Is Blockchain Technology an Answer to the Counterfeit Food Epidemic in Africa?
Blockchain technology is a digital, decentralised public ledger that stores transactions in the form of “blocks”. Each transaction is recorded and added in a chronological order, forming a chain of blocks or a “blockchain”. Once a block has been added to the chain it cannot be altered, as that would affect the blocks that came afterwards. Because of the complexity of global supply networks, the decentralised characteristic of blockchains removes the need for a centralised body – such as a bank or government – to intervene, creating greater transparency of transactions.
Counterfeit food is any food product that has been adulterated or misbranded for economic gain. It can contain substituted or additional ingredients that are harmful to human health. Lesser developed regions that lack high levels of regulation and standards are more susceptible to the problem. In Tanzania alone, more than 50 per cent of all imported goods are counterfeit. Besides low levels of regulation and food standards, the increase in counterfeit food is due to the increased complexity of the global supply chain, open markets and free trade, as well as to poor economic conditions. Efforts are being made to address the spread of counterfeit food, however, and frameworks are being implemented to attack the problem.
There are many factors in Africa that are driving this counterfeiting trend. Firstly, the complexity of the global food supply chain has made it difficult to track the origin of products. Second, open markets, combined with poor regulatory standards and tracking systems, create gaps that are exploited by dealers in counterfeit goods. Thirdly, poor economic conditions have led to the desire for lower priced goods. As a result, especially from the latter two reasons – poor regulatory standards and economic conditions – there has been an increase, not only in international counterfeit dealer networks, but also in domestic networks operating in Africa. Cheaper imports of counterfeit products have increased competition locally, forcing local producers to use inferior or unregulated ingredients in their products to reduce production costs.
Several negative impacts are associated with counterfeit food products, for example: impacts on health and economic growth. In Nigeria, milk powder has been found that did not contain any animal protein; in Kenya, vegetable oil has been made from recycled oil unfit for human consumption; and in Ghana, Sudan IV, an illegal carcinogenic dye that has been banned in the United Kingdom since 1995, has been found in palm oil.
Those counterfeit products could be contributing to the increasing level of malnutrition and cancer in Africa. One of the biggest concerns is the impact that counterfeit food will have on youth development. In Africa, 34 per cent of five-year-old children are affected by stunting of growth, which leads to lifelong impacts on physical and mental development. It is not just health that is at stake, however, African governments have been consistently missing out on much needed tax revenue that could support economic growth and development.
The innovation, development and adoption of blockchain technology, has enabled companies to enhance the traceability of their products
Alibaba, an e-commerce platform, which accounts for 75 per cent of China’s online retail sales, has adopted this technology. It works with food suppliers in Australia and New Zealand, Australia Post and PricewaterhouseCoopers. Managing Director for Alibaba in Australia and New Zealand, Maggie Zhou, mentions that ‘this project is the first step in creating a globally respected framework that protects the reputation of food merchants and gives consumers the confidence to purchase food online.’
In Africa, blockchain technology is slowly being utilised. The Kenyan Revenue Authority (KRA) implemented the Excisable Goods Management System in 2013, to track tobacco, wines and spirits, which brought in an additional $57 million in annual revenue for the Kenyan government.
In addition to blockchain technology, governments and companies are beginning to become proactive in the regulation of food products. Nigerian agencies, the Consumer Protection Council and the National Agency for Food and Drug Administration and Control, announced earlier this year that they will collaborate in an effort to address the quality and standards currently set. They will also increase strategic intervention aimed at securing the food and drugs sector in Nigeria. African countries and companies have also signed on to CODEX, a World Health Organization and Food and Agriculture Organization initiative that sets global standards for safe food.
It is clear that African countries are beginning to take the initiative, but to overcome the counterfeiting problem, governments must remain individually vigilant and also collaborate together. Individual governments should set high regulatory standards and implement effective enforcement mechanisms, perhaps similar to those already adopted by the KRA. The African Union should establish a regional framework, similar to the framework between Alibaba, Australia and New Zealand or the European Union’s Food Fraud Network. This would strengthen and regionalise tracking and regulation methods. On top of this, formal trade agreements could be negotiated and signed, to ensure food safety and high standards. Alleviating the spread of counterfeit food in Africa will help to improve health outcomes across the continent and also support economic development.