Monday, November 3, 2008

Illicit trade undermining single East African market

Illicit trade is undermining moves to establish a single market in East Africa according to a report issued yesterday, 30 October, 2008 at the East Africa International Business Forum in Kigali.

The forum which is being convened by the Commonwealth Business Council, East African Business Council (EABC) and held under the leadership of the chairman of the East African Community (EAC), Paul Kagame was attended by 500 delegates from 28 countries.

"Illicit trade is a growing menace within East Africa's consumer goods market, and includes products which are smuggled, counterfeited or undeclared local production" said CBC director general Dr Mohan Kaul. "It undermines the investment needed to improve competitiveness, and producing the jobs and income needed to support families and public services."

The report looks at the specific effects of illicit trade in tobacco, which the region's largest cigarette supplier BAT stated is estimated to be costing EAC countries around $61m in lost tax revenues annually. "The profile and awareness of the issues around illicit trade are not growing in the East African Community as rapidly as they should be. Regardless of the product category, illicit trade can no longer be viewed as a victimless crime" said Jeremy Pike, British American Tobacco's area director for the sub-Saharan Africa area. "We believe that globally illicit trade in tobacco products is around 6.4% of total consumption, whereas in East Africa the figure is nearer to 14% of the total market consumption - more than double the estimated global average."

The research report highlights the major causes of illicit trade in tobacco and urges government to work with the private sector to address it. Among the measures called for are faster harmonisation of tax levels, better enforcement and tougher penalties, and public education. "A critical problem for all industries affected by counterfeiting or illicit trade is the lack of supervision of some free trade zones which have become conduits for smuggling and illegal trade," said Pike, "and we would like to see them subject to the normal inspection and supervision rules."

According to the report East African countries are facing different forms of illicit trade and they range from local manufacture duty evaded, counterfeits and cross-border smuggling of genuine tobacco products manufactured in neighbouring EAC countries.

The report was been produced in support of the East Africa Business Council programme to combat illicit trade and counterfeiting which will be launched in 2009, and the East African Community secretariat's formulation of an EAC policy on anti-counterfeiting, anti-piracy and other intellectual property rights violations.

[31 Oct 2008 / Bizcommunity]