Counterfeits: A ticking time-bomb calling for urgent action

Kenya Bureau of Standard Quality Assistance and Inspection Manager Barnabas Lihema (in suit) and other officers inspect counterfeit products worth Sh 2 million seized in parts of North Rift region during a past operation. The country loses about Sh69 billion annually due to proliferation of counterfeit goods into the local econom. [PHOTO: PETER OCHIENG/STANDARD]

Reports that the country is losing about Sh69 billion annually due to proliferation of counterfeit goods into the local economy is unacceptable to all those interested in job creation and economic development.

It is particularly regrettable that the national Treasury, the ministry that should be at the forefront in efforts to grow the economy by protecting its manufacturers from unfair and illegal competition has officials sleeping on the wheel. Or how else can its allocation of a paltry Sh200 million to Kenya Anti-counterfeiting Agency in the current financial year be interpreted? Analysts are unanimous that even the Sh500 million that the agency had requested would not have been enough to meet its operational costs if it was to execute its mandate as expected.

Perhaps, the agency had trimmed its expectations following its realisation that it was dealing with officials who would rather protect counterfeiters and their dealers than fund an institution that had the potential to drive them out of business. To such officials, the damage done to local industries was a minor detail. Surely, it has not escaped these Treasury mandarins that the counterfeit goods do not only cost their employer Sh19 billion in unpaid taxes, but also exports jobs that are desperately needed by a country that has unemployment standing at over 40 per cent of its population.

Even more telling, 70 per cent of this group of unemployed is made up of young men and women between the ages of 18 and 35 years. No one needs to be told that this is a ticking time-bomb that calls for immediate action from all. Any talk of creating jobs while neglecting to tackle this menace amounts to an exercise in futility and is doomed to failure. Be that as it may.

Competing demands

Analysts argue it is not too late for Treasury to also realise that the proliferation of counterfeit goods—especially in the pharmaceutical sector where about 30 per cent of the most common communicable diseases such as malaria are said to be counterfeits — poses a grave danger to life itself. Although it is true that Treasury is usually hard-pressed to balance the competing demands for the scarce funds it usually has in its resource envelope, logic should dictate that it gives more to ministries and departments that have the potential to generate much more money than they get directly and indirectly. Treasury might, for example, be persuaded to enter into performance contracts with other Government ministries and departments with potential to generate revenue. The contracts would be similar to the one it has with Kenya Revenue Authority whereby the taxman is allowed to keep a percentage of what it collects to meet its operational expenses.

These Government-owned-entities would then hire individuals willing to work on contracts that have specific annual targets. Failure to meet these targets over a specified period would lead to automatic termination of services. Towards this end, the Government would do well to reorganise and re-activate the Intellectual Property Advisory Committee created by Parliament to enhance inter-agency co-operation. Obviously, this co-operation should be made mandatory and structured in a manner that has a clear chain of command. This would eliminate buck-passing that is found in many an inter-agency whenever something goes wrong. The current situation where in the words of the Kenya Anti-counterfeit Agency Chairman Allan Kamau “everybody wants to shine on their own and are protecting their own turf in the fight against counterfeit products” is counter-productive and only benefits the well-heeled wheeler-dealers at the expense of everybody else.

Who knows? The private sector, which currently loses about Sh50 billion annually to counterfeits may be persuaded to either second some of their best people who are already trained in detecting counterfeits or meeting some of the inter-agency annual expenses. Experience elsewhere suggests that the private sector would be only too willing to play its part provided it is convinced it would get value for its money.

One advantage of embedding private sector specialists with their public sector counterparts is that it would improve co-operation between the two sectors while they would also be keeping an eye on one another. That might be just what is needed to win the war on counterfeits.

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