Protecting Intellectual Property Rights to drive industrialization

By Phyllis Wakiaga

In the 2017 Global Innovation Index, institutions that nurture and support the flourishing of innovation, regardless of whether it is research-based or not, were identified as critical to industrial growth. The countries that scored highly in this Index were found to have put in place institutions that provide good governance in protecting and incentivizing businesses to keep innovating for the sake of their economic development. The presence of strong and progressive institutions means that a country is able to formulate and implement cohesive structures, which support technological progress and growth of markets, brought about by innovation.

Kenya and Rwanda were picked out as being among 17 Global ‘Innovation achievers’ this year, and this is no small fete. However, despite numerous efforts to streamline commerce and industrialization in the EAC region, illicit trade still continues to water down our ability to secure and benefit from our innovation potential as a region. Some of the main challenges in curbing this vice are circumvention, infringement and violation of laws, regulations, licensing regimes, taxation systems and embargoes. Often times, the issue of illicit trade in the individual EAC partner states is not treated with severity as it deserves. Other times, the vices are increasingly becoming sophisticated, using the newest technologies to evade detection, and consequently overwhelming current legal and regulatory measures put in place.  One of the most prevalent forms of illicit trade today is counterfeiting and piracy. Counterfeiting and piracy poses serious socio-economic challenges nationally, regionally and globally. The vice undermines the concept of a free and open market, fundamental to enhancement of innovation and creativity, competitiveness, increased investment, job creation and improved economic situation in Kenya and the EAC partner states. It also undermines industries in the region, poses health risks to consumers, sabotages tourism, stunts innovation and breeds lawlessness.

According to a study on the vice of counterfeiting in Kenya which was done in 2012, it is estimated that Kenyan manufacturers are losing at least 40% of their market share to counterfeiters. Manufacturers lose approximately Kshs 30 billion (US$ 42 million) per year, while the Government loses Kshs 6 billion (US$80million) annually as potential tax revenue.

Whilst innovation aims to increase productive jobs and therefore gainful employment for citizens, counterfeiting dilutes this objective and diverts a huge portion of country resources towards attempts to disrupt these illegal operations. Additionally, many counterfeit products evade taxation and in doing so, these operations appropriate quite a huge portion of our national revenues. Illicit trade cannot offer any steady jobs, and even worse, it puts those employed at risk of facing heavy penalties or face jail time.  Even worse, counterfeits are known to endanger the lives of Citizens as they have not undergone the standards and quality tests and approvals. Needless to say, the overall competitiveness of any country is affected by the prevalence of counterfeits which affects its capacity to supply local demand and export to other markets.

The protection of Intellectual Property Rights therefore needs to take center stage in discussions to promote economic growth through industrialization for Kenya, and the EAC at large. Earlier this year, Kenya Association of Manufacturers launched the EAC Intellectual Property Rights (IPRs) Regime Study, which aims to enhance regional protection of IPRs as a contributor to achieving the industrialization agenda. The study identified various challenges in IPR enforcement in the region, the foremost being the lack of harmonization of intellectual property laws between partner states. This has barred a coordinated enforcement approach to curbing counterfeits as there are divergent IP territories within the same region (EAC) and porous borders which allow for manipulation and evasion.

There have been attempts to solve this through the formulation of the EAC Anti-Counterfeit Bill drafted in 2011, which sort to provide for a uniform definition of counterfeit, scope of coverage, establishment of national anti-counterfeit agencies, appointment of inspectors, remedies etc. This Bill has not been enacted into law and in the interim, individual countries continue to revise their laws and regulations as they grapple with the vice, increasingly adding to the divergent nature of these laws with other partner states.

It is therefore in our interest as a nation and as a region to prioritize Intellectual Property Rights protection, and work towards establishing institutions that nurture innovation. We need to establish mutual recognition agreements on IPR between partner states that will boost cross-border trade and drive industrial growth for our nations.

The writer is the CEO of Kenya Association of Manufacturers and the UN Global Compact Network Representative for Kenya. She can be reached at ceo@kam.co.ke