No country for small traders as war on ‘fakes’ bites

A security personel Jackton Ombocho shows one of the shops vacated by a business trader of kitchenware items due to the government stringent regulations and policies on importation of goods at Nyamakima's KK house building on 10th May 2019. [David Gichuru/Standard]

At the heart of Nairobi’s Nyamakima area on Duruma Road, Cosmas Githaiga, sits on his empty handcart pondering his fate. 

Together with other cart owners, Githaiga has been waiting for business in front of the area’s newest building that houses more 50 shopping stalls.

The building had brought with it hope, as traders, ready for brisk business, hurriedly took up all the stalls. Months later, at least 20 traders have closed shop, citing harsh business environment.

Githaiga says that on a bad day he would take home at least Sh400. Today, earning Sh200 is a miracle. 

SEE ALSO :Anti-Counterfeit Authority destroys counterfeit goods in Mombasa

Duruma Road once boomed with small businesses specialising in fast-moving household electrical equipment, hardware and plumbing materials. Today, the street is a pale shadow of itself.

Traders point an accusing finger at the Government

Last year, the Government began what it described as a war on counterfeits, introducing a raft of policies and tough enforcement that have seen small traders pushed to the edge. Many have opted to shut down.

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The traders cite one recently introduced regulation for their woes. The Government directed that all similar goods must be shipped in one container.

Joining hands

Previously, small traders joined hands to import a variety of goods in one container. But with the ‘similar goods-one container’ rule in place, every trader has been left on their own. Those that cannot afford to import an entire container of goods alone are closing shop.

The Standard spoke to dozens of small-scale traders in downtown Nairobi where dozens of businesses have shut down owing to the raging war on counterfeits. 

The war is fueling tension and anger in downtown Nairobi. Last month, two officials from the Anti-Counterfeit Authority (ACA) were beaten up by angry traders during a raid. 

During the visit to Nairobi’s downtown The Standard came face to face with the stark realities facing erstwhile successful small traders. Many, mostly those who sell imported goods from China, have been waiting for their shipments since 2017.

The resilient ones are still paying rent in the hope that once the shipments are cleared, they will offset their debts. The faint-hearted have been driven out business.

The traders say that the so-called war against counterfeits is actually a proxy war against small businesses financed by monopolies and multinationals.

Figures from the Anti-Counterfeit Authority (ACA) show that at least Sh840 million worth of ‘fake goods’ are seized annually. Since last year, ACA has destroyed Sh1.8 billion worth of “counterfeits.’

When he appointed the deputy head of public service, Wanyama Musiambo, to lead the war against counterfeits, President Uhuru Kenyatta hoped that this would spur local manufacturing which is a key pillar in his famous Big Four Agenda.

But the traders say that Kenya does not have the capacity to produce in bulk, cheap, fast moving products that are affordable for the ordinary citizen.They argue that their target market cannot afford ‘original’ products that the Government wants them to sell.

At Mfangano Street, the traders lamented that genuine products from renowned brands gave them thin profit margins or none at all compared to Chinese products that the Government dismisses as fakes.

Local manufacturers

However, local manufacturers have supported the war against counterfeits. Last month, the Kenya Association of Manufacturers (KAM) chairman, Sachen Gudka, said local manufacturers of vegetable oils have posted a 62 per cent increase in trade volumes since the war on counterfeits started.

Official data shows that the manufacturing sector grew by 4.2 per cent from 2018 contributing Sh689 billion.

The manufacturers have identified downtown Nairobi as the country’s hot spot for counterfeit goods. Last month, fake Samsung phones and accessories worth Sh10 million were seized from traders on Mfangano street.

Traders on the street admit that their clients can rarely tell an original from a fake.

“The customers don’t see any differences between a fake phone and an original one as long as the phone can access internet and serve them the same way a Sh30,000 phone would,” said Sam, who specialises in mobile phones and accessories.

He argued that if the Government was serious on eliminating counterfeits, it should engage China on the issue. According to Sam, some ACA officials have turned into extortionists in the name of fighting counterfeits. 

“Whenever there is a complaint of a fake product the officials run here and seize everything, including genuine products. They later ask us for a bribe to get our goods back. When we refuse to pay they sell the products to other people,” he said. 

By the time of going to press The Standard was still waiting for a comment from ACA on this claim.

Sam, however, clarified that many traders were ready and willing to sell original phones and accessories sourced from big brands, but no one was willing to buy.

“For example, if I buy an original charger for Sh500 I would have to sell it for between Sh600 to 700 to make a profit, but no one is willing to buy a charger at that price. On the other hand, I can easily buy another lower quality charger for Sh300 and sell it at Sh400,” said Sam.

“Yes, it is true that original products from US and England firms are durable, but our target market cannot afford them. If I only sold phones from well-known brands, I’d be lucky to sell even one piece in a day,” he said.

Joel Lengees, who runs a shop that sells household electrical equipment, says he can barely sell five items in a day after the anti-counterfeit operation began.

“If it continues like this, we will all go home and turn to farming. This is a slow but definite death that the Government is putting us through,” he said.

It is not just small-scale traders who are feeling the pinch. A spot-check by The Standard revealed that landlords have drastically reduced rent for stalls as demand dwindles. Stalls that were rented out for Sh17,000 are now being rented for Sh7,000.

Traders association 

Importers and Small Traders Association (ISTA) faulted the manner which the anti-counterfeit war is being waged, saying it was fighting competition instead of fake goods.

The association’s organizing secretary, Anne Nyokabi, who owns multiple businesses in downtown Nairobi, accused the ACA of being used by the multinationals and Kenya’s big firms to fight the small businesses under the guise of eliminating counterfeit goods.

“There are no set standards that the Government uses to determine whether certain commodities are fake or not. They rely on information from companies or businesses that decide whether our goods are fake or not before proceeding to seize our goods,” she said.

“Show us any case won in court by the ACA if at all they are fighting counterfeits,” said Nyokabi.

While admitting that some traders may be dealing in counterfeits, Nyokabi said this was a reaction to growing demand for the products.

“Customers want goods that they can afford regardless of the quality. When a customer comes to your shop looking for a Samsung phone for instance and finds it priced at Sh40,000, he or she will ask you for the cheaper version of that phone and as an entrepreneur you will avail it to them,” she said.

Double standards

The association accused the Government of playing double standards, saying that Chinese traders were bringing in the same products that Kenyan traders are being prevented from shipping in.

It further accused the Government of not educating traders on counterfeits. According to Nyokabi, the perception among traders is that the Government was out to kill their businesses instead of empowering them.

 “If the Government was sincere in its fight against counterfeit goods, then it would have moved to educate us on what constitutes fake goods and what we are supposed to import and what we should not. There are no clear guidelines on this,” she said.

She advised the Government to take up the war on counterfeits with China and other countries responsible for manufacturing the counterfeit products instead of stifling small businesses.

Nyokabi also faulted the Kenya bureau of Standards for not putting adequate measures in place to ensure that sub-standard goods do not enter the country. 

“Kenya should also partner with the East Africa community to fight the entry of fake products because such goods are brought through the porous borders,” she said.

She further urged the Government to ensure the issuance of the certificate of conformity is done at the Kenyan port once the containers arrive as opposed to them being issued in foreign countries for goods destined for Kenya.

“How do you grant a foreign company the authority to check whether goods comply with required standards and at the same time give them the authority to decide if the goods from their country are of the required standards?” asked Nyokabi.

Lack of representation of the small-scale traders whenever the Government is making key decisions affecting them has made their future even more uncertain.

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Anti-Counterfeit AuthorityFake goodsSmall scale tradersGovernment