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Counterfeits trade defies crackdowns to hit Sh103 billion

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Workers load cartons of counterfeit milk in a truck in Kisumu in January. FILE PHOTO | NMG

Kenya lost Sh103 billion in revenue from illicit trade in 2018 despite renewed efforts to curb the vice, a new report shows.

The National Baseline Survey on counterfeit and other forms of illicit trade in Kenya by the Anti-Counterfeit Authority (ACA) shows that the loss in revenue increased by 1.7 percent from Sh101.23 billion in 2017.

This comes even as a multi-agency team, led by deputy head of Public Service Wanyama Musiambo, has been seizing and destroying contraband goods in the country in effort to tame illicit trade.

The multi-agency team comprises Anti-Counterfeit Agency, Kenya Bureau of Standards (Kebs), Kenya Revenue Authority (KRA), the Immigration Department, the Office of the Attorney-General, the Office of the Director of Public Prosecutions, Inspector-General of Police, Financial Reporting Centre (FRC), National Intelligence Service, among others.

“Thirty percent of the firms were aware that their products were being counterfeited and sold in the market, whereas 56.4 percent of the sampled firms were not aware,” reads the survey report which also cites piracy as a notorious form of illicit trade.

The survey, conducted between October 2019 and February 2020, also shows that from the 16 sectors of the economy that the study concentrated on, building, mining, and construction was heavily affected with a share of 23.37 percent in value of total illicit trade.

It was followed by energy, electrical and electronics with a share of 14.67 percent in 2018.

The survey, which was mainly looking at the extent of counterfeit and other forms of illicit trade shows that the sector with the most government revenue loss was food, beverage, and non-alcoholic drinks with a share of 23.19 percent, followed by textile and apparel at 20.09 percent.

According to the findings, the loss of sales as a result of pirated products stood at Sh2.2 billion over the period 2016-2018.

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

The report further shows that between 2016 and 2018, 7,484 jobs were lost in Kenya due to illicit trade with counterfeiting accounting for 32.59 percent of the jobs lost.

Estimates point to a loss of Sh200 billion every year in potential government revenue as a result of dealing in illicit goods.