• You risk losing it all in the quest for illicit profit. Better safe than sorry
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We are a few months into 2024 but everyone is lamenting about a difficult business environment, where new customers are hard to come by and existing customers are not spending as much as before.
For those in business, the temptation exists to break a few rules here and there to maximise profits. Who will notice that your weighing scale is inaccurate by a few grammes? How about inflating customers' bills so that they pay more than they should?
What if you are a farmer and realise certain chemicals can increase your profits, though they will make your vegetables harmful to consumers? How about not filing tax returns? If you don’t file the returns, the tax authorities won’t know that you owe them taxes, right?
Why throw away expired goods from your shop? Most consumers don't check the date anyway, and they won't notice they are buying expired products. The same reasoning can be extended to counterfeit products, which can be sold cheaply, attracting more customers.
If you engage in such practices, you are conducting illicit trade. The Kenya Institute of Public Policy Research and Analysis describes it as “the production or distribution of a good or service that is illegal under the law”.
KIPPRA says illicit trade in Kenya consists of such activities as the illegal sale or possession of goods or services, counterfeiting, smuggling and tax evasion.
“Trading in counterfeit and substandard goods not only creates economic loss but also poses health and safety risks to the society,” KIPPRA stated in a 2023 report.
From a business perspective, illegal activities carry a lot of risk. The worst-case scenario is getting arrested and charged with criminal offences that may lead to a prison sentence.
Even if you manage to get away with a fine, the amount of money you will pay may put you out of business permanently. Your property, including land, motor vehicles, buildings and money in bank accounts, may be seized by the authorities.
As is well known in Kenya, judicial processes can take a long time. The wheels of justice grind slowly, but they certainly grind. During that time, you will be spending money on legal fees, which can drain your finances. Court appearances will take up a lot of your time.
The reputational damage will hit you hard. News of your illegal actions will spread quickly, damaging your relationships with customers and business partners, such as banks and landlords. Other people may refuse to do business with you, fearing they might get entangled in your illegal activities. With such a bad reputation, it will be difficult to get decent employees to work for you.
One thing is certain: engaging in illegal business practices is not worth the risk. There are many legal and ethical ways of growing your business and getting more customers. The best way of staying out of trouble is to learn more about the laws that affect your business and how you should comply with them.