The continuous increase in counterfeit and unlicensed products like alcoholic and illicit brews in circulation in Kenya is denying the country over Sh30 billion in annual revenue, a report by the Office of the Auditor General has revealed.

The auditor also says that the country has been losing over Sh40 billion in taxes annually due to the prevalence of counterfeit goods in the country. 

Illicit brews

The auditor blames the practice on corruption and inefficiencies at the Anti-Counterfeit Authority (ACA).

The sale of illicit brews has been a menace which has been blamed for the deaths of hundreds of youths in many parts of the country. 

Research by the ACA names China as the lead exporter of counterfeits to Kenya involving fast-moving goods such as phones, sound equipment, cables, clothing and automobile spare parts.

“Most of the goods are of inferior quality and are a threat to the health of the people and the environment,” states the report which is currently before parliament.

Local manufacturers and Intellectual Property Rights (IPR) owners, states the report, lose over Sh6.5 billion due to weak enforcement of the law and regulations by ACA, its staff integrity issues and the authority’s lack of physical verification of destroyed goods.

“Counterfeit trade causes economic sabotage as the government and IPR owners lose revenue, unfair competition from counterfeit products, tax avoidance, illicit imports and dumping that leads to a reduction in market share,” the audit says.

The audit covered Nairobi headquarters, Mombasa, Kisumu and Eldoret Regional Offices as well as Namanga and Busia border points. 

A report on the economic impact of counterfeiting by the Organisation for Economic Co-operation and Development (OECD), the audit says, shows that counterfeit products are made to closely imitate the appearance of the original product to mislead consumers.

This includes the unauthorised production and distribution of products that are protected by IPRs such as copyrights, trademarks and trade names.

The audit named software, music recordings, motion pictures, luxury goods, fashion clothes, sportswear, perfumes, toys, motor vehicle spare parts and accessories, and pharmaceuticals as the most hit industries. By Anthony Mwangi, People Daily