Why trade in contraband is a bad recipe for manufacturing sector

Photo credit: File | Nation Media Group

Manufacturing is one of the pillars of President Uhuru Kenyatta’s Big Four Agenda and has the potential to transform the country’s economy, catapulting industrial growth and creating hundreds of thousands of jobs.

However, illicit trade particularly influx of contraband and counterfeits is a huge impediment to the realisation of growth in the goods making sector.

Notwithstanding, President Kenyatta’s government has progressively addressed the threat of illicit trade through a multi-agency approach.

They include collaborations by Kenya Revenue Authority (KRA), Ministry of Interior and Coordination of National Government, KEBS, NACADA, Anti Counterfeit Authority and Ministry of Health among others. Specifically, inter- agency collaborations have been augmented by the formation of a multi-agency taskforce on corruption and economic crimes, which combats illicit trade through joint operations.

These agencies have so far worked to deter illicit trade through collaboration in various areas such as exchange of intelligence at regional and international levels as well as joint inter-agency operations.

Illicit trade

In the first quarter of the financial year 2020/2021, the multi-agency teams led by KRA, conducted 39 operations to combat illicit trade across the country and seized goods worth Sh99 million. In the month of October 2020 alone, 17 operations were conducted across 17 counties and goods worth Sh218 million seized.

These are positive strides towards bringing down the menace of illicit trade that costs Kenya billions of shillings in revenue every year.

A study conducted by the Anti-Counterfeit Authority (ACA) between October 2019 and February 2020 affirms that indeed, illicit trade cost Kenya Sh103 billion in revenue in 2018. Surprisingly, the figure was up from the Sh101. 23 billion recorded in 2017.

A majority of economists argue that the potential in the manufacturing industry has, nonetheless, been elusive, despite efforts made so far. I will accurately state that the remedy to a robust manufacturing industry, is a strategic and assertive approach to bring to a halt the menace of illicit trade.

The government has not been dormant in the area of strategic planning against the menace, hence an elaborate strategy to combat trade in contrabands and counterfeits based on the National Action Plan and Implementation framework to Combat Illicit Trade has been rolled out for 2019-2022.

The strategy synchronises all institutional enforcement and public awareness measures to combat illicit trade in the country through exchange of intelligence at regional and international levels as well as joint inter-agency operations

This strategic approach will deal head on with the influx of illicit goods into the country, which poses a serious threat to growth of the manufacturing sector. Illicit trade undermines creativity and innovation, resulting in job and revenue losses besides funding organised crime and terrorism.

So all hope is not lost in streamlining manufacturing to propel Kenya into an industrial powerhouse in sub-Saharan Africa, since the country has a well-diversified economy that will grow tremendously, especially if the local market is not exposed to illicit trade, which poses unfair competition.

So far, positive strides have been made, as shown by statistics of seizures of illicit products, arrests and prosecutions of perpetrators. In FY 2018/19, over 272,940 brands of various products worth over Sh.6 billion were seized following a countrywide crackdown on illicit trade and counterfeits.

Goods seized

Additionally, 4,211 people were arrested and 1,581 outlets closed for contravening various laws on illicit trade. In financial year 2019/2020, 100 operations were conducted and goods worth Sh1.2 billion seized and erpetrators arrested.

Goods were seized by agencies for being counterfeits, sub-standard, concealed, uncustomed, expired or unfit for human consumption. They included; ethanol, alcoholic products, sugar, rice, cigarettes, liquor, cooking oil and cosmetic products.

Through multi-agency operations, consistency, resilience, high intelligence exchange and punitive measures to perpetrators are paying off. Other than, enhancement of intelligence collection, increased funding to enforcement agencies and institutional reforms are also explored during the strategic planning sessions against illicit trade.

Through the multi-agency framework, the government has ensured improved collaboration and information sharing with partner agencies and market leaders within the private sector.

Specifically, KRA as the lead agency in combating illicit trade in the country, has enhanced its Revenue Protection Service Unit and the Domestic Taxes Department and intensified its market surveillance. KRA has steadily enhanced its coverage of all border stations, airports, seaports and inland depots leading to increased seizure of illicit goods.

The measures being taken by the government to combat illicit trade are putting a stop to the menace, boosting the manufacturing sector, creating employment opportunities especially for the youth and improving the safety of Kenyan consumers.