Lack of Systems to Monitor Safety and Authenticity of Goods

Markets on the African continent suffer from low level of government control over dissemination of illicit goods and counterfeits. This is most evident in product categories like pharmaceuticals, tobacco, alcohol, drinking water, etc. There is also a lack of control in the retail sector, where most actors operate outside the law. Whilst all this poses significant threat to the well-being of citizens and creates barriers to tax base expansion, digital marking, e-services and systems for inspection of goods allow to enhance control and monitor safety.

Challenge Description

Illicit trade remains an alarming problem for African countries and leads to significant budget losses. Only Tanzania loses 3.3 trillion TZS (1.3 million USD) annually, whilst South Africa — 100 billion ZAR (56 million USD). Nigeria loses about 15 trillion NGN (19 billion USD) to fake goods annually and is ranked amongst the world’s highest markets for fake and substandard goods.

Cigarette trafficking, drug trafficking, and the trafficking of counterfeit goods are the main categories of illicit trade. As illicit trade results in unpaid taxes, illegal tobacco costs governments around the world 40-50 billion USD each year in unpaid tobacco taxes. In West Africa the cost is about 774 million USD, while Nigeria loses an estimated 216 NGN billion (278.5 million USD) to the illicit trade, according to the British American Tobacco (BAT) report.

With fragile health security situation in African countries, fake drugs trafficking is among the most widespread and urgent issues as it results in multiple deaths. Thus, as per the WHO report, Africa comprises 42% of the sham drugs trafficking cases (e.g. in March 2019, the WHO reported fake meningitis vaccines in Niger and fake hypertension drugs in Cameroon, in August – fake antibiotic Augmentin in Uganda and Kenya). Furthermore, in Nigeria, fake malaria medication results in 12,300 deaths annually and costs nearly 893 million USD.

In addition, dissemination of counterfeits leads to lower prices on the markets and consequently revenue losses.

Solutions

To combat circulation of counterfeits governments not only should adopt standards but also introduce effective means of compliance monitoring.

• Digital solutions (like Track & Trace System) make markets clearer and more legitimate and provide full traceability, increase tax revenues, including excise duties, establish transparent supply chains and prevent counterfeit goods from entering the retail market. Among the successfully implemented solutions to mention is the mPedigree in Nigeria.
• Dissemination of illicit goods is often coupled with corruption, thus, developing effective anti-corruption mechanisms is crucial. This may include introducing e-services for reporting corruption cases.
• Since fake goods are often being delivered and distributed along with authentic ones, digital marking of goods would allow the traceability of each unit of goods.