September 22nd 2017

Business / Markets

Govt, private sector join to combat illicit trade

The Organisation for Economic Co-operation and Development (OECD) estimates that EAC governments lose over $500 million in tax revenue annually due to the influx of counterfeit and pirated products.

By Free Press Reporternewsdesk@kenyafreepress.comFriday, 16 Sep 2016 15:44 EAT

The East African Business Council (EABC) in collaboration with Kenya Association of Manufacturers (KAM) and the Ministry of Trade, Industry, and Cooperatives has launched the Second Regional Anti-Illicit Trade Conference in Nairobi. The conference aims to seek practical solutions on the ever growing issue of counterfeits, piracy and other forms of intellectual property infringement, smuggling, substandard goods, transit fraud and dumping and trade in prohibited goods and products.

Key to these discussions was the current status of the existing regional and national regulatory frameworks for combating various forms of illicit trade and strategies on how to strengthen them. The two-day conference also centered on how the region can achieve effective enforcement, including the need to set-up inter-agency cooperation at national and regional level; the long-existing contributors to illicit trade, information exchange and consumer education.

Speaking during the conference, the Principal Secretary for Trade Dr. Chris Kiptoo said, “The efforts to combat illicit trade are already underway championed by both private sector and government agencies. Indeed such a persistent vice cannot be combated if we all decide to go at it alone, more collaborative strategies need to be devised and as government we are assuring the existing agencies and business community that we shall look into enhancing the capacity for those charged with this difficult task.”

The Organisation for Economic Co-operation and Development (OECD) estimates that EAC governments lose over $500 million in tax revenue annually due to the influx of counterfeit and pirated products. Much as the figure does not encompass several other forms of illicit trade, the total tax revenue losses from illicit trade exceed the amount.

Uganda is said to lose $1.4 billion, equivalent to almost 5.5 per cent of its gross domestic product (GDP). Tanzania is, in turn, estimated to lose about $1.5 billion in revenue to counterfeits; while in Kenya, KAM estimates a loss of over $42 million annually to illicit trade and approximately $80 million loss in Government revenue.

“Although progress has been made in several areas since; a lot more still ought to be done to win the fight against illicit trade. Evaluation of illicit trade and its effects is challenging, because it operates outside the law, making it hard have accurate data on its scale. What is certain, however, is that illicit trade is driven by the economic opportunity it offers vendors to make money illegitimately in an environment wherein opportunity for economic benefit is perceived to outweigh the actual risks involved.” Ms Lillian Awinja, EABC Chief Executive Officer, said.

Echoing these sentiments, KAM Chairlady Ms. Flora Mutahi said, “Illicit trade is still a huge problem in our country. We are talking of illegal practices that endanger the lives of our citizens due to lack of quality and have a negative effect on our economy since revenue owed to the government is denied. KAM’s 2012 study on the vice of counterfeiting in Kenya, estimated that Kenyan manufacturers have been losing at least 40 per cent of their market share to counterfeiters. It is a huge burden to genuine manufacturers who have to allocate resources to monitoring these activities while their resources would be more profitable if channeled towards expansion and diversification of businesses.”

International participants such as World Customs Union (WCO), International Chamber of Commerce (ICC’s) and Business Action to Stop Counterfeiting and Piracy (BASCAP) were also present at the conference. The EABC and KAM will take forward the recommendations by drawing up an implementation plan that indicates clear responsibilities and a monitoring and evaluation plan.

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