WAR ON FAKES

KRA’s march against counterfeits

Goods seized include sugar, rice, cigarettes, liquor cooking oil, stone-coated roofing tiles, cables, motor vehicle spare parts, plastic pipes, medicines

In Summary

• In this crackdown, more 4,211 people were arrested and 1,581 outlets closed for dealing in illicit alcohol.

• Over 272,940 brands of various products worth more than Sh600 million were also seized for contravening various laws.

The Kenya Revenue Authority is keen on fighting illicit products and has worked tirelessly to seal revenue loopholes. KRA and a multi-agency team on illicit trade and counterfeits comprising of Kebs, ACA, Public Health and the DCI have so far seized goods worth Sh7.5 billion from a countrywide crackdown since May last year. Goods worth Sh1.5 billion have been destroyed.

The team has been on overdrive to ensure an economy that is free of counterfeits and illicit products following a presidential directive. It continues to conduct operations in different parts of the country.

Goods seized include sugar, rice, cigarettes, liquor cooking oil, stone-coated roofing tiles, cables, vehicle spare parts, plastic pipes, medicines, sandalwood, electrical household switches/sockets, beauty/cosmetic products and textiles, among others. These were found to be counterfeited, sub-standard, concealed, unaccustomed, expired and or unfit for consumption.

Suspects are often prosecuted. From this crackdown, More than 4,211 people were arrested and 1,581 outlets closed for dealing in illicit alcohol. More than 272,940 brands of various products worth over Sh600 million were also seized for contravening various laws.

It also emerged that most of the goods seized were counterfeited locally, with alcoholic drinks being the most affected. Others were imported from China, majorly electric cables, roofing tiles and educational materials like geometric sets. Cigarettes were also imported from Montenegro through the UAE.

Of the goods destroyed, KRA made reference and adhered to EACCMA, 2004, and was cleared by Nema. The EACCMA, 2004, empowers the commissioner to destroy the counterfeits/contraband/illicit goods in a manner that he deems fit. KRA has revamped operations and put up systems to ensure success in this fight through market surveillance, intelligence gathering and border control measures.

Counterfeits lead to loss of tax revenue and a drop in the level of compliance by the manufacturing industry. High levels of counterfeiting discourage foreign investors from doing businesses in the country, it further causes unfair competition and suppresses growth in genuine businesses, limiting economic growth.

KRA enforces border control measures to ensure non-entry of any illicit items such as those prohibited under EACCMA, 2004. The measures include 100 per cent verification and scanning of cargo at the ports of entry using non-intrusive scanners and K9 for narcotics.

Increased coordination with the multiagency team is paying off. KRA has also put in place tight export and import control measures, including the use of Regional Electronic Cargo Tracking System on export and transit goods. Additionally, exports of neutral spirit are restricted to registered regional importers as a control measure. Importation of excisable goods is restricted to licensed local manufactures and registered importers.

The Excisable Goods Management System is in use to monitor production and track illicit products in the market. KRA further collaborates with Alcoholic Beverages Association of Kenya in gathering intelligence.

The role of KRA in the multi-agency team is to collect tax and ensure all goods produced locally or imported are compliant with tax regulations. The work that KRA has so far done in combatting counterfeits and illicit trade, is aligned to the government’s Big Four agenda, especially the manufacturing pillar, which aims to create jobs. KRA and the multi-agency team aims to create a fair market for genuine products, hence a level playing field for traders. In turn, consumers are protected from substandard products, harmful to their health.

KRA envisions an economy free of illicit trade and counterfeits, ensuring a fair market for genuine products, hence sustainable manufacturing sector as well as compliance by manufacturers and traders to set regulations. A fair market increases Foreign Direct Investments, encouraging a thriving economy, hence increasing the revenue flow.

Counterfeits lead to loss of tax revenue and a drop in the level of compliance by the manufacturing industry. High levels of counterfeiting discourage foreign investors from doing businesses in the country, it further causes unfair competition and suppresses growth in genuine businesses, limiting economic growth.

Statistics by the Anti Counterfeit Authority state that an increase in the level of counterfeiting reduces economic growth. Using data from 1975 to 2010, ACA further adds that counterfeits in Kenya, decrease GDP growth on impact, the GDP growth increases in the second year and goes on a steady decrease in the third year. The downward trend continues up to the fourth year.