Fake goods may undo China-Africa trade

From Global Times
January 6, 2013
By Mark Kapchanga

Trade between China and Africa has been one of the dominant issues on the table this decade.

Many high-level meetings have been conducted seeking to liberalize movement of goods in these regions. The talks formed part of the wider plan for the realization of South-South trade. The new route has huge potential but only if barriers are cut, subsidies handled prudently and red tape cleared.

Ideally, these challenges will vanish as exports and imports increase. The freer and open markets have had a massive impact on both the Chinese and African economies.

Today, there are more than 750,000 Chinese nationals working in different African countries.

There are also about 20,000 Africans working in China. In 2011, trade between China and Africa appreciated by about 30 percent to $166 billion, while Chinese exports to Africa totalled $93 billion. Trade between these zones can be further deepened.

But underneath this "barrierless" trade regime lurks some danger: fake goods. This might undo the hard-won gains made over the past two decades if not dealt with urgently.

The increased proliferation of forged products is hurting local industries in Africa. Manufacturers are incurring huge losses due to these counterfeit goods. Kenya, Uganda, Rwanda, Burundi and Tanzania combined lose over $600 million per year on counterfeit goods. The printing of fake labels and adulteration of products have tilted the balance of trade in favor of rogue businessmen. High poverty levels in Africa have exacerbated the trade as consumers opt for cheap, made-in-China alternatives.

The majority of counterfeited products entering Africa are drugs. According to the World Health Organization, around 10 percent of drug supplies in developing countries are counterfeit medicines. These have caused thousands of deaths annually.

In Kenya and Nigeria, many of the deaths occur among people who unknowingly consume counterfeit drugs, especially anti-malarial ones that do not contain the active ingredient to fight the disease. The danger of a fake drug also emanates from the fact that it may contain an ingredient that is potentially harmful.

Most of the fake drugs are manufactured in China and India. It's hard to get accurate statistics. But it is estimated that of all drugs from India to developing countries, between 15 and 20 percent are fake. They are sold by businessmen, the mafia and organizations that have "mutual ties" with authorities, especially at border points. Some of the officials are shareholders, while those without stakes get huge bribes to allow for the safe clearance of the goods.

So what next? Should Africa head back to a protected trade regime to check on the rise of this illegal drug business? Definitely not.

It is important to appreciate that the drug business in Asia is very lucrative. The exports have created phenomenal employment opportunities in Africa. China's pharmaceutical sector is expected to hit $115 billion by 2015. This is nearly triple the 2010 sales of $42 billion in 2010. The growth means Africa will earn more from import taxes.

Importantly, China's herbal medicine is flourishing. In Africa, it is used to cure common ailments such as infertility, sexually transmitted diseases, depression, cancer and obesity. Recently, scientists in France discovered a Chinese herbal medicine Radix Dichroae, known as changshan, that can effectively cure malaria.

The blossoming herbal medicine business is testimony enough that Africa and China must team up and fight the counterfeit menace.

But combating the problem of counterfeit drugs has been complicated by Africa's lack of capacity to test and immediately distinguish a fake from an authentic drug.

In some instances, it takes between three and six months to test a batch of suspect drugs. This is because the testing is usually carried out in Europe or the US.

To make the medical sector grow and protect China's international image, authorities must overwhelmingly crack down on the illicit business.

As China's universities and drug firms invest in the development of future drugs, so should security officials come up with up-to-date strategies to deal with this challenge. There is no doubt that criminals are becoming more intelligent and craftier to defeat the system.

Africa should also support Beijing in this cause. The leg-work has been done, but that is not enough. Political courage should be involved in equal measure. Officers found flouting border regulations and engaging in corrupt practices must be prosecuted.

More importantly, the continent must invest in modern equipment to accurately judge the quality of imported products.

The author is a journalist on African issues based in Nairobi, Kenya. mkapchanga@gmail.com

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