Why is the counterfeit market thriving in Kenya? Is it because of over-regulation, over-taxation? Is it corruption preventing people from going legitimate? Or maybe it’s all the above reasons.
According to a report released on Monday by the Anti-Counterfeit Agency, business in counterfeit products has grown into a KShs.70Bn per annum business, rivaling Kenya’s key foreign exchange earners like tourism, tea as well as horticulture.
Let us face the facts; many government corporations as well as other legitimate business enterprises are making losses amounting to billions, while the illegal business is making the owners profits to the tune of more than 60 billion shillings.
The most affected items are medical drugs, electronics, CDs and pirated software, alcoholic drinks, mobile phones as well as farm inputs and even as the Anti-Counterfeit Agency launches its campaign to rid the counterfeit products out of the market, Kenya’s investment profile is still fraught with reputational risks.
But one may ask, what has made this business thrive so much? One of the major reason is the over taxation on corresponding genuine products. Trading in the genuine products is an expensive venture that will see the government tax you on every penny. So, who would go the genuine way and be heavily taxed when there is an opportunity for you to keep most of your profits with no taxation at all.
The second thing is corruption. Most of these counterfeit products are imported and their entry into the country is all thanks to corrupt public servants at the ports. There is also the issue of over regulation that has stifled innovation and creativity among entrepreneurs. Over-regulating on how genuine products should be traded leads to a prolonged process of gaining certification leading to people opting for the easily accessible and often cheaper counterfeits.