Economic benefits of lowering software piracy

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April 26, 2010 – The International Data Corporation estimates that reducing the current 80% software piracy rate as at 2008 by 10 percentage points over four years at an annual rate of 2.5 percentage points would create an additional 977 IT jobs and contribute $73.60 million to the GDP. This represents an increase in total revenue for the local IT industry of $40.01 million and additional revenue for the government of $7.18 million in taxation.

According to the latest report released by the Corporation, Kenya had 30,700 people employed in IT-related positions in 2008 including 7,800 in the software industry alone, a figure that is expected to rise to more than 48,000, in 2013.

At the same time the IDC says the surge in broadband will drive a spike in sales of IT equipment and services over the next few years. Faster bandwidth and increased penetration will open up new spheres for content development and advanced service offerings.

The independent non-profit policy research organisation dedicated to reducing global poverty and inequality estimated that Kenya’s percentage of nationals with university education living abroad in the year 2000, was between 25% and 50%.

The report also cites the unauthorised copying, reproduction, transfer, and usage of copyrighted software as among the most significant threats to the IT industry – the software industry in particular – in the Middle East and Africa (MEA) region. The MEA region as a whole had a piracy rate of 59% in 2008, but countries like Iraq, Libya, Nigeria, and Zimbabwe had rates of pirated software well above 80%; in other words, out of 100 software units installed in 2008, more than 80 were illegally produced, distributed, and sold.

Appreciation for the importance of intellectual property, however, remains low, and enforcement continues to be a major challenge. The Kenya Copyright Board, for example, has had limited success fulfilling its mandate due to a chronic lack of funding, staff, and facilities.

In an effort to reduce instances of software piracy, software maker Microsoft is working to educate partners and consumers about the risks of getting software from suspicious sources.
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“We are investigating the sources of these spam and counterfeiting operations and are doing everything in our power to stop this kind of activity. Purchasing from known and trusted sources and avoiding suspicious deals are the best ways to avoid wasting valuable time and money on counterfeit or infringing software,” says Andrew Waititu, Anti-Piracy Manager, Microsoft, East and Southern Africa.

Few anti-piracy raids were conducted in Kenya in 2008, and those that were carried out were often marred by loss of evidence or an insufficient amount of seized goods. The Act has certainly set out the maximum penalty as Sh800,000 with a maximum custodial sentence of ten years for copyright offenders, but, given the current high levels of copyright infringement, the penalties should be even more punitive and deterrent.

According to Marisella Ouma, the Executive Director of the Kenya Copyright Board; “We have continued to take enforcement action to rid the market of the piracy vice. Although it is a tough war against these software pirates, our action is gradually paying off with punitive action resulting in positive gains.”
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When the raids do end up in civil and legal proceedings, court cases tend to drag on indefinitely, and in some instances, legal issues, such as the presumption of ownership, are interpreted in favour of the defendants.

Nevertheless, against this background, it should be noted that the Kenya Copyright Board, backed by Kenyan IT industry representatives, has embarked on an intensive campaign to raise awareness of piracy-related dangers and damage to the country’s economy and society, and, although software piracy remains a problem in Kenya, there have been examples of companies successfully enforcing their legal rights and obtaining full compensation in anti-piracy cases.

When benchmarked against the IDC Roadmap to Reduce Software Piracy, Kenya scores relatively well in legislation, education, and collaboration. IDC believes, however, that greater efforts should be pursued in enforcement actions and in leading by example, with the government becoming a full legal user of software, thus triggering a virtuous emulation effect. The economic benefits of such improvements would not go unnoticed.

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