The Eastern Cape is one of the country’s top producers of illegal cigarettes – a trade that has contributed to a tax revenue loss of more than R14-billion, and more than 700 jobs lost nationally in the past year.
At a presentation delivered at a symposium on illicit trade held in East London yesterday, the Eastern Cape Socio-Economic (ECSECC) consultative council’s Baphelele Mhlaba said some of the illicit cigarettes arrived here via the province’s small airstrips, which were under limited surveillance. "The Eastern Cape can be used as a point of access because of some of the smaller landing strips in Grahamstown, Queenstown and Port St Johns,” he said.
They are smuggled from abroad without duty being paid, sometimes made to imitate original brands.
But illegal cigarettes are also produced locally. Tobacco Institute of South Africa board member Joe Heshu said they recently made an R18-million bust on a Port Elizabeth company making cigarettes with cheap tobacco from a neighbouring country mixed with cheap products that can be hazardous.
Heshu serves on several boards including British American Tobacco, which exports cigarettes to 22 countries, and is a member of the Tobacco Farmer’s Association of Limpopo.
Citing research carried out in 2016, Heshu said: "The tobacco industry is being crippled by a drastic increase in illicit trade. We are producing 1.2billion less cigarette sticks annually, and this does not affect only the industry – it has a heavy impact on the economy as hundreds lose jobs annually.
"Before a packet of 20 cigarettes even get to the shelves, a tax of R16.30 needs to be paid on it, but there are so many illegal packets of cigarettes about that cost roughly this amount that it raises a lot of questions.”
A legal packet of 20 cigarettes retails at between R25 and R35.
Heshu said over 40% of the tobacco on shelves is part of the illicit trade, which undermines the legal criteria for which cigarettes are supposed to be made and poses a health hazard to those who use them.
StatsSA representative Nthambeleni Mukwevho, revealed that poverty and unemployment, which dominate in the province, are among the factors driving the illicit trade. "In 2015 the provincial economy grew just by 0.7%, yet unemployment increased by 7.3%. People in this province are among the least educated and are desperate to put food on the table.”
Anti-corruption task team head Colonel Mxolisi Nogemane said makers of illicit cigarettes used child labour, especially children from poor families, to make and distribute their illegal tobacco products.
"Our aim is to get to the core culprits, not the vulnerable children,” said Nogemane.
The illicit tobacco trade was a lucrative activity controlled by well organised syndicates that operate both in and outside the country, he added.
The syndicates produce huge quantities of illicit cigarettes and have excellent distribution networks, which make it easy for them to flood the market with their illegal products.
Nogemane said the Hawks were sharpening their intelligence capacity, which would make it easier to break the syndicates and flush out their criminal acts.
Mhlaba said: "Illicit trade undermines the achievement of the targets set out in the Prevention of Non-Communicable Diseases Strategy 2013-2017, which is aimed at lowering alcohol and tobacco consumption by 20% by 2020.
"What this means is that young people are able to access cheap cigarettes, for example, while regulation was more especially aimed at discouraging smoking by new entrants.
"More efforts need to be directed at effectively enforcing existing regulations in order to deal decisively with illicitly traded goods,” he said.
Source: Daily Dispatch