How digital markets are fuelling multi-billion illicit trade in Kenya

Perusing across different social media platforms in Kenya, a lot of businesses have gone big on publicising on socials, but do you know that one out of every four counterfeit products is sold through these channels?

Fresh findings have shown that digital platforms in Kenya have emerged as the new frontier for the sale of counterfeit goods, fueling a multi-billion-shilling illicit trade that is crippling key sectors and endangering lives.

Counterfeiting has reached crisis levels, with online marketplaces and social media platforms emerging as hotspots for the sale of fake pharmaceuticals, electronics, agricultural inputs and branded consumer goods.

Anti-Counterfeit Authority CEO Mbugua Njoroge says that the shift from physical markets to online platforms has made it increasingly difficult for authorities to track and curb the sale of counterfeit goods.

Social media platforms like Facebook, Instagram, WhatsApp, and e-commerce sites have become hotspots for counterfeiters, with counterfeit apparel emerging as the most purchased.

“An estimated 58 per cent of counterfeits that were bought online were textiles. Of all the counterfeits’ bought in the country, 26 per cent are through the digital channels,” said Njoroge.

“Footwear and beauty products that are used by our population. So it means that we are having our own consumers buying most of the counterfeit goods through online platforms.”

The new trend shows how counterfeit trade is evolving, with criminals now using digital platforms to distribute fake goods, making traditional enforcement methods less effective.

With the counterfeit trade in Kenya estimated to cause annual losses exceeding Sh 100 billion, the proliferation of fake goods on e-commerce sites and social media platforms is now a full-blown crisis.

“So that is clear, that for every four counterfeit products, one is being bought online now. So there is already a big change, that if we don’t focus on the online issues, then it could be problematic. And that’s why we all need to think through,” he added.

These platforms are flooded with listings for fake medicines, pirated electronics, counterfeit fertilizers, and even fake branded clothing.

“In Kenya alone, the counterfeit trade results in losses exceeding Sh100 billion annually, harming key sectors like medicine, agriculture, and fast-moving consumer goods,” said Njoroge.

According to the World Health Organisation, counterfeit pharmaceuticals contribute to over 100,000 deaths annually in Africa.

According to the Organisation for Economic Co-operation and Development (OECD), counterfeit goods now account for 3.3 per cent of global trade.

In Kenya, an estimated 30 per cent of goods in circulation are believed to be fake, with sectors such as pharmaceuticals, electronics, and automotive parts suffering the most.

A report by the East African Business Council estimates that counterfeiting and illicit trade account for 30 to 40 percent of goods in sectors such as pharmaceuticals, electronics, and automotive parts.

This has seen the East African community lose an estimated $500 million (Sh64.75 billion) annually in tax revenue due to counterfeit goods infiltrating the local markets.

According to the Organisation for Economic Co-operation and Development (OECD), the global trade in counterfeit goods is estimated to account for 3.3 per cent of world trade.

A 2024 study by Interpol confirmed that online markets have emerged as one of the new battlegrounds for counterfeit trade, therefore calling for us to use technology as a new approach in this new realm.

One of the most significant advancements is the IP recognition system, which has transformed how we monitor and verify imported goods, ensuring that counterfeit products are intercepted before they reach consumers.

This system has bolstered border security and positioned Kenya as a regional model for effective anti-counterfeiting enforcement.

Despite the growing threat, regulatory bodies are struggling to keep pace with the rapidly evolving tactics of counterfeiters.

The ACA has acknowledged the challenges digital platforms pose but admits that enforcement remains a significant hurdle.

“The rise of digital trade platforms has introduced new challenges in combating counterfeiting, making it critical for enforcement agencies to embrace cutting-edge technologies,” said the anti-counterfeiting boss.

“If fully embraced, technology can enable consumers to differentiate between genuine and counterfeit products, thereby reducing the market for illicit goods,” he stated.

In response to this alarming rise, a collaborative initiative known as the National Committee on Combatting Illicit Trade (NACET) has been established.

This framework, based on findings from a 2019 National Baseline Survey on illicit trade, aims to streamline enforcement efforts by bringing together multiple law enforcement agencies.

Additionally, the launch of the National Observatory platform allows consumers to report counterfeit goods, empowering regulatory bodies such as the Anti-Counterfeit Authority (ACA) to investigate and take action.

Despite the increasing threat of ‘digital counterfeit’ distribution, the latest GSMA report, Driving Digital Transformation of the Economy in Kenya, projects that the country’s digital economy will contribute Sh662 billion to GDP by 2028.

Kenyans have initially been blamed for fuelling the trade in counterfeit goods because of the high demand for cheaper products.

It is however proving difficult for the body cope with the vice because of a combination of staff shortage, tough economic times and porous borders which make it hard to effectively tackle the entry of pirated products in the country.

According to the authority, 80 per cent of products categorised as fake or substandard enter the country as imports, with only 20 per cent produced locally. Individual initiatives by different sectors have done little to save the situation.

Manufacturers in Kenya have been pushing for the implementation of a database to help lock out counterfeit goods from the country. This is under the Intellectual Property Rights (IPR) Recordation Regulations being implemented by the Kenya Anti-Counterfeit Authority (ACA).

In a new deal, however, The Anti-Counterfeit Authority (ACA) and Uganda’s Anti-Counterfeit Network (ACN) are working together to leverage digital platforms in the fight against illicit trade.

The most recent partnership signing between the two nations’ anti-counterfeit authorities, Uganda’s ACN chairman, Fred Muwema, emphasised the power of social media in tackling the problem.

“With over 13 million Kenyans on social media, what are you doing there? Posting pictures, chatting… but now, we are saying, can you use this energy to expose counterfeit products?” he pointed out.

The partnership with the Ugandan counterpart will enable real-time reporting of counterfeits and substandard goods.

“If Bleep is introduced and we receive a million reports a year, that significantly assists regulators in their mandate. The platform is already operational in Uganda, and we plan to integrate it further in Kenya,” Njoroge said.

Two months ago, Kenya’s Anti-Counterfeit Authority (ACA) and the Fair Competition Commission (FCC) of Tanzania also announced joint efforts to disrupt and combat the trade in counterfeit goods across the region.