Consumer markets across Africa are booming, which is a good news story. However, there is a sinister side to it. Africa is the dumping ground for counterfeit goods , says Steven Yates, a partner at law firm Adams & Adams.
“We have the perfect storm in Africa. There are a lot of poor people who can’t afford brands but aspire to have them. They will buy if the price is right even if they know a product is a fake .”
Even consumers bent on buying genuine products can face a tough challenge.
Alisa Wingfield, Nielsen executive marketing director for South Africa and sub-Saharan Africa, says: “Many counterfeit products are very hard to tell apart from real products and in certain instances are indistinguishable| unless a lab test is conducted.”
The exact extent of counterfeit goods sales in Africa is unknown, says Yates.
Measurement is stymied by the dominance of traditional small and informal traders who, beyond South Africa, account for upwards of 90% of Africa’s retail trade.
Among the countries worst hit by counterfeit goods is Nigeria, Africa’s largest consumer market and home, according to Nielsen, to 745000 small and informal traders.
“You find genuine brands side by side with their imitations,” says Wingfield.
Putting numbers on the extent of the problem, a study by the Standards Organisation of Nigeria in 2011 found that some 85% of goods sold in Nigeria were counterfeit and substandard.
Across Africa the task of those bent on countering counterfeits is made all the more daunting by the ingenuity of perpetrators.
“Virtually everything you can think of is now being counterfeited,” says
Mohamed Khader, head of law firm Spoor & Fisher’s anti-counterfeiting unit.
The biggest source of fake goods is China. “About 85% of counterfeit goods come from China. The Chinese are resourceful and grab every opportunity they see,” says Yates.
Other major sources of fake goods are Pakistan, Vietnam and Thailand, says Yates.
Many counterfeit goods are in themselves harmless. “We have come across items including golf balls, tea, ball bearings, glues and razor blades,” says Yates.
“Counterfeit hair extensions are also big business.”
However, many counterfeit goods are potentially harmful, if not deadly.
“Counterfeit substandard tyres, vehicle and aircraft spares and building materials can do serious damage when things go wrong,” says Yates.
Serious damage is also being done to commerce by widespread sale of substandard motor oil.
“It is sold as a genuine brand but will cause engines to seize after a few thousand kilometres,” says Yates.
Arguably the biggest menace is counterfeit pharmaceuticals, which are found in abundance.
“In East and West Africa 40%-50% of pharmaceutical products are counterfeit,” says Yates.
“You can readily buy them on the street.”
With fake products including drugs purportedly for malaria and TB, the results are often tragic.
The World Health Organisation estimates that 100000 deaths annually in Africa are linked to counterfeit drugs.
Counterfeiting has also become a serious threat to Africa’s growth.
“Factories have been closed because of competition from counterfeit goods,” says Khader.
“When counterfeit goods reach around 50% of the legitimate product’s volume, there is no point in continuing.”
The plague also deters new foreign players.
“Brand owners want to invest but are put off by counterfeiting and a lack of protection of their IPR ,” says Khader.
What inadequate IPR protection can do to foreign direct investment is highlighted by an International Chamber of Commerce study of Kenya.
It says an improvement in Kenya’s IPR protection regime would result in an increase of US$460-million-$630-million in foreign investment, which in turn would boost employment by up to 185000 workers.
Kenya heeded the message, installing the Anti-Counterfeit Agency under the 2008 Anti-Counterfeit Act.
“Kenya is one of the best examples in Africa of good anti-counterfeit legislation,” says Khader.
But beyond a handful of countries with strong anti-counterfeiting regimes, brand owners are largely in a lone battle.
Their strongest weapon is to register trademarks.
Ideally this should be backed by recording trademarks with customs authorities.
But, says Yates, this is possible only in South Africa and six other countries on the continent.
Brand owners have to take charge.
“They must take action to the full extent of the law,” says Yates. “You must make your brand unattractive to counterfeiters.”
Ultimately Yates and Khader believe the only way to bring counterfeiting under control is through consumer education.
“Kill demand and you kill supply,” says Khader.
“If not we will still be talking about the problem 10 years from now.”
