From designer clothes to breakfast cereals, Kenyans are surrounded by counterfeits

Some of the Counterfeit products that are being held at the Anti-Counterfeit Agency godown in Industrial Area, Nairobi. (Photo:Boniface Okendo)

From the moment an average Kenyan gets out of bed to the time they hit the pillow in the evening, chances are high that they will have interacted with numerous counterfeit products.

In almost all instances, they will not have a clue that the products are fake.

From their designer clothes and make up they put on first thing in the morning, to the kitchen appliances that they use to prepare breakfast including the cooking gas and bowl of cereal they savour at the breakfast table, the interaction with counterfeits goes on through the entire day.

Others include the cellphone, the printer cartridge in the office, auto mobile oil and lubricants. Growth in demand as well as price sensitive nature of the Kenyan consumer has emboldened the counterfeiters.

The Anti-Counterfeit Agency (ACA) opened up one of its warehouses in Nairobi to the Financial Standard. The warehouse holds goods that have been seized during raids on storage facilities, retail shops and the premises of counterfeiters.

The products stay there until conclusion of court cases, after which they are destroyed if the court rules they are counterfeit. The warehouse tells a story of how fake products have penetrated deeply across the market, with products on display covering all aspects of our lives.

ACA Executive Director John Akoten acknowledges the pervasive nature of fake goods in the lives of Kenyans, giving consumers a raw deal and at times exposing them to dangers. Counterfeiting also denies manufacturers returns on their investments and tax revenue to the Government.

The Agency however cannot quantify how much the Government or the manufacturers and other brand owners lose due to counterfeiting. “Counterfeiting is a clandestine affair and it is difficult to quantify,” reckons Akoten.

There are however estimates that legit business could be losing upwards of Sh100 billion per year, while Government is losing over Sh30 billion in taxes.

To demonstrate the magnitude of how much the economy is losing, the ten largest banks in Kenya reported a combined Sh93 billion in net profits.

Other than increasing the bottom line of the legit owners of the counterfeited brands, Sh100 billion can create tens of thousands of jobs and possibly see more firms, local and foreign, set up in Kenya.

Borrow heavily

The money lost in uncollected taxes by Government is enough to put up some of the mega projects that have seen the Government borrow heavily to finance.

ACA has so far seized goods worth Sh1.65 billion since it was operation in 2010, which is a small fraction of the money that is lost to the illicit trade.

Of these, goods worth Sh680 million have been destroyed after conclusion of court cases while goods worth over Sh800 million are being held by the agency at its different warehouses across the country, waiting for conclusion of court cases. For the goods to be destroyed, they have to be declared counterfeit by the court, in which case the counterfeiters are also penalised.

Dr Akoten said there have been instances where the agency has lost court cases, mostly due to failure by brand owners to cooperate during the investigation phases as well as appear in court as witnesses for prosecution. “We have lost several court cases due to failure by the intellectual property owners to cooperate in the litigation process,” he said.

“There are instances where the owners do not have a presence in Kenya or sometimes the owners will make a complaint and walk way... in the process this leads to failure to convict because we do not have much to go with,”

Akoten notes that the agency undertakes capacity building for its staff as well as other government agencies to improve capability to investigate counterfeiting, with expectations that this will lead to increase the number of fake goods that are taken out of the market. Despite the efforts, there have been grumblings form the industry on the capacity and financing of anti-counterfeiting in the country. At its warehouse in Nairobi, ACA is holding goods whose worth Sh300 million, which are awaiting conclusion of court cases. These are an assortment of different products, mostly fast moving consumer goods that range from food items and personal care products to clothes.

There are also specialised and high value industrial goods such as machine parts and lubricating oils. All these products bear popular brands or uncanny resemblances to renowned brands.

At Sh300 million, this is enough ‘stock’ to fill up a relatively large enough supermarket. The Agency has other similar warehouses in Mombasa and Kisumu, while its offices across the country have stores that hold counterfeit products.

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