How firms are stamping out fake goods with high tech labels

Every working hour, about 80,000 bottles of beer are processed through the East African Breweries Ltd (EABL) #ticker:EABL production line at the Ruaraka factory.

An almost equal number of cans is processed on a parallel line. However, not even one of the bottles or cans can leave the factory before it has been affixed with the Kenya Revenue Authority’s excise duty and the Kenya Bureau of Standard stamps.

Each of the two security stamps tells a story; one says that the brewer has paid excise tax while the other assures consumers that the quality of the product has been tested and certified as fit for human consumption. One has an implication on public good while the other has direct import on public health and safety.

These twin messages are at the very heart of every security stamp affixed on any product made or sold in Kenya. The stamps, just like the security marks affixed on identity cards, passports, title deeds and other important documents as well as products meant for public consumption, play a pivotal role in fighting counterfeits.

Stamps, labels and other markers that identify a product make it easy for the public to identify a genuine product and, in the process, make an informed decision.

And with the help of mobile phone technology, a consumer can scan the QR code on a product, say a drug or a book, to satisfy himself that the product is genuine.

And to ensure that consumers who have feature phones are not locked out of the digital revolution, they have the option of authenticating a product by sending an SMS via an Unstructured Supplementary Service Data (USSD) code to a given number.

Only security printers, such as De La Rue, in the case of Kenya, have the capacity to embed such features on authentication labels.

And depending on the needs of a business or manufacturer, extra security markers, such as a trace and track capability can be added. This is important in the export of goods like fruits and flowers to sensitive consumer markets which are particular about issues like amount of chemicals used, whether the producer adopts fair employment practices or is affiliated with fair trade networks.

Such technology is also critical in the management of sensitive documents such as examination papers and academic certificates.

In countries like Kenya, where rogue teachers, police officers and examination officials can collude to tamper with the integrity of examination papers, the track and trace technology can be used to identify in real time at what point examination papers are opened.

Last year, for instance, there were 699,745 candidates who sat the Kenya Certificate of Secondary Education (KCSE) examination in over 3,000 schools. The large number of papers — and officials — needed to conduct the examination creates many opportunities for tampering in an analogue system. However, by using algorithms, each paper can be traced in real time to ensure that it is only opened when the bundle is already in an examination room.

Using a unique serial number, the lifecycle of each individual label is tracked through the simple but powerful Traceology Manager portal, giving brand owners complete visibility and control from source to consumption.

This is the method that institutions like Mt Kenya University have used to ensure the integrity of its examinations by partnering with De La Rue, which has also embedded 11 security features in the university’s degree certificates.

These features include a 2-d bar code with the details of the candidate and what he studied, micro text reading capability and wavy text that cannot be replicated by counterfeiters.

Were such innovations to be embraced on a large scale, at all levels of education, a lot of the problems associated with training gaps would be reduced as it would cut back the number of candidates using other people’s certificates to obtain jobs or secure training opportunities.

In the long run, this would reduce the mismatch between educational qualification as indicated in a certificate and actual competence on the job.

It is also good for business as it makes it difficult for counterfeiters to adopt the technology.

When launching the Small and Medium Enterprises (SME) conference in Nairobi on Monday this week, Interior Cabinet Secretary Fred Matiang’i pointed out the dangers that counterfeits pose in the local market, and signalled that the government was keen on protecting genuine businesses.

“The supply of counterfeit goods, especially on our northern routes, is direct revenue to Al-Shabaab,” said Dr Matiang’i, making a critical link between counterfeits and terrorism. “It hurts us in multiple ways; it hurts our industries, it hurts innovation and puts money in the hands of the wrong people.”

According to the Standards and Regulatory Committee of the Kenya Association of Manufacturers (KAM), counterfeit and substandard products cost the East African region over $500 million (about Sh50 billion) in lost government tax revenue annually. This finding appears to be in tandem with the findings of the Business Daily and KPMG Top100 SMEs survey.

According to 22 percent of CEOs interviewed for the survey, competition, especially unfair competition (including from counterfeits), was the biggest challenge they faced in 2019, meaning that any measures, including adoption of technology to curb counterfeits, would go a long way in increasing the ease of doing business for SME in East Africa.