THE government loses between 540bn/- and 900bn/- per year due to tax evasion related to counterfeit and substandard goods.
This is equivalent to between 4.6 and 7.5 per cent of the total value of Gross Domestic Product (GDP) in Tanzania and 14 - 23 per cent of the National Budget. If total government domestic revenue is 3.6trn/- (2006), then the loss in government revenue is high.
The government's total revenue collection is slightly more than 300bn/- per month, which makes a total collection of between 3.6 and 4trn/- per year.
According to a survey report prepared by the Confederation of Tanzanian Industries (CTI), losses in government revenue are highest with regard to industrial equipment, vehicle spare parts and agricultural inputs which account for 1trl/-; 800bn/- and 600bn/-, respectively, each year.
In Tanzania, the issue of rampant counterfeits and substandard goods is a recent phenomenon. People have started to question whether Tanzania has been turned into a dumping ground for substandard goods or counterfeits and want to know what is being done to arrest the situation.
The situation was negligible. After 1986, Tanzania began marketbased economic reforms that included, among many policies, trade liberalisation, privatisation of public enterprises and deregulation.
During this period, there was misunderstanding of the "free market" system and how it operates, according to the CTI report. Unfortunately, the concept of liberalisation or free market system has been misconceived.
Traders and importers called the new system "free economy" and took advantage of every opportunity to supply consumer goods, regardless of their quality and authenticity. Used goods were imported along with new items. At this juncture, Tanzania became a counterfeit and substandard goods destination.
There was no effective control and regulatory institutions or places to seek redress in case of harm caused by a sub-standard goods or counterfeits. The problem grew rapidly until in 1993/94 when some legislators in a Parliamentary session began to query whether market economies elsewhere in the world are run like the Tanzanian model.
Following these queries Tanzania began to set up regulatory teams to steer the economy in the right direction. To a larger extent the public is not knowledgeable over counterfeit products.
This is particularly true because counterfeiting involves cheating and deception to the extent that members of the public can not easily detect the trick.
Manufacturers and most traders are aware that counterfeiting is illegal. Nevertheless, since they also know that it is profitable and given the nature of the market they work with, they play whatever innovative trick they can afford to cheat consumers, thus making it extremely difficult for most of the public to reveal the trick, the CTI says in its report.
For example, most of the respondents especially in Zanzibar, Dar es Salaam, Arusha and Mwanza acknowledged that manufacturers of counterfeit products make a very small change over the original brand name thus, making it difficult or impossible for consumers or inspectors to notice. For example, Sony appears as Sonny in the counterfeit product.
Ampicillin is shown as Ampilin; Gillette as Gilett; Always Freeways as Stayfree and Blue Band as Gold Band. Fake goods also include industrial equipment and raw materials; agriculture inputs (Dursban, Gladiator, Blue Copper, Dithane, and Cobox).
Counterfeit motor vehicle spare parts include tyres, batteries, bearings, tubes, engine parts and others. Electronic equipment and appliances include television, radios, cassette recorders, computers, wire cables, pirated music and so on.
Also in the black list are fake cosmetics, detergents creams, lotions and toothpastes such as white dent, Collgate and Close-up). The most offending phenomenon in counterfeiting is the influx of fake pharmaceuticals, medical equipment which include surgical gloves, scissors, Blood Pressure Machines and others, the CTI survey has revealed.
The local market is also full of fake clothing and apparel (khangas, shirts, athletics shoes and others. Fake building materials such as electric cables, door locks, lighting bulbs (Phillips) readily available in shops. A wide variety of fake wines and beers has been identified.
So, the underworld of counterfeiters also shunts in fake foodstuffs, chemicals, alcohol and bottled drinking water. These include fake Konyagi and Uhai drinking water. The list of products with comparable brand names is perhaps endless, the CTI says.
Consumers have always been trapped in to counterfeit goods because the brand names and prints appear similar to the names and prints of the original brands. There are cases where the public believes that they use genuine products because manufacturers study carefully packaging of the original or genuine products, that is, the shape of the container, the covers, the prints, etc and then design containers similar to the original ones.
However, they pack different (counterfeit) ingredients and sell. This is common to the products with high demand. It therefore becomes difficult initially to persuade end users that they are using counterfeit goods.
The original containers have also been used by greedy manufacturers to pack wrong ingredients so as to win the market of the genuine products, according to the CTI survey report. Some importers, traders, consumers and political leaders mistook "market based economy to mean "free economy."
As a result, some leaders thought it would not be prudent to act on counterfeits and substandard goods because they would appear to interfere with market economy. The appropriate legal framework and enforcement to support the market economy was absent at the initial stages, especially in the early 1980s.
As a result, trade liberalisation and even privatisation appeared to bring chaos. Counterfeit exports to Tanzania, for example, are cascades of business of what used to be unnoticeable trickles before liberalisation. There was also weak regulations and planning after the 1986 trade liberalisation policy.