Cape gangs made big profits from cigarettes during sales ban: report
When the sale of cigarettes was prohibited during the coronavirus lockdown, trade in the banned product was more profitable than drugs.
This is according to a Global Initiative Against Transnational Crime report, which found that selling cigarettes was an appealing market and, for drug traders, it was easy to monopolise sales in areas which were already under their control.
“Cigarettes became part of the gang trade, utilising regular outlets, including drug dens and street corners, as well as sales in minibus taxis and by prostitutes,” said the report titled “When the Smoke Clears”.
The gangs had allegedly sourced their cigarettes from cruise ships which had docked at the country's harbours.
“Because of the source, these cigarettes would have been big tobacco products. They were initially sold for R10 per single cigarette, rising to as much as R20 amid increasing demand,” the report read.
In compiling this report, researchers had used data from research reports by organisations such as the Research Unit on the Economics of Excisable Products (REEP) at the University of Cape Town, interviews and webinars with experts and from official data sources.
They had also conducted interviews with gang members, ordinary South Africans and others within the tobacco industry who had insight into the subject. News reports, journal articles and books, academic sources, tax experts and other sources were also used
Researchers said they found out by speaking to gang members and people with associations to gangs that millions were made by gangs who took advantage of the cigarette sales ban.
At least two of Cape Town's most notorious criminal gangs made as much as R12m from the cigarette trade.'When the Smoke Clears' report
“Interviews with gang members and associated persons describe how at least two of Cape Town’s most notorious criminal gangs have made as much as R12m [$710,000] each during the period from the start of lockdown in late March until mid-July from the cigarette trade alone,” the report read.
“These numbers are difficult to corroborate given the informal and illegal nature of the activity, but this demonstrates that a significant part of the retail tobacco trade fell into the hands of these organised criminal groups with extensive and well-established distribution networks,” it added.
Other ordinary South Africans also used the unavailability of cigarettes in their favour.
Researchers said they had spoken to a Cape Town woman who bought a large amount of cigarettes before the lockdown. She traded some of these for wine when the alcohol ban came into play.
Other people who had lost their incomes or suffered salary cuts during this period opted to get cigarettes for resale in a bid to make a living.
“A local actor was arrested on charges of selling cigarettes during the ban at a taxi rank in Polokwane,” read the report.
“One couple in Centurion sold cigarettes after losing their jobs. Finding this enterprise to be more lucrative than their previous work, they said they intended to continue with it after the lockdown.”
Children — many who were home during the lockdown — also took to selling cigarettes in a bid to assist their families and make extra income.
“These examples illustrate the diverse array of actors involved in selling lockdown contraband and the ease with which they were able to access the market. It also explains the rapid market growth,” the report stated.
Millions of cigarettes that were being smuggled into SA and around the country were intercepted by law enforcement officials during the lockdown but, seemingly, millions more went undetected.
Several people were also arrested for the possession of cigarettes during that time — many of which were foreign, illicit brands.
This research however, has highlighted that the effects of the cigarette ban had a disastrous impact on SA's economy and tobacco industry. With illegal traders having rooted themselves in the country, it would take years to undo the damage.