Counterfeits, a thorny Tanzania’s industrialisation dream

His shock was based on price difference, whereby a pair of shock absorbers for the genuine one was at 1.1m/- but for the fake one was at 170,000/-.

“For me, I was prepared to buy for the genuine one but, there are many people who opt for the so called ‘copied’ one because of the price, despite the fact they won’t last longer,” says Nyambea, who is a lecturer at one of the Dar es Salaam-based universities.

Car spare parts is just one area, in almost all sectors are overwhelmed with the increasing number of counterfeits, which indeed make Tanzania and local manufacturers lose billions of shillings in terms of tax.

Apart from revenues, there are many people who die because of taking counterfeit drugs and some end up losing their properties because of fire as a result of the unknowingly using counterfeited electric cables.

Researchers Prof. Honest Prosper Ngowi, Godfrey Mkocha and Ellis de Bruijn on the state of counterfeit goods in Tanzania have made a startling discovery; saying the findings from the recent surveys conducted amongst manufacturers, businesses, consumers and multinational Trade Mark owners indicate that approximately 50 percent of consumer goods in the market are likely to be counterfeits.

Commissioned by the Confederation of Tanzania Industries (CTI), the study reveals that counterfeiting in Tanzania has grown by at least 32per cent as an educated estimate in 2008 would put counterfeit products at 18 percent of Tanzania’s merchandise trade.

Presenting the findings at the stakeholders’ meeting in Dar es Salaam, Prof. Ngowi says: “Despite the fact that it’s a global problem, but it’s less in developed than in developing economies like Tanzania.”

In Tanzania, the researcher says: “Counterfeiting is a big and growing challenge; more rampant than occasional counterfeits; wide variety of goods are counterfeited--intermediate and finished goods.”Prof. Ngowi who is also a lecturer at Mzumbe University says that there has been a case of counterfeiting revenue stamps aiming to evade tax.

The study identified key entry points and countries of origin as Dar es Salaam and Tanga ports and airports as well as porous borders of Arusha, Mbeya, Kilimanjaro and Mwanza, Pemba and Zanzibar ports.

According to the study, counterfeits in Tanzania mainly originate from China, India, Indonesia, Taiwan, Singapore, Pakistan, Hong Kong, S. Korea, Bahrain, Malaysia, Burma, Thailand, Chile, Kenya, South Africa, Mozambique, Malawi and Zambia.

The study also describes Dubai as a new centre of counterfeits where re-packaging and labelling is done after production in China.

Prof. Ngowi further divulges ways in which counterfeit works in Tanzania such as imported counterfeits whereby businessmen take product to manufactures normally in China; commission them to imitate the products at low quality and faking the genuine names.

“It is also through domestic counterfeits, whereby the perpetuators do fake names, volume, expiry dates; and sometimes perpetuators put piped water into the genuine bottles.

Beers and spirits are being diluted and re-packed in genuine containers. The similar challenge is being seen in expired fertiliser and seeds which are also re-packed in new bags with new expiry date, inferior fertilizer being re-packaged into the superior ones.”
Reason behind counterfeiting;

Researchers cited some of the reasons behind the ‘illegal’ business, as wrong interpretation of what a market-based economy as they equate free market economy with “anything goes”

Other reasons include inadequate market based economy/ “market rules” based economy, organised counterfeits dealers, who use the highly porous and long borders.

Another researcher, Ellis de Bruijn cites poverty as another pulling factor for people to buy counterfeits as they are being lured by low priced counterfeits.

Bruijn who is also the managing director of the Nairobi-based Compol Associates cites weak control system, corruption and vested interest as well as huge profits which counterfeiters reap, inter-linkages between counterfeiting and other cross border crimes such as money laundering, drug and human trafficking.

Low prices and inadequate consumer awareness and inadequate coordination and collaboration among responsible authorities

The researcher also cites the China factor, which include high tech, small production units.
Why counterfeits are harmful

Effects of counterfeiting are many and closely related, far-reaching such as possible death for example in cases of fake medicines, fires/accidents.

Evarist Maembe is a member with CTI, who decried over the influx of counterfeits in the country’s market outlets, calling for urgent measures to address the challenge.

He says there are numbers of negative impacts of counterfeiting including damages to properties and sometimes leads into causing fires.

“It is may also discourage investments in the country as investors are not interested in investing in a country where counterfeits are at large…this will make the government lose revenues as well as employments.”

Genuine dealers becoming uncompetitive, enterprises may reduce or stop production, sales volume, revenues and profits.

“To me I see these findings, are wake up call to policy makers so that they came up with solution to the challenge,” Maembe says, adding: “My fear is that Tanzania’s dream of getting into industrialisation as counterfeiting is a thorny to it.”

CTI says counterfeits cost the government losses of between 15-25 per cent of total domestic revenue annually, and between 540bn/- and 900bn/- annually in tax evasion related to counterfeits and substandard goods.

Acting chief Pharmacists in the Ministry of Health, Gender, Community Development, Eldery and Children, Edger Basheka also expressed concerns on the matter, calling for collective measures to address the menace.

Adonis Bitegeko, an official from the Tanzania Food and Drugs Authority (TFDA) commended CTI for carrying out the study; saying the findings call for more awareness campaign, so that the public is aware of what is genuine and counterfeits.

He also asked Trade Mark owners to come up with a new approach whereby they make regular surveillance in the market; to address counterfeiting as earlier as possible.According to Bitegeko, the government has started working on reviewing penalties on dealers of counterfeits.