Tobacco alliance doubts validity of IMF ’emergency loan’

Dr Nkosazana Dlamini-Zuma, minister of cooperative governance and traditional affairs. Photo: Supplied/Government ZA

Dr Nkosazana Dlamini-Zuma, minister of cooperative governance and traditional affairs. Photo: Supplied/GCIS

The South African Tobacco Transformation Alliance (SATTA) is the latest to rubbish government’s hasty loan of approximately R70 billion in emergency support from the International Monetary Fund (IMF).

Early this week, the global monetary cooperation announced that it would grant South Africa $4.3 billion through its Rapid Financing Instrument (RFI) programme to tackle the covid-19 pandemic in the country.

Ntando Shadrack Sibisi, chairperson and founder of the Black Tobacco Farmers Association.

In a media release from the SATTA board of directors, the tobacco representative body say that one day of tobacco excise collection would pay the cost of the R70 billion IMF loan for almost three weeks.

The board is represented by British American Tobacco SA’s Johnny Moloto, the Black Tobacco Farmers Association’s Shadrack Sibisi, SATTA’s Zacharia Motsumi and Limpopo Tobacco Processors’ Rudolf Ottermann.

The tobacco industry heavyweights add that the global emergency support from the IMF once more highlights the “complete irrationality” of government’s decision to extend the ban on the legal sale of tobacco products under alert level three of the national lockdown.

They further stress that it will be the South African citizen who will carry the brunt in debts owed amounting to billions of rands in interest. “Because of the ban on the sale of legal tobacco, the government is losing R35 million a day in lost excise payments while criminals and illegal suppliers’ cash in,” the directors say.

The RFI provides rapid and low-access assistance to member countries to meet a broad range of urgent needs including commodity price shocks, natural disaster, conflict and post-conflict situations and emergencies resulting from fragility.

Over the past 126 days of the tobacco sales ban, the South African government have “refused” to collect almost R4.5 billion in taxes on cigarettes.

READ MORE: SA bleeding R4 bn due to tobacco sales ban

“That is enough to pay for more than six years’ worth of interest on the IMF loan. Just one day of tobacco excise revenue would pay the cost of the IMF loan for almost three weeks. This is the scale of the loss that the country is suffering,” the directors lambasted.

The South Africa Tobacco Transformation Alliance (SATTA) says more than 296 000 people are reliant on the free-flowing activity on the tobacco value chain. Photo: Supplied

They have urged government to “do the math and lift the ban on the sale of tobacco products immediately.” The cost of this loan is about R700 million every year. This works out to R2 million a day amid the financial woes of the country which desperately needs money to spend on essential services say the directors.

“That’s what we, as South Africans, must pay just for the right to borrow this money from the IMF. This doesn’t even include paying back an actual cent of the R70 billion. Our government is going to the United States and borrowing emergency money at a cost of R2 million a day while putting itself in a situation where it is unable to collect R35 million a day in tobacco taxes.”

Minister, see you in court next week

Meanwhile a massive showdown is expected in courts as Batsa comes face-to-face with Cogta minister Nkosazana Dlamini Zuma next week over the widely controversial tobacco ban. The cigarette juggernaut is the manufacturer of, among others, Dunhill and Lucky Strike and have gone months without being able to sell their products as government continues to enforce the prohibition of smoking.

In a twist of events in June, the Western Cape High Court announced the postponement of the matter between government and the tobacco industry giant by six weeks.

Fita chairperson, Sinenhlanhla Mnguni. Photo: Supplied

Meanwhile the Fair-Trade Independent Tobacco Association (Fita) have submitted their application to appeal the decision by the Pretoria High Court that upheld the ban on the sale of tobacco products. The association lodged their appeal at the Supreme Court of Appeal (SCA) in Bloemfontein.

After another legal blow in the Pretoria High Court last week, Fita’s bid to appeal an earlier ruling was dismissed. Chairperson of the tobacco lobby group, Sinenhlanhla Mnguni, says that the association will remain steadfast in their legal pursuit to have the widely controversial decision overturned.

“We have submitted our application and the SCA will give a directive response on when further papers must be filed,” Mnguni says.