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2020-06-12

SA’s cigarette ban may be earning criminals R3bn a month, with syndicates rushing in

The ban on smoking during South Africa's lockdown has earned criminal syndicates at least R6 billion so far, estimates Johann van Loggerenberg, author of Tobacco Wars.


Edward-John Bottomley | Business Insider SA

A recent UCT study found that 90% of smokers have bought cigarettes during lockdown. That is despite the prices of illegal cigarettes typically being triple the price of a normal packet.

According to Van Loggerenberg, the state earned around R1 billion per month in taxes on cigarettes. “Cigarettes are very cheap to produce – most of the cost is in the R17.50 VAT, plus little bit of a profit.”

If most smokers have still found a way to buy cigarettes in over two months of lockdown, then the state has lost at least R2 billion in revenue. And because illegal cigarette prices are at least triple the normal cost, that means that criminals have earned R6 billion from illegal smokes since the start of lockdown in March.

The ban has allowed criminal syndicates to expand their reach dramatically. “They’ve also gotten a lot smarter,” he says. And South Africa is now the target of international criminal syndicates eager to get a share of the multi-billion rand pie, as the ban on the sale of all tobacco products continues.

There’s “no question” transnational crime syndicates are involved, Van Loggerenberg says. “Just look at brands you can buy now. They’re Mozambican, Angolan. They’re from the DRC. I’ve even seen some from China.”

“You have 7.5 million smokers in South Africa who’ve just had their supply cut off. It’s any entrepreneur or capitalist’s dream. You can simply buy them in Zimbabwe, smuggle them into South Africa and sell them for triple the price.”

That includes subsistence dealers, who are smuggling a few packs in their pockets, to transnational organised syndicates, he says.

 


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