State warns of coronavirus (Covid-19) pandemic

Wednesday, August 5th, 2020 00:00 | By

Wahinya Henry and KNA @PeopleDailyKe

Corrupt and greedy business operatives are taking advantage of the coronavirus (Covid-19) pandemic to flood the country with counterfeit masks, sanitisers and soaps which are presenting fresh risks to Kenyans.

Speaking in Nakuru last week in Nakuru Trade, Industry and Enterprise Chief Administrative Secretary (CAS) Lawrence Karanja said that illicit goods not only endangers health but also denies the government revenue.

“The universal healthcare agenda is vulnerable to the massive supply of fake drugs.

A staggering 30 per cent of alcoholic drinks in the market are counterfeit. Others are sub-standard agricultural inputs that include fertiliser and pesticides which compromise food security,” he said.

All cylinders

Kenya must therefore fire on all cylinders to curb the rampant cases of counterfeit which not only force investors to exit markets, but also kills the spirit of innovation, which is a key cog of industrial revolution and growth.

According to Kenya Association of Manufacturers, 40 per cent of members’ market share is lost annually due to counterfeits.

Approximately 25 per cent of the cigarettes sold in East African markets are smuggled, causing governments to lose close to $100 million (Sh10.79 billion) in taxes.

The latest National Baseline Survey on Counterfeit and other forms of illicit trade in Kenya conducted between October 2019 and February 2020 estimates that revenue lost in 2018 stood at Sh102.99 billion up from Sh101.23 billion in 2017.

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 per cent in value of total illicit trade, followed by energy, electrical and electronics with a share of 14.67 per cent in 2018.

The sector with most government revenue loss was food, beverage and non-alcoholic drinks with a share of 23.19 per cent followed by textile and apparel at 20.09 per cent.

Thirty per cent of the firms were aware that their products were being counterfeited and sold in the market, whereas 56.4 per cent 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 percent 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 sh 2.2 billion over the period 2016-2018.

Researcher Paul Lutta of the Governance Department the Kenya Institute Policy Research Analysis (Kippra) says corruption is to blame for the trade and loss of confidence with agencies charged with the duty to handle the vice.

“There is need to control corruption perceptions that manifest in these institutions.

There is also need to seal loopholes that facilitate production and entry of counterfeits into the Kenyan market,” says Lutta.

“This may call for long term effective collaboration among these institutions in areas of data and intelligence sharing, joint enforcement and joint prosecutions.”

Working closely

“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.

National Illicit Trade Observatory, a tool that will enable monitoring of illicit trade in Kenya has been launch to fight counterfeits.

The surge does not only make investors exit markets, but also kills the spirit of innovation, a key cog of industrial revolution and growth.

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