Up in smoke - How the tobacco ban in South Africa stoked up an illicit industry

Smokers and non-smokers alike remember the day in May 2020 when tobacco trading was banned in South Africa. Suddenly, in an unprecedented move, the government declared it illegal to buy and sell (and, by implication, smoke) cigarettes and other tobacco products – ostensibly because tobacco use made smokers particularly susceptible to breathing difficulties, one of the pronounced early side effects of COVID. Banning smoking, so the logic went, would lower the risk and/or severity of COVID inflections amongst smokers and alleviate the pressure on hospitals – particularly those that were short of ICU beds and ventilators which were needed for the rising numbers of acute COVID cases. It would also help to keep the COVID-related death toll in check. ?

The tobacco ban in South Africa – like the alcohol ban, the cooked-chicken-from-Woolies ban and the everything-but-winter-pajamas ban – was devoid of scientific merit. There is a big difference between thinking that smoking is bad for people’s health and making it an expensive past-time … and banning the tobacco trade altogether. This smacked of something far more sinister, particularly as news of the ban in South Africa made our friends and relations overseas scratch their heads in disbelief.?

How to create a black market

When you can’t have something, you want it more. Banning a product simply fuels the black market, especially in the case of cigarettes for which there is a pretty inelastic demand. Nevertheless, our politicians and their advisers decided – without any reliable evidence of the link between smoking, COVID and severe illness/hospitalisation – to criminalise a centuries-old practice. Moreover, little thought appears to have gone into what would happen to the tobacco industry in the country and its complex supply chain.

On a more cynical note, there were quite a few entities that stood to gain from a burgeoning black market – tobacco manufacturers included. The tobacco industry in South Africa is far from saintly, we are told. In fact, the illicit tobacco trade has flourished for many years; the tobacco ban simply gave it a boost.

In a webinar organised by the Daily Maverick in 2020 when South Africa was in the grip of a hard lockdown, former SARS lawyer and author, Telita Snyckers, painted an alarming picture of a vibrant illicit tobacco (and especially cigarette) trade in South Africa characterised by the ‘supply, distribution and sale of smuggled genuine, counterfeit and cheap white tobacco products’.

Counterfeit products are copies of branded products manufactured without the rightful owners’ consent, while cheap white products are legally produced in one country but smuggled into another country without customs duty being paid. How are genuine products smuggled, you may ask? When the tobacco trade was banned in South Africa, some manufacturers exploited the government concession that tobacco products could be exported. In the face of massive, pent-up local demand, there was a strong incentive for companies to divert some of their export stock to the local market, at significantly inflated prices.

Who wins, who loses?

The illicit tobacco trade deprives the government of excise and customs revenue, compromises quality standards, and puts many honest manufacturers and traders out of business. The all-out ban in 2020 simply added fuel to the fire, shrinking tax revenue (to the tune of R35 million per day, according to BLSA head, Busi Mavuso) but enriching many parties from the public and private sectors who were strategically positioned along tainted supply chains. Of course, the ban also hit the pockets of smokers who simply could not or would not quit their habit, even in the face of exorbitant prices or inferior products. Smokers themselves therefore ended up aiding and abetting the illicit trade.

Importantly, too, the illicit tobacco trade feeds other criminal activities, such as drug dealing and prostitution, as criminals often have a range of unsavoury businesses that support and subsidise one another other. It is ironic that during various lockdown periods, when the police were busy arresting ordinary citizens for mask offences or breaking the curfew, many criminals had free rein, undetected or deliberately overlooked by the authorities. ?

Can the illicit tobacco trade be contained?

Can South Africa’s illicit tobacco trade be curtailed, bearing in mind that the nonsensical, months-long ban strengthened cross-border and local criminal networks, which prevail to this day? Here are some pointers for policymakers:

• Don’t make an economic activity (on which many people depend for their livelihood) illegal because you’ve bought into some half-baked scientific theory or wish to make a quick buck in the black market. South Africans are much wiser and less accepting today than they were two years ago; you will be exposed – in court. Many felt vindicated when the Western Cape High Court finally declared the government’s ban on the tobacco trade unconstitutional on 10 December 2020.
• ?Give law enforcement agencies (including SARS) more resources and make sure that they are headed by courageous, ethical leaders. Trouble (even incompetence) at the top typically sows the seeds of corruption.
• Ratify the World Health Organization’s Protocol to Eliminate Illicit Trade in Tobacco Products. This would force South Africa to use secure product markings and enhance its supply chain track-and-trace capabilities.

The illicit tobacco trade in South Africa is part of a global industry, buttressed by powerful cartels, political patronage networks and small-time opportunists. Today it is estimated to constitute about 60% of the local tobacco market, dominated by an unregulated, informal sector. However, if anything good has come out of COVID, it is that South Africans have become more aware, more alert … and more gatvol. It’s time to use our collective savvy to call out the criminals.