Kenya: Fake Goods Put Kenya Exports to South Sudan At Risk

Pharmacy and Poisons Board officials load cartons of counterfeit drugs seized during a crackdown in Nyanza (file photo).

Counterfeit Kenyan goods being sold in South Sudan have caused diplomatic tension between Nairobi and Juba, putting genuine manufacturers at risk of having their products blacklisted in the country.

The goods are either smuggled to South Sudan through the Ugandan border or manufactured in Juba's black market, a Kenya government memo seen by The EastAfrican reveals.

So rampant is the trade that, fearing a backlash against genuine manufacturers, the Kenyan ambassador to South Sudan has written a strongly worded letter to the Kenya Bureau of Standards (Kebs) asking the agency to act or risk having Kenyan goods barred from entering South Sudan.

"The Embassy is in possession of products that have been withdrawn from shelves following backlash from consumers over low standards. Some of the manufacturers have gone through proper certification of their products by the Kenya Industrial Property Institute and Kebs but produce substandard (goods) for this market, in effect counterfeiting their products," said Kenya's ambassador to Juba, Chris Mburu, in the letter to Kebs.

The confiscated goods comprise popular Kenyan brands, shining a spotlight on the lack of a common anti-counterfeit and quality standards within the region as the fraudulent processors are said to be having it easy in Uganda and South Sudan.

The letter by Nairobi's envoy in Juba was copied to the Kenyan Ministry of Foreign Affairs.

Mr Mburu said that South Sudan was already shunning Kenya-made goods after the counterfeiters flooded the market with the low-quality detergents, soaps, hair shampoos, food products, vehicle engine oils among others.

The diplomat called on Kebs to sensitise Kenyan manufacturers and other government agencies at the border to work together to ensure that only genuine goods are exported to Juba to avoid the situation getting out of hand.

The EastAfrican has learnt that Kebs convened a meeting to discuss the matter last month, drawing in most of the regulatory bodies as well as the national chamber of commerce.

At the meeting, there were claims that weak anti-counterfeit legislation in Uganda had opened a loophole for shrewd manufacturers who had set base in the country to counterfeit Kenyan brands and export them to South Sudan.

Loss of market

The Kenya Association of Manufacturers (KAM) has also expressed concern over the export of counterfeits, which could lead to significant loss of the key export market.

"It is unfortunate that this is happening within the East African Community region and damaging the reputation of Kenyan manufacturers in the South Sudan market.

"The entire menace has been caused by disparities in the legal framework within EAC, and in this case involving the two neighbouring countries of Uganda and South Sudan.

"We highly suspect that these counterfeit products are manufactured somewhere in Uganda and then transported by road to the South Sudan market," KAM officials said in a letter to the Kenyan Anti Counterfeit Agency (ACA) when the affected products list was shared with the association in September.

More than 20 producers--14 detergent, cooking oil and shampoo makers, five engine oil manufacturers, including a renown multinational brand, as well as a number of food-additive companies--have fallen victim to the counterfeit cartel.

The Kenyan Embassy in Juba now wants Kebs to enter into a memorandum of understanding with the South Sudan Bureau of Standards to ensure that only genuine products cross into the country.

The South Sudanese standards body is set to benefit from benchmarking with Kebs under a memorandum of understanding to build capacity to detect counterfeits.

Legal loophole

The Uganda Anti Counterfeit Bill has been stuck in parliament since 2008, leaving a legal loophole for fraudulent processors to exploit.

South Sudan is yet to enact anti-counterfeit legislation, and the EAC has no common law against counterfeiting, making the region vulnerable to cartels.

The value of Kenyan exports to South Sudan declined by 22.6 per cent from $160.7 million (Sh16.7 billion) in 2017 to $130 million (Sh13 billion) in 2018, according to government data.

Juba offers a huge market for Kenyan manufacturers since South Sudan is yet to set up its own industries after years of conflict. Neighbour Uganda is still building its industries, amid infrastructure deficiencies, and is a landlocked country just like South Sudan.

Nairobi is facing concerns that the agencies tasked with fighting the fakes may be overwhelmed. A recent special survey done by Kenya's Auditor General found that ACA has neither the manpower, equipment nor finances to wage war on the multibillion dollar counterfeits industry now threatening both local and export markets.

The audit found that ACA has just a quarter of its required workforce, which is poorly trained and overworked, making it hard to tame the illicit practice that costs Kenyan manufactures $2 billion every year.

"According to the ACA management, a staff establishment plan that was approved by the Board proposed that a staff complement of 250 was needed by the agency. As at the time of the audit, however, ACA had a staff complement of only 69, three of whom are on contract, 65 per cent are technical and 35 per cent are support staff. This represents about 28 per cent of the total staff required."

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