Fake goods cause 4trn/- loss to Tanzania SOSTHENES MWITA Daily News; Sunday,December 28, 2008 @20:00 Counterfeit and substandard industrial products continued to flood the Tanzanias domestic market in the year 2008, causing a revenue collection stink. In fact, the year saw illegally manufactured, fake and substandard products increase from about 35 to 40 per cent of all goods in the local market. A report prepared by the Confederation of Tanzania Industries (CTI) during the year says that Tanzania, like any other nation around the world, suffers enormously from the adverse effects of the flooding of counterfeit and substandard products. Invariably, the impact of counterfeit and substandard goods hurts the economy occasioning dwindling government revenues. The government, for example, loses between 540 and 900 billion shillings per year due to tax evasions that are related to counterfeit and substandard goods, the CTI says. In the year 2008 the government may have lost an estimated four trillion shillings due to the prevalence of counterfeit goods in the domestic market. Fake industrial equipment and raw materials generated a loss of 1,000bn/-; vehicle spare parts (800bn/-); agriculture inputs (600bn/-) and chemicals (400bn/-). More revenue was also lost due to the presence of fake pharmaceuticals (400bn/-); building materials (320bn/-); textiles and clothes (240bn/-); food and beverages (200bn/-) alcohol and drinking water (200bn/-). This brought the total loss to 3,160bn/-, but this is a mere tip of the iceberg, the CTI says. The goods also compound health problems (fake medical drugs and foods); hurts businesses and consumers and complicates project implementation for government departments. The presence of fake medical drugs and foods is an annoyance to the entire society as it touches nearly everyone. Equally repugnant is the heavy presence of fake television and radio sets; satellite dishes and signal receivers; computers, watches, mobile phones, domestic and industrial fans and an array of domestic appliances including substandard electrical cookers, refrigerators, washing machines, irons and shavers. A residential house in Kigamboni went up in flames during the year when an imitation (fake) circuit breaker failed to control an upsurge in electricity. The market is flooded with equally bad main electrical switches, electrical cables, power extension cords, power stabilizers, sockets, plugs and junction boxes. Counterfeit products are goods that are unauthorized imitations of branded items intended to be passed off for an original with the purpose of defrauding or deceiving the consumer of the said item into believing that it is the original product. A counterfeiter causes the owner of the brand name to effectively lose a customer by misleading the customer into purchasing a counterfeit item (which is substandard in most cases) in the belief that he is purchasing the genuine article. Counterfeiting covers manufacturing, producing, packaging, repackaging and labelling. It involves making of any goods whereby those protected genuine goods are imitated in such manner that those other goods (counterfeits) are identical or substantially similar copies of the protected goods. Counterfeit goods or pirated goods or offending goods are in many cases used interchangeably and they mean goods that are the result of counterfeiting or piracy. Counterfeit products occur when the intellectual property rights (IPR) has been stolen. In other words, counterfeiting is stealing, the CTI says. It is theft that needs concerted efforts by governments and the international community to reduce or eliminate. On the other hand, counterfeits are substantially substandard products which fail to meet requirements of the relevant standard when tested using appropriate test methods. In Tanzania, the issue of rampant counterfeits and substandard goods is a recent phenomenon. People have started to question whether Tanzania has been turned into a dumping ground for sub-standard goods or counterfeits and want to know what is being done to arrest the situation. The main entry points for fake goods on the Mainland are Dar es Salaam, Arusha, Mbeya, Kilimanjaro, Tanga and Mwanza. In Zanzibar, counterfeit and substandard goods filter in through Pemba and Zanzibar ports and the largely porous seashore approach. Counterfeit products originate mainly from Asian countries including China, India, United Arab Emirates (Dubai), Indonesia, Taiwan, Singapore, Pakistan, Hong Kong, South Korea, Bahrain, Malaysia, Burma and Thailand. Chile, a South American country, also harbours notorious counterfeiters. There are some African countries also in the list. They include Kenya, South Africa, Mozambique, Malawi, Zambia and surprisingly, Tanzania. Some products that are manufactured in Tanzania are