Illicit trade, a detrimental vice harming Kenya’s prosperity

Last month, the Kenya Revenue Authority through various media reports reported that the value of smuggled and counterfeit goods seized at Kenya’s entry points reached an alarming Ksh. 243.5 million in 2024 from Ksh. 200 million in 2023. Further this week, the Anti-Counterfeit Authority (ACA) reported the arrest of a suspect for having counterfeit agricultural products valued at Ksh. 3.4 million.

The seizure of these goods and the continued crackdown on various forms of illicit trade continues to reveal the extent to which criminal networks have proliferated in our nation, posing a threat to the lives and safety of all citizens.

The local manufacturing sector has over the years raised concerns about the increase in illicit goods in Kenya. In addition to posing health risks to consumers, illicit trade undermines industries’ investment efforts and stunts innovation. Further, the country’s ability to grow its economy and improve the standard and quality of life for its citizens is compromised.

The most recent reports from manufacturers paint a gloomy picture of the situation on the ground. For instance, the citizens and cement manufacturers raised an alarm over the adulteration of cement products.

Through manufacturers’ advocacy efforts and engagement with various enforcement agencies, 13 people suspected of participating in this vice were arrested on 20th December 2024 by a well-coordinated successful enforcement operation by Directorate of Criminal Investigations (DCI) Kenya. This is not unique to the cement players. Manufacturers of steel roofing sheets have raised concerns about the rise in sub-standards products and so is the similar situation with players in the energy and electrical sector, and the beverage sector among many other sectors.

Illicit trade is not unique to Kenya. It is a global phenomenon that describes any form of trade that infringes the rules, laws, regulations, licenses, taxation systems, and all procedures that countries use to organize trade, protect citizens, raise standards of living and enforce codes of ethics. The concept of illicit trade extends to money, goods, or value gained from illegal or otherwise unethical activities and includes all actions or conduct intended to facilitate such activities.

It must be appreciated that great effort is expended every day around the world to organize trade to protect citizens, raise their standards of living and enforce codes of ethics. Despite numerous legislative and regulatory efforts to streamline trade in Kenya, illicit trade continues to thrive and plague the country. This calls for urgent interventions to protect consumers as well as manufacturers. As Kenya Association of Manufacturers (KAM), we have had extensive engagements with manufacturers as well as government agencies that have a role in the fight against illicit trade. We therefore propose three key interventions.

First is the establishment of a strict and comprehensive system of edging out illicit trade in the economy. Illicit trade undermines the concept of a free and open marketplace which is fundamental to improving competitiveness, increasing investment, generating jobs and economic growth. Every day, illicit trade grows in its reach and sophistication, requiring urgent but effective responses. Trends in illicit trade suggest that there remains a vast field for law enforcement agencies to explore in seeking to enhance their understanding of this problem and the existing legal framework to effectively respond to it.

Second is a deliberate effort to create awareness of the challenge and the existing mechanisms for reporting and handling cases when they occur to complement enforcement interventions. Increased knowledge can reduce the misunderstanding that enables perpetrators of illicit trade to benefit unjustly. Continuous and practical approaches to curbing crime will go a long way in increasing the knowledge, efficiency and success of those charged with the duty to administer the various legal instruments regulating illicit trade.

Third is a joint approach for combating illicit trade. There are diverse forms of illicit trade including smuggling of excisable goods; intellectual property infringements – counterfeiting; trading with illegal weights and measures; trade in illegal, harmful or substandard goods or substances that may carry serious health and safety risks; illegal manufacturing; and Illicit financial flows, among others. These forms of illicit trade are interlinked, which calls for an approach that encompasses all key enforcement stakeholders in what we call the Enforcement Multi-Agency Team. This setup will not only share intelligence but also carry out well-coordinated targeted raids and seizures on suspected illicit operators or traders and outshine any formation of cartels. The same concept must also be embraced for driving both civil (use of alternative dispute resolution mechanism) and criminal actions (use of our judicial system).

Considering this, KAM continues to work with the government to create awareness among consumers as well as law enforcement officers across various enforcement institutions on the presence of counterfeit products in the market. By working with institutions such as ACA, our goal is to see that members of the public are well-informed so that they may purchase genuine goods and, consequently, enjoy value for their hard-earned money. KAM highly advocates for interagency collaboration, coordination, and cooperation among the national enforcement institutions mandated to combat various forms of illicit trade.

We strongly believe that these deliberate anti-illicit trade actions, among others will drive overall economic development, protect local industry from unfair competition posed by illicit goods in the market and ultimately, safeguard innocent consumers from being exploited by these unscrupulous traders thus guaranteeing their health and safety.