For far too long, Kenya’s alcohol industry has been a soft target for unscrupulous traders keen on making a kill at the expense genuine manufacturers.
That the trade in fake brews puts the lives of thousands of hardworking Kenyans at risk has never been taken with the seriousness it deserves. To add to this, the government loses billions of shillings in unpaid taxes from the thriving trade of counterfeit drinks.
The recent seizure of a consignment of Sh822 million worth of excise stamps in Nairobi is the tip of the iceberg. It indicates how lucrative the illegal practice is to the criminals. It also goes to show how big this black-market business is.
Imagine how many more consignments have slipped unnoticed into the market and the billions of shillings in uncollected taxes that the country has lost.
Genuine businesses continue to shoulder the tax burden even as these criminals amass ill-gotten wealth gleefully. At the moment, the illicit traders are riding on the popularity of genuine brands, which brand owners have invested hundreds of millions of shillings to build, to sell the fakes.
The risk to the health of the consumers is too high to fathom. The cruelty of counterfeiters is pushing manufacturers out of business as they price their products way below the market rates since they do not incur significant expenses such as taxes, marketing costs as well as supply chain management overheads.
Looking at the extent of the risks to the lives of the consumers, the loss of revenue to the government and the financial cost it has on genuine manufacturers, it is clear that this crime needs to be stopped.
As industry players through our umbrella watchdog,the Alcoholic Beverages Association of Kenya (ABAK), we welcome the swift action of the arms of government in addressing this challenge. We however believe that more needs to be done to ensure that there is a level playing field for all investors.
The sudden rise in the cases of illicit trade of alcoholic drinks in the market comes at a time when The Inter-Agency Task force on Control of Portable Spirits and Combat of Illicit Brews, a team appointed by the Presidency, is readying major changes to the Alcoholic Drinks Control Act 2010 commonly known as the Mututho law.
As an industry, we have been closely involved in the preliminary consultations leading to the proposed legislation and we’re looking forward to the draft Bill addressing our key concerns.
A critical element in this new law is a mechanism to ensure closer co-ordination between the government agencies involved in the regulation of the alcohol sector and engagement of the key stakeholders.
Market intelligence gathering and sharing is vital for this collaboration to succeed. Already, ABAK and the Kenya Revenue Authority (KRA) are making commendable steps on this matter. We recommend that this collaboration, which should be anchored in law,be expanded to all the parties under the Inter-Agency team.
For the police to arrest these criminals they will need the expertise of key regulators such as KRA and the Kenya Bureau of Standards among others. The law enforcers will also need input from the industry players to help them identify genuine products from the fakes.
Public participation in governance is now enshrined in the Constitution. We are keen to see the government put in place a system of information sharing within its agencies and also with the industry and the public.
(Anthony Kagiri is the Vice Chairman of ABAK, the umbrella industry watchdog representing alcohol companies KBL, UDV, Africa Spirits Ltd, London Distillers, KWAL and WOW Beverages)