ASANDA GCOYI | Vaping bill will smoke the economy, not spark it

Vaping has grown exponentially in SA since 2010 to become one of the fastest-growing industries. Though still a small portion of the overall nicotine market, vaping products hold the potential to vastly contribute to job creation SA’s antismoking agenda.

Recently, the Vapour Products Association of SA (VPASA) commissioned NKC African Economics to conduct a study on the economic contribution of the vaping industry to SA’s economy. This was an update of a study conducted in 2018 by Canback EIU which projected that the industry would generate 10,000 direct jobs between 2017 and 2027.

It is estimated there are more than 350,000 users of vape products in the country. This compares with estimates of 9-million smokers on the lower end to 11-million on the upper end. These are all potential consumers of vaping products. According to NKC’s findings: “(C)ounting direct, indirect, and induced channels of impact, the vaping industry supported an estimated R2.5 billion gross value-added contribution to SA’s GDP in 2019, equivalent to 2.6% of agricultural sector GDP.” This is a sizeable contribution by a “small” industry that barely existed 10 years ago.

In truth, vaping is not a cheap habit. Though it may be cheaper than smoking over time, it requires more money upfront, which could be a deterrent for those wishing to switch.

Government’s stated intention to introduce restrictive regulations against vaping poses one of the biggest threats to the growth of the industry. The proposed Control of Tobacco Products and Electronic Nicotine Delivery Systems Bill, which intends to regulate vaping products as tobacco products, is likely to slow down the growth of the industry by 34.2%, which could lead to a decline in the industry’s gross value-added contribution to GDP by R557.1m. The related loss in jobs is projected at 2,300, accompanied by a decline in tax revenues of R206.4m.

In his last budget speech, minister of finance Tito Mboweni reiterated government’s commitment to accelerate the introduction of a tax on Electronic Nicotine Delivery Systems & Electronic Non-Nicotine Delivery Systems (ENDS/ENNDS). Coupled with the proposed bill, the addition of excise duties will put paid to any notions of industry growth in the future.

In truth, vaping is not a cheap habit. Though it may be cheaper than smoking over time, it requires more money upfront, which could be a deterrent for those wishing to switch. The addition of a tax is likely to make vaping more expensive than smoking. This would be an untenable outcome for many smokers who would like to move to an alternative, but find the costs of vaping prohibitive.

Recently released employment data by Stats SA paints a grim picture of unemployment in the country. According to the second quarter’s Quarterly Labour Force Survey, unemployment now sits at a staggering 34.2% on the narrow definition. On the expanded definition, this rises to 44.4%. This is a lamentable fact which will consign millions of South Africans to intergenerational poverty. It will ruin any prospects the country has of reducing poverty and inequality, fan class tensions and worsen growing racial cleavages.

For this reason, VPASA would caution against hasty moves by government to introduce the bill. The industry is built on small and micro businesses that support many livelihoods. The introduction of stringent regulations will hobble the industry’s potential to grow in the medium to long term. It will put many businesses out and leave the space to be dominated by large entities. This will completely undermine government’s often stated mantra that small businesses are the engine of SA’s economy. In the end, the net effect of government’s overbearing regulation will be the death of an infant industry with a great potential to create employment. 

In 2015, David Sweanor, a legal expert from the University of Ottawa in Canada, coined the phrase “Big Tobacco, Little Helper” to refer to the counterproductive efforts of the anti-tobacco lobby to denigrate vaping in the eyes of regulators and smokers. He writes: “Disturbingly, these attacks on vaping are nothing new in the realm of nicotine policy. There is a very long history of alternative products that appear to have the potential to challenge the market dominance of cigarettes by allowing consumers far less hazardous ways to get nicotine. In each case the threat has been seen off, leaving the tobacco companies free to continue their exceedingly lucrative and depressingly deadly oligopoly with its near-monopoly over the delivery of a very widely used dependence-producing drug”.

Government’s stated motivations for proposing the bill and excise duty on smokers is to protect non-smokers, especially young people, from nicotine addiction. In this telling, government fears vaping will renormalise smoking and serve as what it calls a “gateway” into smoking. Needless to say, this fear is not founded in evidence. It completely ignores the health of smokers who, in some instances, are desperate to find potentially less harmful alternatives to smoking, but do not have the means or the will to do so. It also disregards volumes of emerging scientific evidence which clearly points to vaping as a reduced harm alternative to smoking.

Asanda Gcoyi is CEO of the Vapor Products Association of South Africa

It seems to also suggest that government has become beholden to the anti-tobacco/vaping lobby at the cost of all reasonable alternatives to the draconian measures which are now under consideration within government.

The net effect of what government is proposing, regrettably, is that smokers will continue to be addicted to combustible tobacco, thus putting their health at a larger risk in the long term. This goes against SA’s public health objectives. Government policy should surely be designed to accommodate harm reduction alternatives to improve the health of the nation. That this will also yield much needed jobs is a welcome boost that government should embrace wholeheartedly.

On the current trajectory, government is acting like big tobacco’s little helper. Stringent measures on the only viable alternative to tobacco will set back the fight against smoking and confirm smoking as the premier commodity for nicotine delivery to millions of its users.

Asanda Gcoyi is CEO of the Vapor Products Association of SA