The meteoric rise of illicit cigarette trade has tormented the South Africa Tobacco Transformation Alliance (SATTA) ever since the sale of tobacco was first banned at the start of the Covid-19 pandemic.
SATTA represents stakeholders along the tobacco value chain, from black tobacco farmer organisations to the country’s biggest cigarette manufacturer, and has just appointed a new chief executive officer, Tobela Mapula.
Speaking on the industry’s most pressing issues right now, he says that fighting illicit trading on the one hand, and driving transformation on the other, are what keeps him awake at night.
Food For Mzansi caught up with the new man in charge to get a sense of what he will be doing and what he believes should be done to turn the negatives of the industry around.
Tiisetso Manoko: Congratulations on your new position. What are your immediate tasks as the CEO of SATTA?
Tobela Tapula: I have two immediate tasks. The first is to execute projects that are geared towards transformation and ensuring that emerging farmers continue to derive value and are integrated into the agriculture value chain to have more sustainable agri-businesses.
They have suffered tremendous setbacks, primarily because of the growth of the illicit sector during the Covid-19 lockdown, when cigarette sales were banned.
The second task is to ensure that we successfully oppose the illicit tobacco trade to grow and sustain the industry. We need to reduce the market share of the illicit sector so that we can increase sales of legally produced cigarettes and restore order to the market.
What is the state of the tobacco industry in South Africa right now?
The industry is declining drastically, primarily because of illicit tobacco trade. We are working very hard with relevant government and law enforcement agencies to ensure that the industry is not dominated by players who do not pay tax.
Can you give us a better sense of exactly how big and concerning illicit trading is?
Illicit tobacco trade is massive as it makes up more than 60% of the cigarettes consumed locally. The tobacco ban, enforced during the lockdown, deeply aggravated the situation. We estimate illicit tobacco trade has increased and is edging closer to 70% of the market.
This has a negative impact across the value chain. Because of the drop in demand, legal manufacturers are making fewer cigarettes, which means there is less demand for tobacco that is grown and processed by legal producers.
Transformation is a key aspect of your organisation. What is the pace of transformation in the tobacco industry?
The pace of transformation is not as fast as we had hoped, because of the challenges I have mentioned. Accordingly, we are looking at alternative strategies, particularly when it comes to emerging farmers, which will speed up transformation.
We have developed a revised framework for transformation, with the participation of all our members, and are in the process of finalising this in the form of a transformation strategy and plan.
As part of this, we are forging long-term partnerships with the government and the private sector to ensure that we move with speed and stabilise the value chain.
What are SATTA’s achievements or milestones that you would like to share with us?
We have established ourselves as the voice of the legal tobacco industry and as the representative of its interests. That is no small task, given the rapid growth of the illicit sector and the fact that SATTA was just a few months in existence when the cigarette sales ban was introduced.
SATTA has been able to build an understanding with government and other role players of the threats posed by the illicit sector and its impact on the law-abiding, tax-paying members of the alliance.
From my own perspective, having only assumed this role in May 2022, I am encouraged by the industry’s support and willingness to execute new ideas. This is a very vibrant industry, and there are new developments in the agricultural and agro-processing environment which we are pursuing, including funding.
I have just completed field trips to our members and stakeholders in Mpumalanga and the Eastern Cape and provincial agriculture departments and the private sector are interested in working with us to turn things around.
It is a challenging environment, but our members are innovative and focused on ensuring that we continue to represent the interests of the industry and the society in which we operate, despite the difficult times.
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