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Efforts by Nokia, Samsung on cloned handsets start to pay off in East Africa

But as cloned phones are banned in some countries, other nations expect a flood of fakes

Efforts by handset makers Nokia and Samsung to get governments in Eastern and Southern Africa to ban counterfeit phones are beginning to pay off, with Kenya set to ban the clone devices starting in September.

However, Kenya's biggest trading partner, Uganda, has not made a decision on the fake handsets, which have eaten away market share of major players like Nokia and Samsung -- the two biggest handset players in the region.

Imported counterfeits mostly come from Asian countries, such as China, India, Dubai, Indonesia, Thailand and Taiwan as well as African countries like Nigeria and South Africa.

The Communications Commission of Kenya (CCK) is set to switch off all cloned handsets by September, identifying legitimate and cloned phones by using International Mobile Equipment Identity or IMEI number printed in the phones and recorded in the GSM Association database.

However, the Uganda Communications Commission (UCC) has not indicated they will follow suit, despite the likelihood that the banned handsets in Kenya may end up flooding Uganda -- a development that will further distort the mobile phone market in the country, leading to loss of revenue for handset manufacturers as well tax revenue for the government.

The impending ban of fake phones in Kenya could also prompt a flood of the devices in markets in Rwanda, DR Congo, South Sudan, Tanzania, Burundi and Zambia.

"We are doing our best in tandem with the standards body, Uganda Revenue Authority and the police, but are not likely to eliminate all 'fake' phones existent in the market," Fred Otunnu, the Corporate Communications officer at UCC said in an email response.

Currently, Uganda is one of the countries in the region with the highest rate of substandard mobile phone devices, a situation that has been attributed to the delay by legislators to enact the anti-counterfeit law. About 30 percent of all purported Nokia mobile phones sold in the local market are counterfeits, compared to 10 percent in Kenya, according to industry insiders.

Market observers believe that if CCK implements the deactivation of all SIM-cards used in counterfeit handsets, the supply in Uganda of cloned handsets could go as high as 40 percent, in effect increasing related revenue and health issues. Counterfeit phones are not made with regard to any health regulations.

Nokia officials have been cited in press reports pointing to estimates from the Kenyan Anti Counterfeit Authority that suggest the country loses around $32 million annually through tax evasion on the sale of fake handsets, and estimates that the East Africa region could be losing as much as $200m a year.

Nokia has meanwhile been active in lobbying governments to reduce taxes on mobile handsets, a move that the Kenyan government made and which has been credited in leading to a great reduction in the number of counterfeit devices.

For legitimate phone vendors, tackling the issue of fake phones has remained a challenge.

"We do not have the competency to handle fake phones particularly. Much as we work together with UCC to counter counterfeits, it is not our direct responsibility," says Ben Manyindo, the Uganda National Bureau of Standards (UNBS) acting executive director.

UCC, the telecoms regulator, also seems to be facing the same challenge.

"It is not as easy as it seems to switch off all SIM cards used in counterfeit phones. It would require a huge investment in technology and personnel," argues the UCC's Otunnu.

The last five years has seen a growth in popularity of what are termed "Chinese phones." In fact, only the appearance of a popular brand is cloned. The operating system is not the same as that used in the original phone. There are numerous differences in various features, but the low prices make the clone versions very attractive across sub-Sahara Africa.

These phones may look like the famous brands but the shops that put them together add special features including bigger screens, dual-mode SIM cards and TV reception. While the phones may seem like a good deal, they come with challenges.

The software is often full of bugs and hard to use, there is no warranty and the phones may pose a health hazard because they do not adhere to the relevant safety standards.


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