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Want jobs? Stop buying counterfeit products

EDITORIAL
By - | February 7th 2013

The need for a robust police force and a more transparent standards agency has been exposed by the revelation that Kenya is losing as much as Sh19 billion in tax revenue to counterfeit products.

This as the Kenya Revenue Authority is struggling to expand its tax net to raise more money for the Government.

In addition to this massive sum, manufacturers and other private sector firms are losing a massive Sh50 billion to the vice annually. The true cost of this can be measured in a static job market, rising unemployment and factories shutting down.

For instance, most of the multinational firms producing soap and detergents have scaled down their local output and are importing a huge chunk of their stock from their plants elsewhere. To sum it all up, counterfeits are directly responsible for reduced or slowed economic growth.

According to the Anti-Counterfeit Agency, this means that despite policies by the Government to encourage foreign direct investment like tax concessions, cash grants and specific subsidies; focused improvement in infrastructure, foreign firms are turned off by the high level of counterfeiting in Kenya. The loss of brand name and value due to lower quality copies of their products is not worth the investment. In 2011, Toyota Kenya carried out a study which established that eight of every 10 vehicles on our roadshave a fake spare part.

Part of the reason for the increase in counterfeiting is cheap labour due to high unemployment, corruption among Government officials at the ports of entry, and the high cost of living, which makes cheaper counterfeits attractive to the poor and access by counterfeiters to advanced technology that makes it hard for buyers of their products to distinguish them from the genuine articles.

And it is not true that Chinese goods are all counterfeits. China now leads in patent innovation and quite a number of its companies like Huawei and Haier are world class. This is a problem of enforcement by the relevant agencies due to corruption.

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