Govt Loses Ksh279 Million Daily Due to Illicit Trade

  • Counterfeit goods on display. Kenya lost Ksh102 Billion to illicit traders in 2018 a new report reveals
    Counterfeit goods on display. Kenya lost Ksh102 Billion to illicit traders in 2018 a new report reveals
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  • A new report published on Wednesday, June 10, revealed that the national government lost an estimated Ksh279 million to illicit trade each day in 2018.

    The Anti-Counterfeit Authority (ACA) released the findings of the National Baseline Survey on the extent of counterfeit and other forms of illicit trade in the country, showing a startling loss of government revenue to illegal trade activities.

    "Total government revenue loss from illicit trade in all sectors stood at Ksh101.23 billion in 2017, rising to Ksh102.99 billion in 2018.

    "Total volume of illicit trade stood at Ksh726 billion in 2017 and increased to Ksh826 billion in 2018 which represents 8.9% and 9.3% of Kenyan GDP respectively," reads an excerpt from the survey.

    Some of the counterfeit goods nabbed in Nairobi during a past crackdown.The state lost Ksh102 billion to illicit traders in 2018.
    Some of the counterfeit goods nabbed in Nairobi during a past crackdown. The state lost Ksh102 billion to illicit traders in 2018.
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    The study was released as Kenya joined other countries globally to mark the World Anti-Counterfeit Day and was conducted in partnership with TradeMark East Africa (TMEA) through funding from the Department for International Development (DFID).

    According to the report, overall consumer awareness of the various forms of illicit trade stood at 64% in 2019, a notch higher than the level in 2018.

    From the 16 sectors of the economy that the study concentrated on, building, mining and construction were heavily affected by counterfeiting with a share of 23.37% in value of total illicit trade, followed by energy, electrical and electronics with a share of 14.67% in 2018.

    The sector with the most government revenue loss was food, beverage and non-alcoholic drinks with a share of 23.19%, followed by textile and apparel at 20.09%.

    30% of local firms were aware that their products were being counterfeited and sold in the market, whereas 56.4% of the sampled firms were not aware that their products are being counterfeited and sold in the market.

    Between 2016 and 2018, 7,484 jobs were lost in Kenya due to illicit trade with counterfeiting accounting for 32.59% of the jobs lost. 

     Elema Halake, Executive Director, Anti-Counterfeit Authority.
    Elema Halake, Executive Director, Anti-Counterfeit Authority.
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    The study also cites piracy as a critical form of illicit trade. According to the findings, the loss of sales as a result of pirated products stood at Ksh2.2 billion between 2016 and 2018. 

    Although the trend depicts a marginal decline between 2017 and 2018, the loss as a result of total sales is quite high ranging between 37.69% and 42.14%, which is a clear indication of how piracy is wiping profitability of the affected firms and individuals.

    “We conducted this study with the sole purpose of determining the extent and magnitude of illicit trade in the country and the findings are out. 

    "This provides baseline statistics upon which we will work very closely with our enforcement teams and other Government agencies to nab culprits to reduce counterfeiting and other forms of illicit trade in Kenya. We have nabbed counterfeit goods over Ksh2.8 Billion and surrendered them to law enforcement agencies for the prosecution of suspects. 

    "This goes a long way to demonstrate our resilience in the fight against counterfeiting,” noted Elema Halake, Executive Director, Anti-Counterfeit Authority.

    He added: “As we celebrate the World Anti-Counterfeit Day today, we urge all Kenyans to beware of illicit goods when purchasing products in retail outlets.

    Additionally, he called upon both public and private sectors, especially the Kenya Association of Manufacturers to continue working closely with ACA to battle this economic threat.

    The launch of the baseline survey report coincides with the unveiling of the National Illicit Trade Observatory (NITO), a tool that will enable monitoring of illicit trade in Kenya. 

    Capitalising on its partnership with TMEA through funding from DFID, ACA has established the observatory to complement and enhance efforts of the Multi-Agency Team on Illicit Trade established by the President, to eliminate unfair trade competition in Kenya. 

    The observatory tracks six types of illicit trade: counterfeit, piracy, substandard goods, uncustomed goods, restricted goods, and unexercised goods.

    “The observatory is designed to be a data management and reporting tool where enforcement agencies will report seized goods (both from domestic and import markets), while the private sector shall be able to anonymously report on counterfeited products affecting their market share as well as their impact,” said Ahmed Farah, TMEA’s Kenya Country Programme Director.

    World Anti-Counterfeiting Day 2020 is now in its twenty-second year and was established in 1998 by the Global Anti-Counterfeiting Group (GACG) to enable the organization of local, national and regional events under the umbrella of an international campaign.

    Ahmed Farah, TMEA’s Kenya Country Programme Director.
    Ahmed Farah, TMEA’s Kenya Country Programme Director.
    File