Infiltration of substandard goods; Consumers and Local Manufacturers are at risk

by Ian Rumanyika
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The production and sale of counterfeit goods is a global, multi-billion-dollar problem with serious economic and health consequences for the Government, businesses and consumers.

Ugandan local companies lose up to $2m (sh4b) annually to the trade in fake goods. In 2009, Uganda was ranked as one of the region’s largest recipients of counterfeit products according to the survey conducted by Mohammed Muingai Advocates contracted by the East African Community Secretariat to draft an EAC policy on anti-counterfeiting and anti-piracy.

We had an online engagement recently on X-spaces, and someone joked that we have fake employees, employed by fake companies, producing fake products, and we are generally in a fake cycle but isn’t this a reality in many circles of our day-to-day operations?

When it comes to the steel manufacturing industry, more than in other sectors, counterfeiting and substandard goods present life-threatening incidents that include the collapse of buildings and loss of innocent lives. The steel industry has experienced substandard products penetrating the market, exposing the client to several risks. The Construction Industry has found that raw, substandard steel is the most counterfeited commodity among the building materials (within the construction industry).

Like in many other African cities, Kampala’s population growth is exponential and outstripping the supply of different products and services that otherwise are required to enable the city and country at large to undergo a remarkable urban transformation. This growth and need for urban development, in turn, means the need for more modern infrastructure; however, we are not new to the unfortunate fact of many people opting for cheaper materials, which usually are not to standard requirements.  The challenge is that the genuine players are losing market share and market confidence and eroding our margins.

Currently, the industrial sector’s contribution to GDP, which includes steel manufacturing, is 27.6 per cent; this level of industrial contribution to GDP is below the 35 per cent mark for countries aiming to achieve middle-income status. Due to the proliferation of substandard goods and counterfeits on the market, this could continuously get lower because substandard and counterfeit goods are often sold at lower prices than genuine products, resulting in revenue losses for local manufacturers. This can reduce the financial capacity of local manufacturers to invest in new technologies and production processes, limiting their ability to compete effectively in the market.

In 2015, the anti-counterfeiting goods Bill was tabled in the parliament with the aim of com­bat­ing the im­por­ta­tion and sale of coun­ter­feit prod­ucts on the Ugan­dan do­mes­tic mar­ket. The Bill sought to pro­hibit trade in coun­ter­feit goods that in­fringe upon pro­tected in­tel­lec­tual prop­erty rights, to re­quire in­tel­lec­tual prop­erty rights to cover only copy­right and trade­marks and to pro­hibit re­lease of coun­ter­feit goods into the chan­nels of com­merce.

The Bill also sought to cre­ate of­fences re­lat­ing to trade in coun­ter­feit goods, em­power the Com­mis­sioner Gen­eral to seize and de­tain sus­pected coun­ter­feit goods, al­low in­spec­tors ap­pointed by the Uganda Na­tional Bu­reau of Stan­dards to seize and de­tain sus­pected coun­ter­feit goods and to pro­vide for in­ci­den­tal (re­lated) mat­ters. But unfortunately, this same bill was withdrawn from Par­lia­ment stat­ing that there are other laws that can ad­dress the gap.

So, how can manufacturers safeguard themselves against this vice and help ensure public safety while waiting on the way forward on the anti-counterfeiting goods Bill? Business owners should look into the enforcement of rights through public-private partnerships. Infringement of intellectual property rights is still seen as a white-collar crime among many enforcements. The UNBS Act, (2013 amendment) and 2018 regulations emphasize the use of the UNBS distinctive mark, all products covered by compulsory standards must be certified and issued with a distinctive mark before they are allowed on the market.  This certification is not a formality; it is assurance to the consumer that a product is safe and reliable. To the manufacturer, it is testament that your product is of good quality.  With the increased risk and compliance guidelines organizations are accountable to, it is important that they work to minimize and eliminate risk.

Public education will also go a long way in ensuring compliance. It is a fundamental legal principle in that the ignorance of the law is no defense. Consumers often have good and sufficient reasons for believing falsehoods and buying counterfeits, perhaps because that is all they know or what they can afford. The government and relevant organisations have a duty to appropriately disseminate such information to the public and make it publicly accessible.

In the fight against substandard and counterfeit products, collaboration is critical. It requires retailers, logistics providers, customs, and government bodies to work together. Uganda National Bureau of Standards, the Private Sector Foundation of Uganda, and the Uganda Manufacturers Association, amongst others, play a vital role in safeguarding the local manufacturer’s work. Our work as manufacturers is more effective when we work together, and this will help to protect the reputation of locally produced goods and support the growth of the manufacturing sector in Uganda as we attract more direct investments.

The value of human life is priceless; therefore, as the steel sector players, we have the fundamental duty to hold paramount the safety, health and welfare of the public against all other considerations.

The author is the Head External and Corporate Affairs of Uganda Baati Limited.

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