Is Kenya a technology dumping ground?


Published on 18/01/2009

By James Ratemo

The rising number of counterfeit mobile phones and other electronics in the country is reaching worrying levels, yet authorities are either unable or unwilling to arrest the trend.

Companies are losing billions of shillings in profits and the Government losing a fortune in taxes as unscrupulous traders ride on established brands to rip off Kenyans and threaten businesses. It is no laughing matter that Local manufacturers are losing a staggering Sh50 billion annually to influx of counterfeit products and illicit trade. Worse still, the vice has engulfed the health sector and counterfeit drugs are getting way into the country.

A story carried by The Standard’s CCI on Wednesday, the Kenya Association of Manufacturers Anti-Counterfeit and Illicit Trade Committee Chairman Polycarp Igathe said the vice denies the Government Sh35 billion annually in tax revenue. Owners of the established brands lose a lot since unscrupulous traders ride on their brand and sometimes destroy the good image the brand has earned if they sell defective products.

Counterfeits neither come with a warranty nor after-sale services. It is also hard to find right spare parts for counterfeited goods since in the first place ‘ counterfeit manufacturers’ have not provided for the same and you cannot easily trace their origin in case of a problem.

Reality

A survey by The Standard in the past several months reveals that the counterfeit business is booming and there are no signs it will stop any time soon. All kinds of phones with great brand names on their packs are openly displayed to lure unsuspecting buyers.

Sadly, the phones come with fake warranty or none at all, meaning consumers are at risk of losing their money in case the gadgets break down.

Sadly too, even if the products last, the fact that they were shipped in illegally raises questions on the safety of our borders, integrity of our port entry keepers and motive of the perpetrators. Sample this, immediately a new phone is launched in the market, traders in downtown Nairobi take a few days or weeks to have a similar phone but at a cheaper price on the shelves. In most cases these phones are of low quality and only ride on the brand name to sell. This in actual sense is theft of ‘intellectual property’ or piracy.

Pollution

Another danger is that the faster these gadgets break down, the quicker they add to environmental degradation since local consumers have not embraced art of disposing e-waste.

Visit any dumpsite and you will see hordes of ‘dead’ mobile phones and other obsolete or damaged electronics. It is simply a disaster in the waiting.

The situation is even risky especially now that Kenya is gearing to shift from analogue to digital broadcasting come 2012 ahead of the global deadline of 2015.

With our borders proving to be so porous and counterfeiters so shrewd for authorities, manufacturers of analogue television sets would want to dump the products in the country to make a quick kill.

*David Muya and *Paul Maina (not their real names) are stockists of counterfeit phones in Nairobi’s Tom Mboya and Ronald Ngala Streets and they are happy about the proceeds they receive from the illicit trade.

“Most of these high cost phones I sell are genuine but were not meant for this country. That is why they don’t have warranty because the manufacturer only offers warranty if goods are sold in the intended market,” argued Muya. The phones Muya is talking about are commercially termed as ‘grey’ products meaning they are genuine but in the wrong market.

“Kenya has a punitive tax regime and when the phones enter through the legal channel, the custom duty is so high meaning the cost shoots beyond what many can afford. The grey phones, however, are smuggled in from countries with friendlier tax regimes giving me chance to lower price and woo many customers,” said Maina.

Lack warranty

“Since the goods lack warranty, we sell at a lower price compared to goods with one year warranty,” he adds.

Even if we give warranty, it means once the product is determined to be faulty we would be forced to ship it to country of origin where the warranty is recognised for us to get a replacement or free repair,” said Muya.

According to Nokia Communications Manager East and Central Africa Dorothy Ooko, the grey phenomenon occurs when genuine phones destined for a certain market end up being sold in another market.

“High taxes and duties encourage traders to go and buy these phones from another country (like Dubai and China) and then avoid paying these taxes hence sell the phones at cheaper prices,” explained Ooko in an e-mail interview.

Nokia General Manager for East Africa, Gerard Brandjes terms the ‘grey’ or undeclared phones as lost to the state since country does not derive maximum revenue from the expected taxes on mobile phone imports.

|   |    |    Comments (0) |   Add Comment


Today’s magazine

    Crazy Monday
Kogelo attracts ‘wonder-baby’ tourism

Jackie Adams*** gyrated her curvy hips in a sexy motion that resembled a fertility dance. The young woman from New York was among the multi-racial throng that celebrated Barack Obama’s inauguration at Kogelo village in Siaya.