Dar drug barons now enter fake goods market By JOSEPH MWAMUNYAGE THE EAST AFRICAN Authorities in Tanzania now believe that powerful drug barons in the country have moved actively into the lucrative business of importing counterfeit goods. The country has lately seen an unprecedented upsurge in sales of counterfeit products. Since March, the Fair Competition Commission (FCC) has destroyed counterfeit goods worth over Tsh200 million ($180,000). The goods, which were impounded at the port of Dar es Salaam, included electrical items, tube lights, energy savers, extension cables, bulbs and shoe polish. There were also 240 cartons of TV sets and 404 cartons of loudspeakers. In most cases, the importers of fake goods do not pay taxes. Even when they do, the goods value is underdeclared, thus denying the government revenue. In an exclusive interview with The EastAfrican, Deputy Minister for Trade, Industry and Marketing Hezekiah Chibulunje said the government was monitoring the trend closely and is poised to come up with new measures to stop the illegal business. Mr Chibulunje said the drug dealers have changed tack after stringent measures were introduced to curb drug trafficking. They have abandoned drugs for fake goods because the risks involved are minimal. In a surprising revelation, the government admitted that the fight against counterfeits was a war against very powerful individuals with a lot of money who once engaged in illegal drug trafficking. To launder the money, the ex-drug dealers were turning to lucrative counterfeits and other illegal business. A new law is expected to make importation of fake goods more difficult as it will allow the FCC to visit retail outlets. The director general of the FCC, Geoffrey Mkocha, told The EastAfrican last week that the problem of former drug barons engaging in counterfeits is not unique to Tanzania. He described it as a cross-border trade which takes place alongside drug trafficking, trade in weapons, human trafficking and money laundering. The head of the anti-counterfeit department at the Fair Competition Commission, John Esau Mponela, recently told The EastAfrican that the issue of rampant counterfeits is a recent phenomenon in Tanzania. Mr Mponela said the trade in counterfeits, which includes electronic and electrical goods, medicines, batteries, matches, tyres, motor vehicle spares, shoe polish and toothpaste has been expanding. In some areas such as electric goods, it is feared that counterfeits account for between 30 and 40 per cent of the total value of imported goods. The trade liberalisation of the late 1980s and globalisation have opened the doors for such goods in Tanzania, he said. According to Mr Mponela, a recent survey by ICR Corporate Research estimated that Tanzania Cigarette Company Ltd is losing approximately 40 per cent of its income due to counterfeits. The company also estimates that East African Community member states lose approximately $20 million annually in taxes due to counterfeits. The developing countries are increasingly becoming victims of counterfeits with huge negative effects in terms of lives and health; destruction of property and value for money losses. Even though the FCC has wagged an unrelenting war against fake goods, there are certain provisions of the law that water down its crusade. The FCC is pushing for amendment of these statutes. The legal framework in place for fighting counterfeits in Tanzania is the Merchandise Marks Act, 1963 CAP.85 RE 2002 (formerly CAP.519) as amended in 2004, which makes dealing in counterfeits an offence. The Merchandise Marks Act, 1963, which came into force on April 15, 2005 42 years after its enactment is an old law and thus not surprisingly full of gaps. The Act has been found to be deficient in two particular areas. The first is that in accordance with the Act, the person who is vested with the task of carrying out the functions specified only defined under Section 2(1); but his powers are not established expressly in the Act. The Act further sates that, such a person, known as the Inspector, cannot under the existing provisions enter any privately owned premises suspected to contain counterfeits until he first obtains a warrant from a magistrate for every premise the inspector suspects to harbour counterfeits. To do away with these shortcomings and after advice on what should be done to close the gaps within the law, the FCC in consultation with the Attorney Generals chambers forwarded the proposals to parliament for amendment of the Act.