Smuggling fears as fake goods seizure declines

The exclusion of the Anti-Counterfeit Agency (ACA) from inspecting imports at the port of Mombasa could be hampering the fight against fakes after the value of seized contrabands dropped sharply.

Official data shows that the value of fake goods confiscated at the port fell 76.63 per cent to Sh232.2 million in the year ended June from Sh993.4 million two years ago, which could be an indication of increased smuggling into the market that remains awash with counterfeits.

The State Department of Trade has linked the sharp decline to the absence of ACA officials, both at the Mombasa port and the Inland Container Depot in Nairobi.

“The underachievement is due to ACA exit from ports of entry, that is, Kilindini (habour at the port of Mombasa) and ICDN (Inland Container Depot Nairobi),” ACA said in a scorecard report for three years through June.

The department, headed by PS Johnson Weru, says the country missed the target for seizure of counterfeit goods by wide margins of more than 70 per cent during the period.

During the two years, counterfeit goods valued at Sh558.9 million were seized against a target of nearly Sh2.13 billion — an under-performance of 73.71 percent.

Inspectors from ACA were among those from more than 20 other agencies who were kicked out of the port of Mombasa, the Nairobi container depot, and other major ports of entry for imports in 2019.

Delays in clearing goods

This was part of the government policy to reduce inefficiencies and delays in clearing goods at the port, thereby piling costs for importers through East Africa’s largest seaport.

The move saw agencies operating from the port fall to four — Kenya Revenue Authority (KRA), Kenya Bureau of Standards (Kebs), Kenya Plant Health Inspectorate Service (Kephis), and Kenya Ports Authority (KPA) — from more than 20 previously.

The four are seen as the most critical in the clearance of imports.

Besides ACA, other agencies which left the customs points at major ports of entry included Pharmacy and Poisons Board, Sugar Directorate, Kenya Wildlife Service, Kenya Dairy Board, Central Firearms Bureau, and Kenya Radiation Protection Board.

“At the time, we were told we have to go into intelligence-led investigations. So instead of standing at the port when the container is being opened, we have to wait for tip-offs or do some investigations to see whether there would have been counterfeits,” Flora Mutahi, the ACA board chairperson, told the Sunday Nation.

“We should have been given time to build (capacity for) an intelligence-led unit because now being able to inspect documentation to try to find counterfeit was not easy in early days.”

The Kenya Association of Manufacturers (KAM) has in the past estimated that about 70 per cent of counterfeits are imported, the bulk of which are from China and India where the low cost of production has encouraged bulk manufacturing.

Conservative estimates have suggested the government loses between Sh50 billion and Sh200 billion in potential revenue to counterfeits every year.

Counterfeit goods

ACA seized fake goods worth Sh232.2 million against a goal of Sh900 million in the fiscal year ended June, Sh326.7 million against Sh1.23 billion the year before, and Sh993.4 million versus Sh1.02 billion in 2018/19 financial year, the data from the Trade ministry shows.

Counterfeit goods worth Sh212 million have been destroyed in the three years, significantly short of Sh2.15 billion that had been earmarked.

The ministry has attributed the gaping shortfall to “lengthy court processes”.

Some 979 cases were resolved during the three-year review period out of 1,913 files which were investigated, beating a target of 791 cases largely on “increase in the number of cases resolved through out of court settlement”.

A person convicted of trading, manufacturing, hiring out, exhibiting for sale, importing, or transiting fake goods through Kenya is liable to a fine of not less than three times the value of the prevailing retail price of each counterfeit item or article under the current law.

The fine can be substituted or accompanied by up to five years in jail. Repeat offenders face a maximum of 15 years imprisonment or a fine of at least five times the value of the prevailing retail price of the counterfeited goods under section 35 of the Anti-Counterfeit Act, 2008.

ACA, the state body formed in 2008 to combat dealings in fake goods, had in 2018 said it planned to propose stiffer, deterrent penalties for offenders through an amendment to the current law.

“It (counterfeiting) should be considered economic sabotage and the offence classified as an economic crime,” Ms Mutahi had said in an interview in August 2018.