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TRADE-TANZANIA: Cheap Imitation Goods Are Flooding Markets

Sarah McGregor

DAR ES SALAAM, Aug 20 2008 (IPS) - The mishmash of shops in Tanzania's central Kariakoo market in Dar es Salaam stock an infinite array of brand name fakes. Throngs of customers snap up mobile phones, designer gear, high-tech electronics and gadgets – all imitations being sold at unbelievably low prices.

The fakes business is booming in one of the world's poorest nations, where pricey authentic items are beyond the reach of most consumers. The east African nation ranks 159th out of 177 countries on the United Nations' Human Development Index, which measures a range of poverty and economic indicators. Per capita spending is 340 dollars a year.

"I don't think we're doing a bad business because we're helping people to survive on the little money they have," said salesperson Yahaya Khalini, who declined to give his real name in fear of police retribution. More than half the mobile phones and computer parts dangling from hooks in his tiny store in Kariakoo are knock-offs, which are illegal to sell.

But some Tanzanians are vehemently opposed to the sale of counterfeit goods. One such person is Hussein Kamote, director of policy at the Confederation of Tanzania Industries (CTI). He told IPS in an interview in Dar es Salaam that the illicit trade has a negative effect on the economy.

Tanzania loses up to 780 million dollars a year in government revenues and 140,000 jobs because of counterfeiting, according to a recent report by CTI.

More than 20 percent of the merchandise offered in Tanzania's major trading centres – including the cities of Arusha, Mwanza and Moshi, and the semi-autonomous island of Zanzibar – is pirated, the study showed. That rises to 70 percent if you include below-standard goods.

"Most of the counterfeits in Tanzania use brand names. They are also sub-standard in quality," Kamote argued, saying that such goods can have "serious safety consequences for consumers, hurt the economy and prevent the local manufacturing industry from growing".

Still, counterfeiting thrives because of demand from Tanzania's cash-strapped shoppers for low-price fakes, he said. Some customers are also duped into buying counterfeits. Many of the fakes are virtually carbon copies of the original, Kamote indicated.

"The worst part is you buy it cheap but actually it's expensive because you pay for it several times over after it breaks," he added.

Shoddy products can also have lethal results. Fake medicines – from anti-retrovirals for AIDS patients to the anti-impotence pill Viagra – make it to the shelves of some pharmacies in Tanzania.

The World Intellectual Property Organisation estimates the global value of counterfeit goods rose to 750 billion dollars in 2007 from 5.5 billion dollars in 1982.

Between five and seven percent of world trade is in illegitimate goods, with the profits apparently being used in organised crime, drug smuggling and other illegal activities, according to the website of the U.S.-based International Anti-Counterfeiting Coalition, a group of companies.

Factories in China pump out a large quantity of the counterfeits in distribution, the IACC said. "China remains the single largest source of fake products found in global markets," it claimed. India, the United Arab Emirates, Indonesia, Taiwan, Thailand and the African nations of Kenya, South Africa, Mozambique and Malawi also export counterfeits to Tanzania, the CTI study revealed.

Manufacturers in Tanzania – so-called "backyard industries" – are also moving into the lucrative business. Food and drug authorities have stumbled across inferior-quality tea and toxic toothpaste in brand name packages, which were produced by local factories, Kamote pointed out.

But the government is starting to fight back. Tanzania's Fair Competition Commission, formed in 2007, has confiscated one billion Tanzanian shillings (862 million dollars) in counterfeit electronics, car parts and medicines at the country's land, sea and air ports. A new law passed this year strengthens FCC's power to search shops, seize and destroy fakes, and slap fines of up to five million shillings on offenders, according to Michael Shilla, director of consumer affairs at the commission.

Inspectors will target small shops in September to find clues that will take them to wholesalers and importers of counterfeits. "We want to send a message that Tanzania is no longer a dumping ground for counterfeits," Shilla told IPS.

"We are encouraging consumers to use their power, like voting. If they vote not to buy the goods, then businesses will stop selling them."

Some consumers have already launched their own boycott. Hamisi Juma, a bus agent, saved 125,000 shillings to buy a mini hi-fi stereo at a big name chain store in Dar es Salaam's largest indoor mall.

"I could get a unit like this for 80,000 (shillings) in the Kariakoo market but I know I'll get what I paid for," he said. "If there's a problem I can't go back for a refund or exchange."