A consortium of tobacco companies has taken the South African government to court in a bid to overturn the administration’s decision to ban the sale of alcohol and tobacco products during the Covid-19 pandemic.
Japan Tobacco International (JPI) and British American Tobacco South Africa (BATSA), together with The South Africa Tobacco Transformation Alliance (SATTA) claim the ban represents an unwarranted and unfair infringement of citizens’ rights. The tobacco giants are arguing that, rather than gaining the positive outcomes predicted by the government, prohibition will in fact lead to a reduction in vital tax revenues and a rise in the illicit trade of tobacco products, at the same time potentially imperilling the lockdown itself.
Voicing concerns over the negative impact of the government crackdown is a savvy move by an industry looking to validate its commercially motivated call for a repeal of the legislation. Those South Africans – including some civil society groups – who have taken a stand against the ban will certainly be keen to hitch their wagon to anything that emphasises its defects.
Smuggling is on the rise
There’s little doubt that Pretoria’s ban on tobacco sales has led to a smuggling boom. Despite the erection of a 25-mile coronavirus control fence along the border between South Africa and neighbouring Zimbabwe in April, tobacco consignments are still been transported every day through hundreds of illegal entry points.
Illicit products also appear to be impacting the efficacy of the ban. A recent study undertaken by researchers at the University of Cape Town indicated that around 90 percent of smokers had defied the regulations by purchasing black market cigarettes. Some are concerned that this illicit trade could be difficult to eradicate after the Covid crisis has passed.
A hypocritical stance
However, attempts by Big Tobacco to warn of a rise in the trade of illicit tobacco products are disingenuous, to say the least, especially as many of the industry’s major players have been implicated in highly organised smuggling operations for many years now. In fact, some would say that the industry invented the illicit trade in its own products as a way of preventing governments from implementing changes that would benefit citizens around the world.
Their methods are transparent. While tobacco companies continue to pay lip service to the idea of addressing South Africa’s illicit trade problems, no-one believes that they are truly committed to its resolution. A case in point is the industry’s aggressive opposition to SARS’ tender process for a comprehensive track-and-trace scheme that would present a practical method of clamping down on illicit trade. Such a system would be controlled by the government and enable the prosecution of actors involved in the parallel trade.
Schemes for tracking and tracing tobacco products along their supply chain have been identified by the World Health Organization (WHO) as one of the most effective tools for stamping out the black market for smokes. Indeed, as a party to the WHO Framework Convention on Tobacco Control Protocol to Eliminate Illicit Trade in Tobacco Products, South Africa has already pledged to implement such a system. South Africa’s attempts to institute a track-and-trace scheme, though, have faced constant pushback from the tobacco industry.
Far from supporting the initiative, the (now defunct) Tobacco Institute of Southern Africa (TISA) instead complained that the tender was ‘rushed’ and would lead to the imposition of ‘excessive and impractical regulatory burdens’ on small retailers. Perhaps unsurprisingly given TISA’s relentless lobbying, the tender was subsequently cancelled.
It’s the latest in a line of SARS projects to bite the dust due to a concerted effort by the tobacco lobby to discredit and disband its teams. The recent, tame lockdown SARS directive requiring the electronic monitoring of cigarette production is a small concession by manufacturers and a far cry from the kind of track-and-trace system that would herald any kind of meaningful change.
Moreover, BATSA doesn’t appear to have slowed cigarette production since the start of the ban – SARS even reportedly raided a BAT factory during lockdown. As a result, all official indications show that consumers in the country have swapped the previously popular transnational brands for those manufactured by local tobacco producers.
Changing the narrative
Government sources cite concerns over public health as the main reason behind the ban. In his defence of the new regulations, President Cyril Ramaphosa stated that tobacco and alcohol are a ‘hindrance to the fight against coronavirus’ and reiterated the need to prioritise scarce medical resources ‘to receive and treat vast numbers of Covid-19 patients’.
Coronavirus notwithstanding, few are blind to the impact of the illicit tobacco trade on South Africa’s public and fiscal health. According to TISA, under-the-counter cigarettes cost South Africa R8bn in lost taxes last year alone (over R40bn in the last ten years). Were the industry really concerned, it would look to its own supply chain and withdraw its opposition to the government’s efforts to close down the black market. This has not been the case.
Instead, industry actions have been largely confined to using the threat of illicit trade as reason to resist tobacco control measures: witness, for example, TISA paying social media influencers to promote the #TakeBackTheTax, while opposing government proposals to control tobacco products. With evidence drawn exclusively from industry-funded research, it’s no coincidence that the data used had an implicit bias overestimating the scale of the trade in illicit tobacco.
Big Tobacco’s interventions in South Africa over recent months represent further evidence of double-dealing. Although posing as a trusted source, the industry is anything but – its actions show that operational focus lies with prioritising trade over the health of its consumers. Illicit trade may well be a problem in search of an effective solution, but, if there’s one thing tobacco companies have shown us, it’s that it’s not a conundrum that can be tackled from within.