South Africa enjoys the status of being one of the biggest and most diversified economies in Africa. It plays important global roles such as, until recently, being the only bloc member of the G20 and a champion in Brics.
In spite of these imperative strides even at a regional trade level it still has to deal with the disconcerting task of cleaning up its books and getting off the greylist imposed by the Financial Action Task Force (FATF). It has urgent work to do combating financial terrorism and money laundering, phenomena worsened by the illicit trade industry.
This issue was highlighted at an Emea security, anti-counterfeiting and financial terrorism risks conference held in Dubai this week. Countries generally take three years to comply, and South Africa has committed to tackle its eight strategic deficiencies by the beginning of 2025.
According to the Transnational Alliance to Combat Illicit Trade (Tracit) the trafficking of fake goods is driven by transnational syndicates and there is also extensive domestic production.
But how urgent is catching the bad guys smuggling fake goods, laundering money and corrupting legitimate markets when the government is not able to keep the lights on for a full day, there is no sustainable supply of potable water and crime is at an all-time high? Is it a realistic expectation that we will meet the deadline and continue the work when we get delisted if corruption is the very enabler that drives the surge of illicit trade?
It is in fact a matter of urgency as it will not only improve the country’s borrowing capacity and rid itself of the third-world rating but also attract foreign investment. The grey list affects the country’s reputation at a staggering rate as it worsens unemployment, increases criminality, discourages foreign investment and drains revenue from an economy that could be thriving.
The primary hub for counterfeiting is found in the Johannesburg CBD, and there is also significant activity in Bellville, Western Cape; Marabastad, Pretoria; and the Durban CBD. This is according Tracit. Another layer that complicates illicit trade is the phenomenon of zama zamas. But not much is being to eradicate their activities.
Two suspects were arrested at the weekend when police intercepted a truck transporting illicit cigarettes worth an estimated R22m outside Cape Town.
The problems fall in stages down a steep and rocky slope as consumers have created a demand for fake products. But who can blame them when their spending power has fast declined in the past years? Meanwhile, Sars says illicit trade costs the economy R100bn every year.
It is commendable that the government has established the Border Management Authority, which is expected to enforce co-operation between law enforcement entities to combat crime at the borders. The hope is that it will not be infiltrated and corrupted but actually serve its purpose. Success would lead to a better rating.
With its economic influence on the continent, membership of the G20 and Brics, and affiliation with other key international groupings, South Africa owes it to itself to promote its interests and address the threat that illicit trade poses to the economic development of the continent.
