Business leaders from across several sectors have warned illicit trade is rapidly expanding in South Africa, threatening jobs, public health and investor confidence.
The issue took centre stage during the first day of the Proudly South African Buy Local Summit.
To raise public awareness about the far-reaching impact of illicit trading across industries, Proudly South African hosted a peaceful march on Monday during which a memorandum of demands was handed to the department of trade, ondustry and competition (DTIC).
The action aimed to highlight the damage caused by illicit trade and call on government and policymakers to implement stronger interventions to prevent further job losses.
The issue was unpacked during a panel discussion featuring GS1 South Africa CEO Zinhle Tyikwe, Aspen strategic trade development senior executive Dr Stavros Nicolaou, SA Canegrowers Association CEO Dr Thomas Funke, South African Breweries (SAB) senior manager of excise and tax Fatsani Banda and Steel and Engineering Industries Federation of Southern Africa CEO Tafadzwa Chibanguza.
Speaking during the discussion, Banda said buying local is closely tied to supporting legal markets.
“Buying local implicitly means buying legal and our conversation, drawing attention to the growth in illicit alcohol, was to exemplify that a growing illicit trade market hurts the economic multipliers SAB brings to this country,” she said.
Banda said the legal alcohol industry supports hundreds of thousands of livelihoods and contributes significantly to the economy.
“We are a value chain of 250,000 people. Our GDP contribution is R80bn and our tax contribution is close to R50bn. There are a lot of multipliers that go into the local economy we’ve established.”
She warned the illicit alcohol market continues to expand.
According to a 2025 study by Euromonitor International titled “Understanding the Illicit Alcohol Market in South Africa”, illicit alcohol accounts for 18% of the country’s total market volume, representing an estimated R25bn annually.
Fiscal losses to the state reached about R16.5bn in 2024.
“Consumers have said it’s very hard to distinguish between legal and illicit alcohol,” said Banda.
She said the Drinks Federation of South Africa has established a responsible trading task force to help curb the problem.
“We’ve dedicated a set of metrics and identifier tools to drive down the volume growth because consumers can’t identify it. We’ve made it a retailer initiative to get it off the shelves and out of the visibility of consumers.”
Banda said collaboration between government agencies such as the South African Revenue Service (Sars) and law enforcement will be critical to tackle the issue.
“Without dedicated enforcement tools, without an increase in the budget dedicated to that, without synchronisation between the SA Police Service and Sars we won’t see the results we need to see,” she said.
Nicolaou warned the illicit trade in pharmaceuticals poses severe public health risks.
“We are dealing with a significant societal malaise with illicit trade,” he said, noting estimates place the overall illicit market in South Africa at between R60bn and R400bn.
“It’s one thing losing revenue to the tax man, it’s another how it dents investor confidence in the country and around things like intellectual property rights. We send a very bad signal to investors,” he said.
Nicolaou said the problem is particularly serious in the pharmaceutical sector, where counterfeit and substandard medicines can have life-threatening consequences.
“In my industry fake, substandard, illicit and unlawfully compounded medicines have severe consequences because you’re dealing with people’s lives,” he said.
He warned the rise in GLP-1 weight-loss drugs has seen a sharp increase in illegal products entering the market.
“Sometimes drugs are in phase three clinical trials. The safety of the drugs hasn’t been proven yet but there are counterfeits on the market,” said Nicolaou.
He said illicit medicines are often smuggled into the country disguised as other goods.
“It’s insane that GLP-1 products are being brought into the country as cat food or calcium. That’s why they’re not being picked by customs and Sars,” he said.
Nicolaou called for stronger enforcement, including high-profile raids on facilities distributing illegal medicines.
“A high-profile raid of a facility sends the right message. The less we do that, the more impunity grows,” he said.
Chibanguza said the steel industry is under pressure from substandard imports and has been heavily affected by unfair and illicit trade practices.
He said, global overcapacity, particularly from China, has led to a surge in imports.
“Between 2018 and 2025 steel consumption in the country dropped by about 35% to 40% but imports increased by 100%,” he said.
He warned that substandard imported steel products also pose safety risks to consumers.
“Sometimes you are trying to solve a basic need. For example, someone wants to put up a low-cost house in an informal settlement. The roof sheeting that comes in is so paper thin that it can cause a fire,” he said.
Chibanguza said tariff decisions and improved technical expertise among customs officials are needed to prevent illicit and substandard products entering the country.
Funke said the sugar industry is also grappling with illicit imports that are often misdeclared to avoid duties.
“Sugar often makes its way into the market in the form of rice. It is declared as rice, which doesn’t have an import duty, and it enters the market,” he said.
He said some imported sugar is packaged in non-food grade packaging and this poses health risks.
“We’re working very closely with the DTIC and Sars to find a solution,” said Funke.
Tyikwe said technology exists to help track and verify legitimate products.
She said barcodes issued through GS1 serve as a product identity system that can help authorities track goods across supply chains.
“We can track and trace any product that comes into or leaves South Africa,” she said.
She stressed the system needs stronger regulatory backing.
Industry leaders at the summit agreed stronger enforcement, improved regulation and greater consumer awareness will be essential to curb illicit trade and protect the economy.
TimesLIVE
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