RAMS MABOTE | Tobacco bill risks jobs as illicit trade surges amid lack of enforcement

There is something deeply seductive about legislation with a noble name.

Call it a Tobacco Control Bill, put public health at its heart, invoke the protection of children, and talk about addiction, disease and the burden on the health system. In times such as this, opposition can quickly be made to look like an argument against protecting South Africans.

But sometimes the most important question is not whether we should regulate. It is how we regulate and what happens when regulation outruns enforcement. South Africa is now standing at precisely that crossroads.

The proposed Tobacco Products and Electronic Delivery Systems Control Bill seeks to tighten restrictions on tobacco and nicotine products, including advertising, packaging, sales and smoking. Those are legitimate areas for public policy. Tobacco is harmful. Nicotine addiction is real. The state has a responsibility to protect public health.

But there is another tobacco story unfolding beneath the headlines. Often debates about legislation are at best removed from the public they are trying to serve and, at worst, hifalutin’, flying over everyone’s head. Unless matters are personal.

The proposed Tobacco Products and Electronic Delivery Systems Control Bill now in front of the portfolio committee on health is such a personal piece of legislation to me.

This is the story of the legal economy being slowly strangled while the illegal economy grows stronger. And if we get the balance wrong, the unintended casualty will not only be the tobacco industry. It will be jobs, farmers, factories, small businesses, tax revenue and communities that depend on legitimate economic activity.

I know two people who are victims of the current “state of the tobacco industry”. One is my cousin Michael — an addicted smoker, unemployed and practically indigent. On his government grant, Michael can no longer afford legal tobacco. He now lives on illicit cigarettes, which may or may not be more harmful to his health than the legal ones.

The other is Mpho — an honest father, husband and employee of a company that is about to shut its doors because the tobacco industry is under siege from lack of regulation and protection. Because Michael no longer buys legal cigarettes, Mpho is about to be ejected onto the streets into unimaginable dire straits.

That warning deserves far more attention than it has received. The elephant in the room is not the cigarette. It is the black market. South Africa does not have a tobacco regulation problem in isolation. As with most other things, we have an enforcement problem.

The illicit cigarettes economy has become so entrenched that it is no longer a peripheral nuisance operating in the shadows. It is a parallel market. And the numbers are sobering.

Reuters reported in January that illicit cigarettes were estimated to account for about 75% of South Africa’s cigarette market. British American Tobacco South Africa subsequently announced that it would close its Heidelberg manufacturing plant by the end of 2026, citing the devastating impact of illicit trade on its domestic business. About 230 direct jobs are at risk, including that of Mpho. Reports say more than 35,000 direct and indirect jobs could be exposed across the broader ecosystem.

Think about that for a moment. A factory closes. Workers lose their income. Families feel the consequences. Suppliers lose business. Farmers lose customers. Local shops lose legitimate supply. And government loses tax revenue.

Meanwhile, somewhere else, the illicit cigarettes trader is still doing business.

That is not regulation. That is economic displacement. That is the competitive advantage of the black market. It can sell cheaper precisely because it does not play by the rules.

The South African Revenue Service has estimated that illicit tobacco trading cost the fiscus about R40bn in excise revenue between 2020 and 2025.

So the question South Africa should be asking is not simply: “How do we make tobacco regulation tougher?” It should be: “How do we make regulation work in the real South African economy?” Because jobs don’t exist in legislation. They exist in value chains.

Here is the uncomfortable irony. If legitimate tobacco products become progressively harder and more expensive to manufacture, distribute and sell, while illicit products remain readily available, the consumer does not necessarily disappear. The market migrates.

There is another risk: we could miss the chance to get tobacco regulation right. Cigarettes and non-combustible products are not the same, and that difference matters when it comes to tobacco harm reduction. But if the illicit tobacco market continues to grow, the debate about safer alternatives could get lost as the government focuses on fighting the illegal trade.

That would be a missed opportunity. Many smokers may not be ready to quit nicotine but could choose potentially less harmful alternatives to cigarettes. Therefore, we need legislation that tackles everything: illicit tobacco, protecting jobs and public health, while still giving smokers access to regulated alternatives.

That is what smart regulation should look like.

South Africa does not need a weaker tobacco control regime. It needs a smarter one. One that protects public health without surrendering legitimate economic activity to criminals. One that regulates the market without abandoning the people who work within it.

One that closes loopholes rather than factories. One that puts organised crime under pressure rather than putting workers under pressure. And one that understands that every time a legitimate job disappears, an illegal entrepreneur gets another opportunity to fill the vacuum.

The tobacco debate should therefore not simply be about cigarettes. It should be about the kind of economy South Africa wants to build. An economy where legitimate businesses are rewarded for complying with the law. An economy where farmers can invest with confidence. An economy where factories can employ people for generations. An economy where taxes actually reach the fiscus. An economy where criminals are not allowed to become the country’s fastest-growing entrepreneurs.

Because if we regulate the legal economy while failing to police the illegal one, we may achieve the appearance of control while losing control of the market itself. And when that happens, the first thing to disappear may be the cigarette factory.

But the last thing to disappear will be the consequences.

• Mabote is a reputation manager and CEO of Kingmaker Consulting