Stafford Thomas writes for the Financial Mail where this article appeared first
Fake goods dumped in Africa are grave threat
“We have the perfect storm in Africa. There are a lot of poor people who can’t afford brands but aspire to have them. They will buy if the price is right even if they know a product is a fake .”
Even consumers bent on buying genuine products can face a tough challenge.
Alisa Wingfield, Nielsen executive marketing director for South Africa and sub-Saharan Africa, says: “Many counterfeit products are very hard to tell apart from real products and in certain instances are indistinguishable| unless a lab test is conducted.”
The exact extent of counterfeit goods sales in Africa is unknown, says Yates.
Measurement is stymied by the dominance of traditional small and informal traders who, beyond South Africa, account for upwards of 90% of Africa’s retail trade.
Among the countries worst hit by counterfeit goods is Nigeria, Africa’s largest consumer market and home, according to Nielsen, to 745000 small and informal traders.
“You find genuine brands side by side with their imitations,” says Wingfield.
Putting numbers on the extent of the problem, a study by the Standards Organisation of Nigeria in 2011 found that some 85% of goods sold in Nigeria were counterfeit and substandard.
Across Africa the task of those bent on countering counterfeits is made all the more daunting by the ingenuity of perpetrators.
“Virtually everything you can think of is now being counterfeited,” says
Mohamed Khader, head of law firm Spoor & Fisher’s anti-counterfeiting unit.
The biggest source of fake goods is China. “About 85% of counterfeit goods come from China. The Chinese are resourceful and grab every opportunity they see,” says Yates.
Other major sources of fake goods are Pakistan, Vietnam and Thailand, says Yates.
Many counterfeit goods are in themselves harmless. “We have come across items including golf balls, tea, ball bearings, glues and razor blades,” says Yates.
“Counterfeit hair extensions are also big business.”
However, many counterfeit goods are potentially harmful, if not deadly.
“Counterfeit substandard tyres, vehicle and aircraft spares and building materials can do serious damage when things go wrong,” says Yates.
Serious damage is also being done to commerce by widespread sale of substandard motor oil.
“It is sold as a genuine brand but will cause engines to seize after a few thousand kilometres,” says Yates.
Arguably the biggest menace is counterfeit pharmaceuticals, which are found in abundance.
“In East and West Africa 40%-50% of pharmaceutical products are counterfeit,” says Yates.
“You can readily buy them on the street.”
With fake products including drugs purportedly for malaria and TB, the results are often tragic.
The World Health Organisation estimates that 100000 deaths annually in Africa are linked to counterfeit drugs.
Counterfeiting has also become a serious threat to Africa’s growth.
“Factories have been closed because of competition from counterfeit goods,” says Khader.
“When counterfeit goods reach around 50% of the legitimate product’s volume, there is no point in continuing.”
The plague also deters new foreign players.
“Brand owners want to invest but are put off by counterfeiting and a lack of protection of their IPR ,” says Khader.
What inadequate IPR protection can do to foreign direct investment is highlighted by an International Chamber of Commerce study of Kenya.
It says an improvement in Kenya’s IPR protection regime would result in an increase of US$460-million-$630-million in foreign investment, which in turn would boost employment by up to 185000 workers.
Kenya heeded the message, installing the Anti-Counterfeit Agency under the 2008 Anti-Counterfeit Act.
“Kenya is one of the best examples in Africa of good anti-counterfeit legislation,” says Khader.
But beyond a handful of countries with strong anti-counterfeiting regimes, brand owners are largely in a lone battle.
Their strongest weapon is to register trademarks.
Ideally this should be backed by recording trademarks with customs authorities.
But, says Yates, this is possible only in South Africa and six other countries on the continent.
Brand owners have to take charge.
“They must take action to the full extent of the law,” says Yates. “You must make your brand unattractive to counterfeiters.”
Ultimately Yates and Khader believe the only way to bring counterfeiting under control is through consumer education.
“Kill demand and you kill supply,” says Khader.
“If not we will still be talking about the problem 10 years from now.”
Stafford Thomas writes for the Financial Mail where this article appeared first
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