In his medium-term budget speech yesterday in Parliament, minister of finance Enoch Godongwana said the government is working around the clock to combat illicit trade, which includes tobacco and alcohol production.
He said the illicit trade threatens the economy, endangers consumers, and robs the fiscus of billions in revenue.
“The growing markets for illicit cigarettes and alcohol pose serious risk to public health and undermine legitimate businesses. Each year, billions of rands in taxes go uncollected, funds that could have closed our revenue gap and avoided tax increases entirely.
“According to the South African Revenue Services (Sars), since 2020, government has lost around R40 billion in excise revenue to the cigarette black market,” Godongwana said.
Fight against illegal trade
The tobacco industry has called on the government to strengthen its oversight on tobacco production, as the livelihoods of tobacco farmers and the industry were being crushed by illicit cigarettes.
“Government is clamping down on this illegal trade. In the last six months, Sars suspended three licenses for non-compliant tobacco production,” Godongwana said.
On infrastructure, Godongwana said, following strong interest from the freight logistics industry for information, the unit will issue the first rail corridor request for proposal by December 2025, with others following in early 2026.
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“We are also committed to simplifying the institutional arrangements across the infrastructure ecosystem. The new Infrastructure Finance and Implementation Support Agency will be operational by March 2026.”
A boost for agricultural exports
He noted that they have identified dysfunction in the country’s logistics sector, which is a key area in need of intervention. “The movement of freight within the country faced serious challenges, resulting in traffic congestion as the transportation of goods shifted from rail.
“With Durban Pier 2 welcoming private operators, we expect to unlock R200 billion in investment over the next five years,” he said.
Meanwhile, the Citrus Growers’ Association (CGA) echoed the minister’s statement regarding the improvement in the Durban port, citing it as a critical port for the citrus industry.
“The Port of Durban plays a pivotal role in South Africa’s citrus export industry, with almost half of all citrus exported from there. As citrus production volumes are set to grow, the efficiency and capacity of Durban’s entire logistics ecosystem become increasingly vital.
“Recent investments in logistics infrastructure in Cato Ridge are significant. For example, in June this year, the Maersk Cato Ridge Cold Store opened. This 10 000-pallet facility, situated across from a container depot, had a successful first citrus season,” the CGA stated.
According to the organisation, 40% of SA’s citrus originates in Limpopo and must travel nearly 850km to Durban, so improved rail access is essential.
“It is also encouraging to note that after two years of waiting, there is finally legal clarity on the International Container Terminal Services (ICTSI) concession at the Port of Durban’s Pier 2 Container Terminal.
“The citrus industry hopes implementation of the ICTSI-Transnet partnership now moves swiftly and that our growers will be able to reap its benefits as soon as possible,” the CGA said.
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