Drugs, fakes, crude oil and region’s part in transnational crime

Friday April 14 2017

East African economies now have to contend with an over $1.6 trillion transnational crime business as the countries are considered a transit route for drugs from Asia to European markets.
A new report by US-based Global Financial Integrity, which puts the annual global business of transnational crime at between $1.6 trillion-$2.2 trillion from around $650 billion in 2011, singled out Tanzania and Kenya as transit points for Afghan heroin from Pakistan and Iran to European markets.

Transnational crime — drug trafficking, counterfeiting, illegal logging and fishing, crude oil theft, illegal mining and wildlife trade, human and organ trafficking, cultural property trafficking and small arms and light weapons trafficking — is undermining economies, destroying the environment and jeopardising the health and wellbeing of the public.

GFI policy analyst Channing May contends that transnational crime has become a big business.

“Linking this array of illegal goods are consistent trends in the organised networks involved in the crimes, the role of the global shadow financial system and the negative consequences for governments, economies and societies in developing countries,” she said.

The report shows counterfeiting as the most valuable transnational crime, at $923 billion to $1.13 trillion per year, followed by drug trafficking at $426 billion to $652 billion.

In East Africa, counterfeiting and pirating of pharmaceuticals, consumables, luxury goods, and intellectual property is undermining businesses, denying governments tax revenue and leading to job losses.


In Kenya, for example, the counterfeit goods market is worth about $900 million annually, robbing the government of $84 million to $490 million in tax revenues.

“Counterfeit goods provide organised crime and terrorist groups with financing. In addition, they impact the health and safety of the general public,” states the report.

According to the report, human trafficking is one of the fastest-growing transnational organised crime markets with 21 million men, women and children around the world being victims of trafficking.

The crime, which generates $150.2 billion in profits each year, is playing a growing role in terrorist and insurgent activities and groups.

With East Africa becoming an oil and gas producer, the region will have to deal with crude oil theft — a big transnational crime estimated to be worth at least $5.2 billion to $11.9 billion annually as of 2015.

In recent years, Nigeria has been the hotbed of worldwide crude oil theft, with 100,000 to 400,000 barrels stolen each day, which is equal to roughly 4.3 per cent to 17.2 per cent of daily domestic production.

Also critical for East Africa is the growth of illegal extraction and trade in minerals, estimated at $12 billion to $48 billion annually and illegal logging which is estimated to be worth $52 billion to $157 billion per year.