Ban turned SA into cig smuggling mecca ... and legit firms took part: report

While tobacco companies in SA have denied being behind the large number of cigarettes available on the black market during the country’s lockdown, a new report claims that the industry may indeed have had a hand.

When South Africa moved to reduced lockdown levels in May, the tobacco industry reached an agreement with the government that it could continue to produce cigarettes – but only for export.

At the time, the sale, transport and distribution of tobacco and related products had been controversially outlawed.

But a Global Initiative Against Transnational Crime report has uncovered that at least 66% of cigarettes earmarked as “exports” did not make it out of South African borders, or did not reach their intended destination.

“Destination countries included neighbouring Namibia and Lesotho, as well as Mali in West Africa, and Syria. In the case of the former two countries, not only were fewer cigarettes recorded as imports than were listed as exports from South Africa, but the number of cigarettes marked for these countries far exceeded their per capita consumption of the product.

“This missing stock is likely lost to the black market, and given the close proximity of Lesotho and Namibia to South Africa, it probably finds its way back home. In the case of exports to Mali and Syria, missing stock probably either never leaves South Africa, or it gets lost in transit and enters black markets abroad.

“If this is the case, it means that tobacco companies in South Africa are aiding and abetting an illicit global trade in these products that is not merely confined to southern Africa.” 

Despite prominent cigarette brands being available on the black market alongside the low-quality foreign brands that made their way into the country during the lockdown, the tobacco firms had claimed that these were either counterfeits or old stock which had already been in the hands of distributors.

The report, titled “When the Smoke Clears”, said the country became a “tobacco smuggler’s mecca” during the ban, which was implemented from the end of March until August.

“Locally produced cigarettes were available, but the increase in foreign brands was notable. The neighbouring countries of Zimbabwe and Mozambique were the most common source of these brands, but labels from adjoining Namibia and Lesotho, as well as countries further afield, such as China, the Democratic Republic of the Congo, Zambia and even France were on sale,” the report read.

These illegal cigarettes were far cheaper before the Covid-19 crisis hit, but their prices were massively inflated during lockdown — at times by more than 200%.

Before lockdown, about 35% of cigarettes on the market had been illegally smuggled into the country. During lockdown, with no legal trade of tobacco products allowed, this number jumped to 100%. 

The report envisaged that some cigarette manufacturers may struggle to recover from the impact of lockdown and go out of businesses, while those able to “navigate the ban may have broadened their consumer base, especially among price-sensitive smokers”.

“With prices more or less returning to their pre-lockdown levels and the economic impact of South Africa’s Covid-19 response being felt, many consumers now, more than ever, will seek cheap options,” the report read.

“Lastly, new syndicates smuggling previously unknown foreign brands that emerged during the ban may continue to operate, having realised the potential for profit. With the established players consolidating their place and a new generation of smuggler emerging, South Africa’s tobacco wars are set to escalate. The impact on both the fiscus and on public health are likely to last for years to come.”

But besides the dire impact that these cigarettes had on the economy, the report has revealed that the black-market cigarettes may have had a lasting health impact on smokers. 

It was revealed that some of the brands were not only low quality, but some smokers who spoke to the researchers said they had affected their health more than legal brands.