Zimbabwe losing the product counterfeit war

The unchecked growth of counterfeit (fake) products dumped in the Zimbabwean market has reached alarming levels. Although the country's official import bill shows that imports into the country have slightly eased to $5.2 billion for the past 2 years from the $6.26 billion of 2015, the quality of the imports leaves a lot to be desired for the society and the economy. A closer look at branded merchandise displayed in the streets, at flea markets and most retail outlets shows the magnitude of this catastrophe which has been left to develop in the local market.

Counterfeit or fake products appear in virtually everything from foodstuffs, electronics, drugs, musical CDs, kitchen wear, clothes, footwear, handbags, perfumes, machine and auto parts, vehicles, cellphones and accessories, toys, chemicals and tools. The major sources of these products are China, Dubai (UAE), Singapore and South Africa which account for over 70% of the Zimbabwean import bill. These products are imported day and night in containers or disguised as cargo in-transit to neighboring countries. Asian producers take advantage of popular global brands such as Sony, Philips, Samsung, Johnson & Johnson, Adidas, Nike, L'Oreal, Giorgio Armani, Honda, Colgate, Rolex and Gucci  to mention a few. Some counterfeits look original to a level where consumers cannot tell the difference even in broad daylight.

What makes product counterfeiting a lost war in Zimbabwe is that customs is happy to collect a few cents on the declared fake merchandise than enforce laws that control importation of such merchandise. The unrestrained growth of counterfeit products is an enormous drain on the Zimbabwean economy as foreign currency is lost on poor quality merchandise that does not fit the intended purpose especially products intended for commercial use such as vehicles, electrical goods, spares, tools and equipment. Besides posing health and safety risks to the poor consumers, the products come at a cost of job losses as local producers cannot cope. Buying fake goods is not a bargain. Fake products are not made to the same standards and typically have to be replaced more often which ultimately costs more. The government is further deprived of tax revenues as counterfeit goods have very low commercial values on the bill of entry as compared to original products. Counterfeits create unfair competition for local artisans and legitimate businesses that support the economy through paying taxes to the government and employing thousands of qualified personnel.

According to a 2017 report published by the Organization for Economic Co-operation and Development (OECD), global trade in counterfeit and pirated goods is worth over $500 billion dollars annually with U.S. (20%), Italian (15%), French (12%) and Swiss (12%) brands being the hardest hit by Asian counterfeit producers. The exploitation linked to counterfeit goods starts with the manufacturer and continues up to the end of the supply chain in developing countries such as Zimbabwe.

There has never been any serious enforcement of laws to fight importation of counterfeit products into the country. Authorities have been more concerned about exercise duty than the nature and quality of the imports. Urgent intervention will be required through the following:

Empowering local watch dogs
Monitoring the quality of imports and products on the market requires strong institutions that can deliver on their mandate free from external interference. These institutions include The Standards Association of Zimbabwe (SAZ) and the Competition and Tariffs Commission (CTC). These watchdogs should be afforded a budget to monitor the quality of imports at all the country's border posts. Monitoring can start when import documents are logged with ZIMRA to check the background of what is to be imported, the producer, the local partner, the cost and verify if the set quality standards will be met. Once there is variation as is the case with counterfeits, they should be empowered to ban the importation of such counterfeit goods.

Tightening Border Controls
The smuggling at Zimbabwe's Border posts especially Beitbridge, Chirundu and Plumtree is a national disaster. Virtually anything from toxic drugs, illegal or restricted products and counterfeits goods can pass through customs without any meaningful checks. There is need to tighten border controls through scanners, CCTV and cargo screening. The resources required to implement such control measures are a drop in the ocean to the tax revenues that leak daily through our porous borders. Add in the damage to the society and local industries.

Strict Anti-Counterfeiting regulations
Counterfeiting remains a growing problem in the modern world economy. The developed nations have enforced strict laws to punish importers of fake products in the market. Stiff penalties and fines should be enforced to exporters and importing entities of counterfeit products. South Africa blacklists individuals, logistics companies and partners of any counterfeit product that comes through their borders. They seize or impound from passports, trucks and licenses for such entities. Take for instance importation of fake energy drinks, banned substances, narcotics, counterfeit medical drugs and alcoholic beverages that have found havens in high density suburbs. The government should not wait and see such vices go unpunished when legitimate businesses such as NatPharm, Caps and many more are struggling to stay afloat because of it.

Victor Bhoroma is business analyst with expertise in strategic marketing and business management aspects. He is a marketer by profession and holds an MBA from the University of Zimbabwe (UZ). For feedback, mail him on vbhoroma@gmail.com or Skype: victor.bhoroma1.