By Tobias Alando
The illicit economy continues to have a reverberating effect on various sectors, posing a threat to the achievement of development goals.
International trade statistics show that the total value of illicit trade was KSh 726 billion in 2017 and KSh 826 billion in 2018, a 14% increase. In terms of their GDP share, this represents an increase from 8.9% in 2017 to 9.3% in 2018.
The growth in international trade, advances in technology, and changes in trading methods have come with new challenges that call for advanced strategies to effectively and efficiently combat illicit trade.
Over the years, Kenya has made strides to fight the vice, with the biggest win being the establishment of the Anti-Counterfeit Authority (ACA) in June 2010. Additionally, Government established the Inter-Agency Anti-Illicit Trade Executive Forum and Technical Working Group (Multi-Agency Team for Combating Illicit Trade) to strengthen interventions toward curbing illicit trade and facilitate the exchange of information between agencies and enhance enforcement.
Besides ACA, different agencies, anchored on various laws, continue to collaborate to sustain the fight against counterfeiting and related forms of illicit trade. Some of these institutions include Kenya Revenue Authority, Kenya Industrial Property Institute, Pest Control Products Board, Kenya Plant Health Inspectorate Service, National Police Service, Kenya Copyright Board and Kenya Bureau of Standards, among others.
However, despite these efforts, illicit trade still threatens the economy. The National Baseline Survey on Counterfeits and Illicit Trade found that the worst-hit sectors are Building, Mining and Construction (23%), Energy, Electrical and Electronics (15%), Textiles and Apparel (14%), Plastic and Rubber and Metal and Allied sectors (9% each). The five sectors accounted for 70% of illicit trade in sixteen manufacturing sectors in 2018. Complaints from the private sector and consumers were on counterfeiting, piracy, uncustomed goods and substandard goods. The lead form of illicit trade complaints received was counterfeit, which accounted for 71% of the total complaints received between 2016 and 2018.
The impact of counterfeiting and other forms of illicit trade cannot be ignored. The vice has impacted the health of consumers who unknowingly consume counterfeited goods. It has also led to revenue loss for businesses and government, the decline in investments and job losses as a result of unfair competition from illicitly traded products.
Various stakeholders have observed that existing initiatives to combat counterfeiting were largely reactive, with few complaints from a narrow spectrum of complainants being filed. They, therefore, agreed to take a more proactive approach, by embarking on voluntary recordation of intellectual property rights. This was through the Intellectual Property Rights (IPRs) recordation program for all imports, rolled out by ACA since 28th February 2022.
Under the programme, ACA aims to develop a database of intellectual property information for goods to be imported into the country. Kenya is the second country in Africa to implement the IPR recordation program after South Africa. Internationally, other countries in the Americas, Europe, Middle East and Asia have also implemented the program.
The United States has a robust intellectual property enforcement program. The US Customs and Border Protection enforces federally registered trademarks and copyrights that are recorded through the e-recordation program, utilizes automated risk-management systems to analyze and targets imported intellectual property infringing goods, and has the legal authority to detain, seize, forfeit, and ultimately destroy IP infringing merchandise entering the country.
Once implemented, the IPR Recordation Programme shall guarantee consumer health and safety while protecting local manufacturing entities from cheap counterfeit imports. It will spur both domestic and foreign investments, and as a result, lead to economic growth and job creation.
The recordation programme has come at an opportune time when Kenya is gearing up to trade under various agreements, such as the Africa Continental Free Trade Area (AfCFTA). As such, prioritizing the fight against illicit trade shall enhance market access, increase investments and drive economic growth.
The writer is the Head of Membership and Governance at Kenya Association of Manufacturers. He can be reached at firstname.lastname@example.org.