Survey: Price factor ignites demand of counterfeits

THE high cost of genuine products in the local market has created an insatiable demand for cheap products among Tanzanian consumers, reveals a recent survey.

This desire for cheap goods has consequently created a fertile ground under which counterfeits and substandard products gain popularity in the country, a study by Tanzania Knowledge Network (TAKNET) confirms.

“The non-suspecting buyers who rush for cheap prices can rarely distinguish between genuine and counterfeit goods,” the research on importation of counterfeit products says.

TAKNET is a joint initiative by the UN through its Joint Programme on Capacity Development for Development Management under one UN initiative, the Tanzania government and the Economic and Social Research Foundation.

The network was established to promote sharing information on various aspects of social and economic development and to stimulate discussions by informed individuals on current development issues. 

It organises thematic and topical discussions focusing on issues of national interest. These discussions by informed and experts result in valuable consensus building on policy and issues of concern to the Tanzanian society. 

The major objective of its survey was to explore how the government and other stakeholders can control the quality of imported goods. It was specifically aimed at finding a solution to curb the importation of counterfeit goods which are detrimental to public health and the country’s economy in general.

The dictionary definition of counterfeit is “to make an imitation of something with intent to deceive.” Thus, a manufacturer (or seller) of a counterfeit cheats intentionally by selling fake goods to a customer.

According to the TAKNET researchers, some estimates put the market of counterfeit products in Tanzania at about 525 million US dollars per annum. Worldwide trade in counterfeits and pirated goods runs to around 250 billion US dollars per annum.

The Confederation of Tanzania Industries (CTI) says government revenue loss due to counterfeits is possibly 15 per cent to 25 per cent of the total domestic revenue, close to 900bn/- per annum, on account of tax evasion due to counterfeits and substandard goods.

The TAKNET survey says smuggled goods (not always counterfeits) are lumped together with counterfeits because they deprive government of the expected revenue.
The aim of the discussion on importation of counterfeit products was to provide a virtual platform to the public to share views on how to overcome the problem in the Tanzanian market.

The discussion intended to determine the extent of demand and supply of counterfeit goods in the country; to investigate the existing laws, law enforcement and measures to curb the trend; to explore the control mechanism in existence and their effectiveness among the deterrent mechanism in existence and to draw up conclusion and policy recommendations that will help to curb the existence of counterfeit goods in Tanzania.

Researchers in the said study observed that “so long as the demand for goods outstrips supply, the consumers will tend to accommodate all types of qualities found in the market.”

People are also driven by cheap prices because their purchasing power is tool. In Tanzania, counterfeit goods that are popular include cloths, mobile phones, building materials, shoes, pharmaceuticals, electrical items, perfumes and sunglasses, just to mention few.

Other sources say worst popular fakes are possibly batteries and chargers that have the potential to kill instantly upon initial use or when stumbled upon accidently.

TAKNET researcher Wenceslaus Aloyce warns that “we should not spend too much time pointing an accusing finger at China when a lot of counterfeits are produced by foreigners or by our own people here in Tanzania.”

A new type of counterfeiting ‘invented’ in Tanzania mentioned in the TAKNET study involves adulteration (kuchakachua) of motor fuel with its debilitating effects on motorists.

According to a 2009 study, most counterfeit products trace their origin in Asian countries such as China, India, United Arab Emirates, Indonesia, Taiwan and Thailand and some African countries such as Kenya, South Africa, Mozambique, Malawi and Nigeria.

According to the TAKNET survey, it is also said that some Asian countries genuine manufacturers can alongside establish parallel lines for producing counterfeits or substandard goods targeted to specific poor countries.

“The crave for whatever is imported is what fuels the growth of counterfeits,” contends researcher Deo Mutalemwa.

Another researcher Angelo Lunyungu adds: “We do all know that some of the products imported are also available in our local market; for lack of nationalism we opt for the imports, thereby ignoring our own products.”

In Tanzania, appropriate laws and institutions to oversee the regime for control of piracy and counterfeits have been put in place.

Tanzania has also signed and ratified a number of international treaties on the protection of Intellectual Property Rights (IPR) so as to bring its posture to international standards.

  The IPR laws include for instance the Paris Convention for the Protection of Industrial Property (1883), the Trade Mark Law Treaty (1981), Lusaka Agreement establishing ARIPO, The Harare Protocol, WIPO Treaty (1970) and the International Union for the Protection of New Varieties of Plants (UPOV). IP laws which are administered by the Business Registration and Licensing Agency (BRELA) established since 1997.

Tanzania has promulgated laws to deal with piracy and counterfeits, such as the Trade and Service Marks Act of 1986, the Copyright and Neighbouring Rights Act of 1999 which prominently includes provision against the manufacture or modification or importation for sale or renting of any device whose copyright is already established.

The law lays down specific punitive actions to met out the culprit. If this Act were effectively enforced, it could possibly have been able to reduce piracy to a considerable degree in this country.

There are also other relevant Acts like the Merchandise marks Act of 1963 that specifically prohibits importation of counterfeits and empowers appropriate officers to seize, detain, forfeit or dispose the counterfeits with fines imposed on the culprit. It empowers the Fair Competition Commission (FCC) to investigate godowns and premises suspected to hold illicit goods.

The FCC joins other institutions in the forefront engaged in efforts to deal with the challenges of counterfeits, pirated and substandard products like the Tanzania Food and Drugs Authority, TBS, BRELA, Tanzania Revenue Authority, Energy, Water Utilities Regulatory Authority, the Attorney General Chambers and the police force.

Apart from these institutions - weakened for lack of funds and manpower - there is lack of good governance related to flagrant disregard of established laws by the citizens.

Researcher Ricky Renson says lawlessness is becoming ingrained in national culture to the detriment of the nation.

“A country without law and order is a dead walking country. Because ethic is dead and mourners are few, that’s why illegal business penetrates to our country,” he explains.

Another researcher, Abdalla Hassan, advocates for public education to enable consumers distinguish between fake or counterfeit products and genuine ones. This could include public awareness sessions by TFDA, TBS, Tanzania Food and Nutrition Centre and others through exhibitions and fairs.

Other methods advocated by the researchers were for companies to set aside budgets for advocacy of nationalism among Tanzanian consumers and setting out internal marketing strategies to leverage consumption of the home-made products.

Generally, Tanzania is lauded for having established counterfeit fighting institutions that have potential to deal with the vice decisively.

These institutions, however, require strengthening through more funding and manpower as well as toughening the legal instruments.