The Communications Authority of Kenya (CA) has introduced a new licensing regime targeting telecommunications companies and electronics wholesalers as part of efforts to curb the influx of counterfeit devices in the country.
The proposed Telecommunication Equipment Distributor (TED) license requires wholesalers and telcos to pay a one-time fee of Sh250,000 for a 15-year license and annual operating fees amounting to 0.4% of their annual turnover, with a minimum threshold of Sh120,000.
For major players like Safaricom, which earned Sh10.54 billion from device sales in the financial year ending March 2024, the annual operating fee could reach Sh42 million. The charges apply to distributors of mobile phones, tablets, laptops, and television sets, with the CA emphasizing the importance of ensuring compliance with international and local quality standards.
The new TED license mandates that vendors source their products only from certified ICT equipment importers, who will now bear the responsibility for verifying that all devices comply with industry standards. Additionally, distributors must provide at least a one-year warranty for all gadgets.
Kenya has faced a significant influx of counterfeit electronics, including mobile phones without International Mobile Equipment Identity (IMEI) numbers, which complicates efforts to track stolen devices and ensure security. The CA estimates that counterfeit sales cost the economy Sh3.2 billion annually in lost tax revenue.
A report by the CA in 2020 revealed over 3.5 million counterfeit mobile phones in the country. This figure has likely grown alongside the rising demand for gadgets, driven by remote work, online education, and increased technological penetration. As of June 2024, Kenya had 35.21 million smartphones, up from 26.5 million in March 2022.
The CA’s new licensing framework could lead to higher consumer prices as businesses pass on the additional costs. Electronics prices have already surged in recent years due to a weakened shilling and the import-dependent nature of the industry.
The effectiveness of the TED license in combating counterfeit electronics remains uncertain, particularly given the high demand for affordable gadgets and the proliferation of vendors across Kenya. The regulator acknowledges the difficulty of controlling substandard devices in a market dominated by numerous small-scale sellers.
The TED license is the latest in a series of measures by the CA to address counterfeit electronics. In 2023, Kenya’s Supreme Court cleared the CA to implement a Device Management System (DMS) capable of detecting counterfeit gadgets on mobile networks. However, the DMS rollout has faced resistance from telcos like Safaricom, which argue the system could compromise user privacy by exposing sensitive data.
The CA has also explored other initiatives, including an online platform to allow Kenyans to verify the authenticity of devices by inputting their IMEI numbers. This initiative would build on the now-defunct 1555 IMEI verification project, which ended in March 2023 after a three-year run.