Companies targeting the East African market are set to benefit from the introduction of new anti-counterfeit rules which the regional trading bloc is preparing to clamp down on fake goods.
Lawyers drafting the regional anti-counterfeit legislation say they are at an advanced stage and the laws could be introduced in the East African Assembly as early as July.
If approved the new anti-corruption legislation would help Kenya to secure its regional market from counterfeiters who have been munching the market share of local firms such as Eveready, Haco Industries and BAT on the lucrative.
A committee of trade experts from Kenya, Tanzania, Uganda, Rwanda and Burundi met in Arusha, Tanzania, the headquarters of the EAC yesterday to discuss the draft anti-counterfeits laws applicable in the EAC member states, lawyers who made the draft said on Tuesday.
The lack of anti-counterfeit laws in the EAC has enabled traders in contraband goods to get away easily.
A recent survey commissioned by the EAC says companies in East Africa lose up to 90 per cent of business to counterfeits annually.
Kenyan businesses alone lose Sh50 billion in sales annually, according to the Kenya Association of Manufacturers, because of the penetration of illegal goods into the markets.
The Government also loses Sh19 billion in taxes every year due to the production and sale of contraband goods.
Paris-based international research and discussion group Organisation for Economic Co-operation and Development, estimates in its 2008 report that manufacturers in East Africa lost about $20 million annually due to trade in counterfeit in the region.
Kenyan firms affected the most by counterfeiters are manufacturers of shoe polish, ball-point pens, alcoholic beverages, juices, pharmaceutical products, computer software, computer software and music.
“The committee of trade experts reviewing the draft anti-counterfeit laws is an internal channel of the EAC that will enable the proposed laws to go before the regional Assembly,” said Mr William Maema, a Kenyan lawyer who participated in the drafting of the proposed anti-counterfeit law.
The draft was made by legal experts from the five EAC member states and if passed by the EAC Assembly it will be sent to the council of ministers for approval.
Fighting counterfeits in East Africa has proved to be difficult because of the region’s porous borders and different levels of legislation and policy on fake goods.
Although Kenya enacted anti-counterfeit laws in December, other EAC member countries; Uganda, Tanzania, Burundi and Rwanda are yet introduce similar laws.
The Kenyan law provides for a maximum five-year jail term and a cash penalty that is three times the value of the counterfeited product.
A repeat offender would be jailed for a maximum of 15 years.
A new Anti Counterfeit Agency—a watchdog that will protect local manufacturers from those trading in counterfeited goods has also been constituted under the Ministry of Industrialisation to monitor progress in the fight against counterfeited goods.
Battery maker Eveready East Africa Limited has faced challenges from counterfeited batteries especially those imported from China.
Dry cell batteries account for 90 per cent of Eveready’s sales.
According to the Economic Survey 2009, production of dry cells dropped from 109.3 million cells in 2007 to 88.1 million cells in 2008 mostly due to competition from counterfeits and cheap imports.
Regional lawyers reckon that the proposed laws have the potential to reduce the share of market under counterfeits and offer regional companies opportunities to grow their market share and profitability.
The regional anti corruption laws will also protect consumers from harmful and substandard products.
East African Community, Africa’s oldest trading block which was resuscitated in 1999 after its collapse in 1977, is facing a daunting task to establish a common anti counterfeits law applicable in the member states as manufacturers complain of increasing incidents of counterfeiting of goods.
Kenya has enacted anti counterfeits laws which provides for a maximum five-year jail term and a cash penalty that is three times the value of the counterfeited product for counterfeiters. A repeat offender would be jailed for a maximum of 15 years.
A new Anti Counterfeit Agency—a watchdog that will protect local manufacturers from those trading in counterfeited goods has also been constituted under the ministry of industrialization to monitor progress in the fight against counterfeited goods.
Agency has powers to break into any premises suspected of manufacturing illicit goods and arrest, without a warrant, any person suspected to engage in counterfeiting products.
Currently, the police which investigate such occurrences have to obtain search warrants from courts before breaking into business premises.
Some manufacturers are worried that the anti counterfeit laws in Kenya will not stop producers of contraband since it would be difficult to extend the fight against pirated goods beyond the Kenyan borders.
Uganda is preparing to enact its own version of anti counterfeit laws this year.