imitated overseas. Tanzanian high quality khangas, for example, have cheap copies coming in from India. Tanzania has a highly porous border that has little surveillance. Apart from Tanga harbour, Horohoro, Sirari, Mtukula and Tunduma border that have on-site regulatory officials, the Tanga coastal line (about 60 kilometers long) has 17 landing sites that handle mostly unofficially declared small cargo. Some of the cargo may be counterfeits and substandard. There are many other landing sites along the Indian Ocean that cater for small cargo. They include Kisiju (Coast region), Boko (Dar es Salaam) and Bagamoyo. Border posts such as Horohoro, Namanga, Holili, Tarakea, Songwe and Tunduma have law enforcement authorities, but they lack expertise for identifying counterfeits. Porous borders with Kenya, Uganda, Rwanda, Burundi, DRC, Zambia, Malawi and Mozambique are entries for smugglers of fake goods. The ability of state institutions to police or regulate the conduct of persons living in such areas or using such routes is limited. Further, any goods actually impounded can still enter the market due to corruption which is on a wider scale in Tanzania, the CTI report says. The most widely distributed counterfeit or substandard goods in Tanzania include hand-hoes condoms, toothpaste and used tyres (from China); mosquito coils (from Indonesia, Singapore and the UAE); razor blades, salt, corn oil, engine oil, Aerosol, brake fluids and toothbrushes (from UAE). The offending goods also include toilet soap, detergents, absorbents, cotton wool, surgical cotton gauze, safety matches, jute bags, condoms, Topaz razor blades (from India). Counterfeit products that confounded law enforcement agencies included fake foreign and local banknotes. Other counterfeit goods widely available in the local market include mineral water, tomato paste and wheat flour (from Italy); gasoil (from Bahrain); Tomato paste (from Oman); Condoms (from South Africa), according a report by the Tanzania Bureau of Standards (TBS). Fake industrial equipment and raw materials that are readily available in the domestic market include motor vehicle spare parts, agricultural inputs, industrial and domestic chemicals, pharmaceuticals, building materials, textiles and clothes, food and beverages, alcohol and bottled drinking water. The influx of counterfeit or substandard goods cause huge losses in government revenue and frustrate employment opportunities; profitability and the performance of the manufacturing industry. They are a dangerous health hazard for; they often cause diseases and deaths. The phenomenon also intensifies poverty and its manifestations such as infant and maternal mortality. Greedy people who deal in fake products are involved in high risk business. They are criminals who are highly organized. They, invariably, operate clandestinely or under cover. There are world spots which specialize in the manufacture of counterfeits and substandard goods aimed for countries where anti-counterfeits regulations are either weak or are not enforced effectively like the case in Tanzania. The country is increasingly becoming victim to counterfeiters. To be able to address this anarchy, the government needs to formulate and implement an implementable course of action, the CTI says. Such action should include creating public awareness about the seriousness and scale of the problem. The local market should be able to reject such products. There is therefore a need to have sensitization (and capacity building) programme which will particularly focus on training and on advocacy to enable consumers understand the hazards of these products and be able to reject them. While sensitization programmes are an on-going exercise, there is an urgent need for the government (ministries, regulatory institutions, etc) to train large numbers of experts who can be allocated in different ministries and particularly regulatory authorities to deal with the problem. Tanzanias punishment for infringement is weak as a deterrent. The magnitude of the punishment needs to be scaled up. People who trade in counterfeits are more or less rich organized criminals who make huge profits, which they then use to interfere with anti-counterfeits laws and regulations. More powers should be given to inspectors than there are currently in the Act to enable them to track the counterfeits through the whole supply chain. In its efforts to curb the entry of fake products in the local market, TBS conducts surprise market surveillances. Business people found selling sub-standard products are dealt with accordingly. Another step is the opening of offices at border points and certifying products in their original countries to make sure that all products abide by respective Tanzania or international specifications before they enter the local market.