Counterfeits; Uganda's Complex Puzzle (Interview)

9th November 2009

Mr Gideon Baddagawa, the executive director, Uganda Manufacturers Association spoke to The Monitor's, Sharon Omurungi, on how counterfeits are affecting local manufacturers. Excerpts:

How much do local manufacturers lose to counterfeits annually?

That requires a survey which we haven't done, but they lose billions of shillings.

Which of these sectors were affected most?

Everyone is facing the challenge equally. The scourge is wide-ranging and it ranges from food processing to plastics and pharmaceuticals. For example, if one is to produce medicine such as paracetamol, the person making the genuine product will lose the market share to the counterfeiters.

Those that are coming in are quite cheap because a number of them are not taxed. The result is they come to the market at much lower prices than the real ones. And the unsuspecting public here usually goes for the cheaper goods although they may have a negative effect.

The government too loses a lot of revenue to counterfeits. The employees and the unemployed are also affected because the manufacturers employ fewer people as a result of the lower output as a result of loss of market share. That is why there is urgency in the enacting of a law against counterfeits.

Were you (UMA) part of the team that drafted the counterfeit bill? And why is it taking so long to get passed by the Parliament?

We were invited as UMA to participate in the drafting of the bill. This was way back about six months ago. Of course, you might be interested to know that this is one of the 17 commercial bills that we have asked the government to expedite through the various stages until they become part of the country's laws.

Not many of these bills have passed through Parliament though and one of them is certainly the counterfeit bill. This is undermining the production of genuine products and trade. The delay is affecting consumers, the business community and the government. We are losing a lot of money as an economy. There are three attributes we attached to this bill. One of them is to have a punishment to the people who are trading and manufacturing counterfeits.

Two, we also want an institution set up mandated to implement this law. Although, most people think that UNBS is charged with fighting counterfeit goods, it's not. Counterfeits are way beyond UNBS and certainly do not fall within the mandate of any institution in this country. So, if we have an institution to work alongside UNBS to fight this vice, that will be good for us. Kenya has already passed the bill and if one is caught dealing in counterfeit goods then you part with $24000, regardless of whether you produce or trade in them.

Of course, they have a problem with implementation but at least the law has been passed. We have not passed any such law despite the many times that we have urged the government to do so. This is the 10th year we are requesting for this law and we're still waiting.

How adequate is the current law?

Today the maximum penalty that you can get out of dealing with counterfeits is a jail term of between three months and three years. If we want to change the law we have to take it back to parliament to be redesigned, this is something that is taking quite a lot of time. The drafting of the bills at the law reform society is what has taken quite a little bit of time but a period of 10 years is much too long.

From which country do most of the Uganda counterfeits come?

I can't say there is one particular country but they are so many products (not exactly counterfeit but substandard) that are coming from South East Asia. I think we should have a very strong law, and since we are going into the EAC now, the law governing counterfeits within the boundaries of EAC should also deter entry into Kenya or Tanzania.

Such a law is under discussion in Arusha, the EAC headquarters and once it's ready, we will know. I think individual countries should be able to have their national counterfeit laws. That means Uganda should be able to fight the counterfeits from within even before we go into the EAC.

Which products are most counterfeited?

Toothbrushes, cosmetics, toothpaste, electronics; now this is where the trade mark problem is; labelling products Sony, Panasonic with double 'n', umoja or moja Eveready with different spellings. This is done deliberately in attempts to deceive the consumer so that the he/she is confused about what is genuine and what is not.

As I said there is no institution at the moment that can directly pull these products off the shelves and charge whoever has put them there.

That is the institution that we are looking for as we ask the government to help us. We need to label the products that we are putting out to the market. If you have not registered your trademark, there is no way you can charge someone for using that trademark because in the first place you don't have the legal right to the product.

We are telling our manufacturers to register their trademarks and to look out for those producing the same thing and tell us about that person. If one produces toothpaste and someone else comes up with the same packaging and everything is similar and it is put on the market, as manufacturers, we need to raise a flag.

Whose problem is it that counterfeits find their way into the country?

First of all, it is the problem of the government because we expect it to be controlling the entry points in this country.

However, it is also a problem of the private sector that is the individual enterprises and firms because if I see these products on the market and I don't raise a red flag then they are going to continue putting them there.

But even if I raise a flag, some institution (which does not exist) should be able to help me by enforcing the law against malpractices. Someone can counterfeit goods worth billions but spends only three months in jail.

One of the perpetrators of counterfeits is the government because we don't have a law against them. Goods continue to flow in the country freely because people know there is either no law or the one that is there is weak. The private sector too produces fake goods within their homes and industrial premises and bring these fake things like curry powder which is similar to what Uniliver produces.

The private sector goes to the exporting countries and orders for substandard goods to be imported into the country and sells them quickly and cheaply and then goes back for more of the same. The earlier we found a solution in form of a law where police will be involved, URA and the private sector the better. We should also be involved in educating the public about counterfeits.

We have started to enlighten them as we did in the just concluded trade fair by showing people (across all sectors) what a counterfeit good is like. Adulteration is another concept that we are bringing up. A counterfeit product could also be one that has been adulterated.

We believe that the counterfeit law should go beyond the outside and look inside the container to see the substance that is inside because a jerry-can of Sadolin or Peacock paint may look the same from the outside but inside someone has mixed the real thing with 50 percent water. That is why we were proposing that the bill reads 'counterfeit and adulteration bill' so that we cater for both instances.