Have you bought a trendy phone lately, probably from a high-end shop in town? Chances are that it is fake.
You are just one of the many Kenyans who have lost their hard-earned money following an influx of counterfeit smartphones mainly from the Middle East, leading to massive revenue leakages and an e-waste menace.
The counterfeit devices, which are manufactured without due consideration to the recognised security standards, experts say, are also likely to expose mobile money systems and the wider banking and financial system to undue risks.
Players in the industry have further warned that smartphone makers are losing revenue and brand loyalty following numerous cases of users’ devices failing just days after being purchased.
The use of digital tools has further made it possible for counterfeiters to bypass traditional checks such as serial and IMEI numbers used by consumers to verify devices’ authenticity.
“Counterfeiting has evolved with crime networks at the manufacturing, importation, distribution and retail chains,” explains Peter Mutula, a brand protection consultant with Samsung Kenya.
He says unscrupulous wholesalers and retailers obtain counterfeiting kits, including fake screen covers, stickers and battery wrappers that are then used to repackage the phones as genuine and recognisable brands.
Counterfeit phones bear different names at the point of manufacturing and importation but are then injected into the country’s distribution and retail chains where they are falsely branded with the names of some of the popular brands such as Samsung, iPhone or Nokia.
The smartphones are then priced much lower compared to prices of original phones, attracting unsuspecting buyers looking for a bargain. A fake Samsung Galaxy Note 8 phone, for example, was listed as retailing at Sh15,000 compared with the current retail price of Sh50,000.
Kenyan authorities have singled out Nairobi’s Tom Mboya Street and Luthuli Avenue as major conduits for the trade in counterfeit smartphones, with several raids in the past unearthing millions of shillings worth of fake merchandise.
Last month, a raid by the Anti-Counterfeit Authority (ACA) on Luthuli Avenue uncovered a haul of counterfeit phones worth Sh8 million, bearing popular brands such as Samsung, HTC, Nokia, Huawei and Sony following complaints by Samsung Electronics.
This followed a similar raid in February targeting small-scale retailers on the same street that also unearthed over Sh1million worth of fake devices.
“Initially, we used to tell customers to check the IMEI number but crooks have managed to cheat the system using digital software and the phones come with IMEI numbers already activated in the system,” explains Mr Mutula.
At the same time, there is a concern that components such as lithium-ion batteries found in smartphones pose a risk to users and the environment given the high disposal rates.
“These products are prone to counterfeiting because they are fast-moving goods that give a quick payback to counterfeiters,” explained Ibrahim Bule, chief inspector at ACA.
“The chemical content in components such as the batteries is also unknown and this could pose a risk of radiation or burns to users.”
Kenya is among the top-five smartphone markets in Africa, with ownership estimated at over 41 per cent of mobile users as of 2018, up from 25 per cent five years ago.
Multiple SIM cards
According to the Communications Authority of Kenya (CA), the number of mobile subscribers in the country currently stands at 106 per cent, with more than 49.5 million registered SIM cards.
“The penetration level of more than 100 per cent is attributed to the multiple SIM cards ownership in the country,” says the regulator, adding that one in three Kenyans is believed to own more than one SIM card.
This presents a thriving market for the trade in counterfeit smartphones that target consumers, the majority of whom are young and low-income earners. A study by the European Union Intellectual Property Office and the International Telecommunication Union estimated the smartphone industry lost Sh4.8 trillion worth of sales to counterfeits in 2015 alone.
The African region accounted for the biggest chunk of sale losses, with smartphone vendors in the region losing Sh945 billion in sales revenue.
“In some regions, particularly in low-income countries, there is an important market for second-hand and refurbished smartphones,” said the report in part.
With more Kenyans transitioning from feature phones to smartphones or looking to replace their aged devices, the challenge is unlikely to go away in the near future.
Authorities say marked discrepancies in prices are some of the obvious red flags to identify fake devices.