17 June 2018

Kenya: Why Kenya Has Long Way to Go in War on Counterfeits


The war on counterfeits is on, but so is the influx. As late as last Friday, counterfeits were still streaming in at the Inland Container Depot in Embakasi, indicating that the battle is complicated and far from being won.

As more sugar was impounded coming in through the Mombasa port on Friday, a trader was busy clearing a consignment of counterfeit light bulbs at the inland depot.

Rampant corruption, negligence, poor coordination among State agencies manning the country's borders and other systemic weaknesses give counterfeiters an easy time, making Kenya a free field for importing and dumping fakes.


Three main agencies man the borders - the Kenya Revenue Authority (KRA), the Kenya Bureau of Standards (Kebs) and the Anti-Counterfeit Authority (ACA). While Kebs is in charge of checking for quality, the KRA is tasked with collecting taxes, leaving ACA with the task of spotting and dealing with counterfeits.

The Sunday Nation has learnt that the ACA has only 24 inspectors countrywide, two of whom man the Mombasa port. The port, which operates 24 hours a day, receives an average of 2,000 containers daily through its 20 entry points.

At any given time, there are 18 unmanned entry points; sometimes none is manned since the two officers are grossly overworked and might sometimes be unable to cope.

"They do at least 5 per cent verification of the containers coming through the points they man, and every container they open has counterfeits. It is not a small trade," ACA Director of Enforcement Johnson Adera said.


In fact, until recently, there were measures to check for counterfeits at the Jomo Kenyatta International Airport (JKIA), a major terminal where some 25 cargo airlines operate tens of planes ferrying various commodities from a wide range of destinations.

Access to the airport has been a point of contention between the ACA and the Kenya Airports Authority (KAA), even after President Uhuru Kenyatta directed the multi-agency team to crack down on counterfeits; friendly fire is said to have been sustained by some border agencies keen to hold sway at the entry points. The shortage of inspectors has made almost every officer in the agency assume the role. They all conduct field surveillance, which is prone to abuse.

The Nation got a copy of a letter sent by ACA to the airport authorities. "We have been reliably informed that the application for passes by our inspectors has been declined, and the chairman of the Passes Application Vetting Committee indicated the reason being that the duties of the agency are not clear. We find this highly regrettable in the face of clear provisions of the Anti-Counterfeit Act," read the letter dated May 15.


The letter, copied to Deputy Head of Public Service Wanyama Musiambo, is said to have been written after ACA officers were denied access to the cargo section at JKIA.

There are many other intrigues surrounding the crackdown. Insiders say that, while the multi-agency team is rattling the cartels, cracks are emerging within the various agencies keen to outshine one another.

In the disquiet, the KRA takes the blame for focusing solely on revenue collection, with goods that have not been verified from their points of origin attracting only a 15 per cent penalty. Kebs, which checks for standards, is said to be largely understaffed and heavily infiltrated by cartels that print standardisation marks for sale to the counterfeiters.

The complications go beyond the government agencies' mandates. Not all contrabands are substandard; in fact, some are said to be better than the originals. That means once they pass the standards test and pay duty, they are released on the market.


The net effect is that the local manufacturers or the appointed agents of the international brands soon realise a reduction in sales while the market remains oversupplied. Productivity is hurt, jobs are lost and even KRA loses revenues since the fakes are not taxed.

Before the war reached its peak in the past week, the counterfeiters had started changing tack to beat the hawk-eyed officers: Besides identifying a well-known brand and having them made cheaply in large quantities in places like China, some makers of fake products had started importing components of certain goods and assembling them locally.

For instance, they would bring in several television sets and printers without any names and then ship in genuine looking labels in engraved parts then fix on demand. That way, it would be difficult for one to say they have been cheated.

China, in particular, has increased the dumping of counterfeits into the country after the country opened more duty-free windows for heavy imports being used in the mega infrastructure projects being carried out by the Chinese.


Another common method used by the cartels is importing goods supposedly in transit to Uganda and Rwanda and then dumping them in local warehouses or taking them for clearance outside the county and sneaking them back into the country.

Insiders say that without the approval of the Agriculture and Food Authority -- through its Sugar Directorate -- it is impossible to import sugar.

So it remains unclear how huge consignments sneak through the borders, are trucked through the seemingly carefully -manned police roadblocks and weighbridges, and end up in godowns in the city. Insiders say the police are involved, and that they mostly escort the goods or to secure them when they are being offloaded.


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