Africa Business Communities

[Column] Flora Mutahi: Fight against counterfeits must be sustained

To begin with, we would like to acknowledge and commend the latest efforts by the Government in the fight against illicit trade and counterfeits. 

The establishment of an anti-counterfeits focal point within the Office of the President is an indication that severity of the impact of this vice to the citizens of this country and cost to our economy, is well understood by the Country’s leadership.

To state simply that illicit trade affects mainly businesses and government revenue, is to understate the extent to which the vice permeates and degrades all levels of our society and threatens the future of this country.

The nature of counterfeiting and illicit trade is such that it tends to thrive where graft and corruption is entrenched. Not only does it take away the citizen’s right to quality and genuine products, it also puts their lives at great risk by infiltrating their markets with substandard and, in many cases, highly dangerous goods.

Additionally, many counterfeit products evade taxation, and in doing so they appropriate huge portions of our national revenues. This explains the recent upsurge of fictitious invoicing which has been flagged by the Kenya Revenue Authority facilitate tax evasion.

The Government has declared loss of billions of Kenya shillings to this racket which, in addition to inflating the cost of sales and aiding in the under-declaration of imports, it catalyses the smuggling of uncustomed goods. Recent statistics by theGovernment indicates that it loses over Kshs 200 billion annually as potential income.

It is time to criminalize this vice and impose heavy penalties on anyone found to be dealing with counterfeits.

Currently, there exists a disconnect between the seriousness with which enforcement agencies have taken up this initiative, and the ruling and sentencing of culprits found guilty of these offences.

The laws, presently do not sufficiently take into account the severe effects that supply of counterfeit goods does to our population’s health, quality of lives and the economy.

Other countries in the world have done this in order to counter the economic sabotage brought on by counterfeits and illicit trade. For instance, in America, the 18 U.S. Code Section 2320, states that whoever intentionally “traffics in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services” shall face a penalty of a fine of not more than $2,000,000 and a prison sentence of not more than 10 years, or both.

For a subsequent violation, the penalty is increased to up to a $5,000,000 fine and up to 20 years in prison.

In Singapore, the sale of counterfeit goods is an offence punishable by a fine of up to S$10,000.00 per counterfeit good, or up to five (5) years’ imprisonment, or both. A counterfeiter is liable to a fine of up to S$100,000.00, or up to five (5) years’ imprisonment, or both.

This shows an understanding that counterfeits is not just a social problem in terms of misleading the public and swindling consumers of their money; it is a poses a danger to our health and safety, it poses a security risk for the entire country and threatens to derail our efforts towards economic progress.

Recent investigative activities and seizures by Government agencies and state departments such as, the seizure of Brown sugar in Eastleigh – clearly labelled ‘Not fit for human consumption and the capture of Chinese nationals openly selling counterfeit electric cables, are an indication that the taskforce intervention is bearing fruit for industry and consumers.

The keenness, to embolden these initiatives, assures investors of the full support of Government in terms of resources, intelligence and security apparatus.

Kenya Association of Manufacturers has worked closely with the Judiciary to publish an enforcement guide to combat illicit trade in the country. However, as it becomes increasingly complex we need to move a step further.

As we do this, nonetheless, we must be deliberate in ensuring a sustained collaborative approach to these efforts; so that the work that has started does not come undone in a few months, and risk being rendered ineffective in years to come.

The only way to ensure that this is sustained to urgently criminalize the vice in order to send a strong message to the criminal networks, clipping their growth. A special court to fast track the rulings associated with these crimes should be established, and an immediate review towards stiffer sentences and penalties.

We should not allow these activities to continue derailing our national economic goals and sabotaging the success of our progress especially with the Big 4 agenda in mind.

As industry, we are ready to work with all partners and enforcement agencies, providing insight towards the development of strong lasting regulations to stamp out counterfeits – protecting our citizens and growing our local economy.

Flora Mutahi is the Chairlady of Kenya Association of Manufacturers and Vice Chairperson of the COMESA Business Council.


Share this article