lost.
The study also cites piracy as a critical form of illicit trade. According to the findings, the loss of sales as a result of pirated products stood at Ksh 2.2 billion over the period 2016-2018. Although the trend depicts marginal decline between 2017 and 2018, the loss as a result of total sales is quite high ranging between 37.69% and 42.14%, which is a clear indication of how piracy is wiping profitability of the affected firms and individuals.
“We have nabbed counterfeit goods over Ksh 2.8 Billion and surrendered them to law enforcement agencies for the prosecution of suspects. As we celebrate World Anti-Counterfeit Day, we urge all Kenyans to beware of illicit goods when purchasing products in retail outlets. Additionally, we call upon the public and private sector especially the Kenya Association of Manufacturers to continue working closely with us as we battle this economic threat,” noted Elema Halake, Executive Director, Anti-Counterfeit Authority.
Capitalising on its partnership with TMEA through funding from DFID, ACA has established the observatory to complement and enhance efforts of the Multi-Agency Team on Illicit Trade established by the President, to eliminate unfair trade competition in Kenya. The observatory tracks six types of illicit trade: counterfeit, piracy, substandard goods, uncustomed goods, restricted goods, and unexercised goods.
“The observatory is designed to be a data management and reporting tool where enforcement agencies will report seized goods (both from domestic and import markets), while the private sector shall be able to anonymously report on counterfeited products affecting their market share as well as their impact,” said Ahmed Farah, TMEA’s Kenya Country Programme Director.
World Anti-Counterfeiting Day 2020 is now in its twenty-second year and was established in 1998 by the Global Anti-Counterfeiting Group (GACG) to enable the organization of local, national and regional events under the umbrella of an international campaign which could focus on the particular problems of counterfeiting and piracy in the countries or regions involved.