Counterfeiting in Nigeria and its Negative Influences on the Economy

Counterfeiting in Nigeria and its Negative Influences on the Economy

Counterfeiting in Nigeria and its Negative Influences on the Economy

It is very hard to obtain accurate statistics on counterfeiting, mainly because it is a clandestine activity. Counterfeit has become prevalent in Nigeria. Counterfeiting is a global problem. Many goods moving through international commerce are counterfeited. Industry data show that 5-7% of world trade, valued at about US$20 billion worth of products in the Information Technology (IT) sector move through unauthorized channels annually.[1]

Various factors are responsible for counterfeiting but the principal motivations for counterfeiting are quick profits, low promotional investments and risks, the ease of production and low costs, opportunity, unsatisfied market demands, weak market links, the strategic location of their operational bases in terms of commerce, the difficulty of detection and proof, and the non-deterrent effect of or complete absence of laws.

It dissuades industrial development of local industries

Nigeria now holds 63 percent of the remaining West African textile manufacturing capacity. Nigerian wax-resist textiles are found in almost every marketplace in sub-Saharan Africa. But Nigerian manufacturers face another challenge in the African market: cheap Asian imports. The Nigerian government applied trade tariffs on imported textiles to protect what was left of the industry and give it time to mature.

It directly affects right holders

Industry world-wide lose billions of dollars every year to counterfeiters. Industries in Nigeria also account for the huge losses, especially the pharmaceutical industry.[2] It impacts on right holders in a number of different ways. First of all, industries in Nigeria which find themselves in direct competition with counterfeiters suffer a direct loss in sales. In addition, consumers who are deceived into believing that they bought a genuine article when it was in fact a fake, blame the manufacturer of the genuine product when it fails, creating a loss of goodwill.

Thirdly, beside direct losses of sales and goodwill, one should not forget the expenditure involved in protecting and enforcing intellectual property rights. The right owner becomes involved in costly investigations and litigation when combating counterfeiters and may also have to spend further sums on product protection.

It discourages foreign investment

The major cost to developing countries like Nigeria in which counterfeiting occur is the loss of access to foreign investment because of concerns by investors that intellectual property which is produced as the result of the relevant investment will be stolen by others. This discouragement of investment has the obvious short-term effect of reducing taxes and revenues and the longer term effect of stifling economic development.[3]

In the long run counterfeiting discourages investment in product development since a company will not get all the benefit from its investment. The governments of countries where counterfeits are sold will also have to expend increasing amounts of money in funding police and other investigation and enforcement operations. Furthermore, the judicial authorities, including the courts and prison service, need to spend additional time and money in sentencing and dealing with counterfeiters.

It has damaging consequences on public health

Counterfeiting of various products has damaging consequences for consumers in Nigeria. They generally involve:

(i) Extorting a higher price from consumers for the infringing product than they would be prepared to pay for copies;

(ii) Consumer deception about the quality of the counterfeit product, with the consequent risk to health and safety;

(iii) The absence of after-sales service or any effective recourse in the event of damage or injury.

In addition to its economic impact, counterfeiting has been identified as having a damaging effect upon public health in both developing and developed countries.[4]

A similar WHO report on counterfeit drugs in Nigeria estimated counterfeits to number 40-60% of all the drugs in the country. Counterfeit drugs include products with little or no active ingredients or products for which active ingredients have been replaced by less expensive alternatives, giving as examples: children’s deaths at Jos University Teaching Hospital from ingestion of paracetamol75 syrup adulterated with diethylene glycol; the seizure of blood pressure medication containing chalk; insulin vials filled with sugar water; analgesics passed off as anti-malarias; and medicines that have long expired are put back in the market, relabeled with new dates.76

A 1989 study conducted by Denham Pole in Nigeria indicated that 25% of samples studied were fake, 25% genuine and 50% inconclusive. A study conducted in Nigeria in 1990 by the former Deputy Director General of WHO, Adeoye Lambo, for a pharmaceutical firm in Lagos showed that 54% of drugs in every major pharmacy shop were fake, a figure that had risen to about 80% in the subsequent years. The situation got progressively worse with time until 2001 when NAFDAC started an aggressive war against fake/counterfeit drugs.[5]

On June 7, 2001, one major drug company (Novartis) testified in a House Subcommittee that a counterfeit ring they uncovered produced “millions of yellow tablets that were virtually indistinguishable from the genuine product made of boric acid, floor wax and lead-based yellow paint used for road markings.” Almost 2500 people were killed in Nigeria in 1995 through injecting a supposed antimeningitis drug during an international vaccination campaign. A batch of this vaccine was counterfeit.

e) It negatively impact on public security

Counterfeiting has an adverse effect upon public security, where profits from this trade are appropriated by organised crime, which uses them as a means of recycling and laundering the proceeds of other unlawful activities (arms, drugs, etc.).

 

[1] The National Agency for Food, Drugs Administration and Control, (NAFDAC) Nigeria: Safeguarding the Health of the Nation. Copyright 2002-2007 https://www.nafdacnigeria.org

[2] For instance, Counterfeit pharmaceuticals have far-reaching public health implications and have therefore attracted considerable concern from public bodies, in particular from the World Health Organization (WHO). Counterfeit medical products are defined by the WHO as ones that are “deliberately and fraudulently mislabeled with respect to identity and/or source” (WHO/IFPMA, 1992)

[3] More specifically, the establishment of key industries in developing countries, such as those in the IT, biotechnology and pharmaceutical areas, where intellectual property rights play a key role, will be difficult to establish in the absence of effective intellectual property laws or enforcement

[4] The ICC has reported that dozens of people died in Cambodia through taking ineffective, counterfeit malaria medicines. Law enforcement in Zambia seized counterfeit shampoo containing acid. Body-builders and others buying steroids on the black market in Australia were sold repackaged livestock steroids as human steroids. Diseased pig meat was used in counterfeit cans of pork luncheon meat in China

[5] A counterfeit drug or medicine is one which is produced and sold with the intent to deceptively represent its origin, authenticity or effectiveness. It may be one which does not contain active ingredients, contains an insufficient or inaccurate quantity of active ingredients, or contains entirely incorrect active ingredients (which may or may not be harmful), and may be sold with inaccurate, incorrect, or fake packaging. Fake Viagra is common in many parts of the world.

Read also: Counterfeiting as a Trademark Infringement

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