IT firms demand lower taxes

September 26, 2008

, NAIROBI, September 26 – The market of IT related equipment could grow by over 200 percent per year if restrictive taxes in the local market are eliminated.

Hewlett Packard (HP) East Africa’s Enterprise Sales Manager Charles Munyororo explained on Friday that Kenya was a frontier market for Information Communication Technology and could record double digit-growth if the government reduced taxes on peripheral devices and inputs such as computers and IT spare parts.

“It would increase our business and primarily around the use of devices such as laptops, servers and storage technology which would help people to host web services in the country,” he said.

Mr Munyororo told Capital Business that the entry of Internet based companies such as Google in the Kenyan market coupled with the arrival of the undersea fibre optic cables would have the knock-on effect of creating a vibrant IT sector.

The industry has in the last few years seen substantial development, which has been attributed to the growth of the middle class coupled with the cutting down of the prices of Personal Computers (PCs).

Although the sector has a huge potential to grow, the manager noted that it was being crippled by counterfeits. He disclosed for example that the market for toners, cartridges and other consumables in the country was losing over Sh500 million every month due to counterfeits.

The industry rakes in Sh737 million ($10million) every month but only about 30 to 40 percent of the sales are genuine products.

Mr Munyororo cited the company’s raid in Nairobi two weeks ago which netted counterfeit products worth over Sh11 million and called on the government to expedite the enactment of the Anti-Counterfeit Bill in order to save IT firms millions of shillings in lost revenues.

“Most of these fakes come from the Middle East and China. But there are some products that are being manufactured locally,” he explained.

HP’s Supplies Channel Manager Eric Kiragu however said they had introduced measures such as holograms to help their customers differentiate between fake and genuine products.

“The hologram on a genuine HP product’s box has a dark blue and a light blue shade. If you move the box from left to right, the dark shade of the hologram should move from either left to right. Our products also have embedded microchips such that if for example a toner is put in a machine, it will be able to identify a genuine from a fake one,” he added.

The firms market share is in the technology services group where they provide servers, software and storage, information technology are above 30 percent while in imaging and printing it is over 70 percent.

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