Survey finds high levels of illicit tobacco in South Africa

A mystery shopper survey in South Africa has found that 41 per cent of retail outlets were openly selling illegal tobacco.

The survey – conducted by Ipsos on behalf of the South African unit of British American Tobacco (BAT) – found that the problem was most pronounced in Free State, Western State and Gauteng, where 74 per cent of retailers were found to be offering packs of 20 cigarettes at below the Minimum Collectible Tax (MCT) price level set by law.

The company says the survey reveals tax evasion on an "industrial scale" and shows that South Africa's cigarette market "has been transformed into a multi-billion-rand free-for-all for lawbreakers."

"Even allowing for some of these purchases being stolen, smuggled or counterfeit stock, the sheer volume and range of brands available suggests that some manufacturers must be complicit in the sale of these products – whether through omission or active facilitation,” according to BAT South Africa general manager Johnny Moloto. “There is no other plausible explanation."

To stem the trade, the South African government should insist that all companies comply with pricing rule, ratify the World Health Organization (WHO) illicit trade protocol, and introduce a comprehensive track-and-trace system, he added.

The survey was carried out in around 4,600 retail outlets – including informal stores, independent shops and convenience stores, cafes and wholesalers – out of an estimated 150,000-plus such establishments across South Africa in February 2021.

The tobacco giant has however come in for criticism of its own with regard to the illicit trade in tobacco. The Organized Crime and Corruption Reporting Project (OCCRP) recently issued a report claiming that BAT itself has contributed to the trade by oversupplying Mali, which it says is a major source of cigarettes that are trafficked to South Africa.

South Africa restricted the sale of tobacco products for five months last year because of the COVID-19 pandemic, ending the ban on August 17, 2020. There have been reports of an increase in illicit trade during the restriction.