Now Cadbury Kenya shuts down over counterfeits
31 October 2014, 10:34
Nairobi – The ever-rising smuggling of counterfeit products in the manufacturing industry has forced both Eveready and Cadbury companies to shut down and relocate their industries to other countries due to the government’s failure to tighten its grip on importation of substandard goods.
The CEO, Kenya Association of Manufacturers (KAM), Betty Maina, who appeared before the National Assembly Finance, Planning and Trade committee alongside the CEO Kenya Private Sector Alliance (KEPSA), Carol Kariuki, said that anti-counterfeit regulatory bodies should be held responsible for the influx of substandard goods in the market.
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“Smuggling and manufacture of counterfeit goods remains a great challenge which has had a negative impact on the entire manufacturing sector stretching from edible oils, toiletries and even to the ailing sugar sector pushing factories to the brink of closure,” said Maina.
“While the closure of Eveready’s factory in Nakuru is regrettable due to loss of 100 jobs, we are glad to see that the company will continue to invest in the local economy through the real estate sector creating additional opportunities in the economy,” she added.
Maina revealed that out of 800 manufacturing companies including the multinationals she represents in the country, about 10 to 15 have shut down while others sold hence threatening the existence and growth of local industries.
Unfavorable legislations such as taxation policies, high costs of power and labor in the country in addition to high corruption by officers in regulatory agencies being bribed to allow entry of illicit products into the market were identified as major causes of investors in the manufacturing sector relocating to countries with low cost of doing business.
“Both Energizer and Cadbury this week selected Egypt as their new source of products, highlighting the growing appetite of investors to locate in the northern Africa State and use Kenya as their distribution and marketing base. We must continue to re-examine and evaluate the local business environment with the aim of bringing down the cost of doing business in the country,” said Maina.
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The KAM CEO called on the government to address the problems facing the manufacturing sector with urgency to attract more investors especially through full enforcement of the enacted laws to curb importation of substandard goods among other illegal business practices.
Kariuki said substandard products have also affected the KEPSA sector including the oil companies where counterfeit gas cylinders which are prone to devastating explosions are on high supply in the market yet no legal action has been taken by responsible regulatory bodies.
“We have severally convened meetings with the President as key manufacturing representatives and he is aware of issues happening in the industry. Today we are hearing about the issues Eveready and Cadbury are going through leading to their closure but tomorrow we will hear many more,” said Kariuki.
She stated that 7 out of 10 gas cylinders are counterfeit and challenged the government to take immediate action to weed out such illegal products for protection and nurturing of local industries.
“If we expect to maintain our competitive edge and attract investors to set up base locally and create the much needed jobs so that we feel the new middle-economy status, then as a country we must address elements that soar up the cost of our business operating environment including unreliable power supply, unclear and confusing regulation, high cost of corruption, the declining purchasing power of the local market, security, skills gap in technical areas and improvement of infrastructure,” said Kariuki.
The manufacturers’ representatives alleged that powerful persons such as politicians and senior security officers engage in counterfeit business activities and even some pocketing bribes ranging from KES 10 to KES 15 million as consignment for distribution of the illicit goods.
The Finance Committee chair, Benjamin Lagat, confirmed that he will summon various regulatory agency officials for interrogation for failure to deal with counterfeit goods in the country. Some of the agencies to be summoned include the Kenya Revenue Authority, the Energy Regulatory body, and the Kenya Bureau of Standards.
“We will summon all regulatory bodies to seriously look into the raised issues affecting the industry. The relevant Cabinet Secretaries may think that things are working well in their sectors yet down there issues are affecting investors,” said Lagat.
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