By Luke Anami

Kenya loses Sh50 billion annually to counterfeiters.Last year, the figure went up to Sh70.2 billion.

"The cost could be more if unreported cases are factored in," said Polycarp Igathe, chairman Kenya Association of Manufacturers (KAM) Anti-Counterfeit Committee.

And since traders in counterfeit products do not pay taxes, the Government loses Sh19 billion.

These products account for approximately 25 per cent of all manufactured products in the country, according to KAM.

"It is difficult to get accurate statistics to substantiate the extent of the activity due to its clandestine nature," Mr Igathe, who is also the managing director of Haco Industries, said.

Assorted fake products seized by the Kenya Bureau of Standards during a raid recently. Photo: Jonah Onyango/Standard

Other than erosion of genuine brands, counterfeits lead to loss of sales and market share and the closure of production facilities. For instance, parallel importation of Haco products is rampant.

"Haco Industries alone has lost the entire Tanzanian market due to counterfeits, which is about Sh200 million," said Igathe.

Counterfeits target fast moving consumer goods such as soaps, detergents, food products, alcoholic beverages and dry cell batteries. Others are cosmetics, electrical equipment, medicines, shoe polish and apparels.

"Counterfeits are eroding the confidence of investors in Kenya as their destination," he said.

Igathe said a strong link has been established between counterfeiters, criminal networks and organised crime. Unsuspecting consumers need to be protected from phoney products that continue to pose health and safety risks to consumers.

"The level of counterfeiting is high. Estimates show that more than 30 per cent of the anti-malarial drugs in the market are fakes," Ms Betty Maina, CEO KAM says.

She reckons that counterfeits discourage new investments because of fear for unfair competition.

For example, even after banning a set of batteries, KEBS has been unable to ensure they are not in the market.

Battery brands such as Everpower, Tigerhead, and Everyday are still found in the Kenyan market.

In an earlier interview, battery maker Eveready’s Managing Director, Mr Steve Smith, said his company loses up to Sh750 million annually to the trade while the Government loses up to Sh2 billion in revenue in the sector.

"We lose money to the tune of Sh40 billion in unpaid taxes through trade in counterfeit and substandard goods and this is hurting the economy and manufacturers.

We cannot allow a few individuals to continue doing this," said Prof John Lonyangapuo, PS Industrialisation.

He said the agency’s board has been inaugurated and it is in the process of recruiting a chief executive officer, a factor confirmed by Industrialisation Secretary in charge of Anti-Counterfeit division at the ministry.

"A board to operationalise the Anti-Counterfeit Act has been constituted with Allan Kamau as chairman," John Mosonik, the Industrialisation Secretary, told The Standard on Sunday during an interview in his office on Thursday.

The Anti-Counterfeit Agency under the Ministry of Industrialisation is expected to herald a new chapter in the fight against substandard goods, as the agency will be required to investigate and arrest people who pirate goods.

The new anti-counterfeit watchdog has powers to destroy fake goods imported into the country. It also has the powers to raid premises suspected of manufacturing counterfeited or substandard goods.

The new law gives the Anti-Counterfeit Agency powers to break into any premises suspected of manufacturing illicit goods and arrest, without a warrant, any person suspected to engage in counterfeiting products.

Currently, the police who investigate such occurrences have to obtain search warrants from courts before breaking into business premises.