The tobacco industry is greatly encouraged by the growing national pushback against the threats posed by the illicit tobacco industry, said South African Tobacco Transformation Alliance (Satta) spokesperson Zachariah Motsumi.
Motsumi said the University of Cape Town’s research on the economics of excisable products revealed alarming figures, estimating a loss of R119 billion in excise and VAT revenue over two decades due to illicit cigarette networks.
Fighting the good fight
“Fortunately, their calls for action did not fall on deaf ears. Edward Kieswetter, the commissioner of the South African Revenue Service (Sars), lent his support to the cause, acknowledging that illicit tobacco was ‘the biggest fight we face now’. Determined to turn the tide, Kieswetter vowed to allocate more resources to combat these complex crimes which he did very well,” he said.
Motsumi expressed that they agree with the Sars commissioner that illicit products account for 60%-70% of cigarette sales and cause tremendous damage to the fiscus.
“The national fiscus is not the only place where the illicit tobacco sector is causing tremendous harm, cigarette producers like Batsa are having to retrench tobacco factory workers and about 500 jobs are currently at risk in third-party logistics companies that transport their products.
“Not only cigarette manufacturers have taken a massive knock, [so] have the farmers who grow tobacco, and the companies that process it. The entire value chain has been hammered,” he said.
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Battle against illicit trade continues
According to Motsumi, they have called for more aggressive measures against the tobacco mafia networks, urging communities to join the fight against illicit activities.
“With the support of law enforcement and the collective determination of all stakeholders, they believed that it was possible to reclaim their industry from the clutches of organised crime.
“As the sun set on another day in South Africa, the battle against illicit tobacco raged on. But with Satta leading the charge and a united front against the forces of darkness, there is hope that a brighter future lay ahead for the tobacco industry and the nation as a whole,” he said.
Motsumi said there were 125 black tobacco farmers when Satta was formed, now there are only 10, down 92%. “South Africa also has less than 155 commercial tobacco farmers, 21% fewer than the 197 it had in 2019.
“Satta’s tobacco processing affiliate, Limpopo Tobacco Processors, has directed farmers to cut back even on planting new crops and has to shorten its working week in some areas to two days because of the drop in demand for legal leaf,” he said.
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