On Wednesday, 19 April, Business Against Crime (BACSA) in partnership with Business Leadership South Africa (BLSA) hosted a Webinar aimed at unpacking the exponential growth of illicit trade of alcohol and cigarettes during the lockdown.
As people, governments, big businesses, small businesses, and civil societies across the globe grapple with the coronavirus pandemic and lockdowns, criminal syndicates are taking advantage.
An unintended consequence
The banishment of products such as alcohol and cigarettes during the lockdown has had an unintended consequence in the increase of illicit trade. However, the sale of these products in the black market is not entirely new. A study conducted by Ipsos in 2019 discovered that the illicit trade of tobacco, for example, constituted about 40% of all tobacco sales in South Africa.
According to Tebele Luthuli, Managing Director of BACSA, the government must reconsider the nationwide ban as smokers and drinkers will more likely buy from underground syndicates and fuel the illicit trade of goods – which will remain a costly exercise to the South African economy
This is a huge problem for businesses that are operating legitimately and of course, the government. The South African government is losing about 1.64 billion Rands in tax revenue due to illicit trade which is much needed in the already struggling economy.
Government backtracks
It goes without saying that these illicit trade ‘vendors’ opens up opportunities to scammers. On the other hand, what was initially welcomed as a shot in the arm for the economy following last week’s announcement by President Cyril Ramaphosa was that from TODAY (May 1), the country will move to level 4 lockdown and see the unbanning of cigarettes.
Sadly, the government has backtracked on its decision to allow the sale of cigarettes, with Co-operative Governance & Traditional Affairs minister Nkosazana Dlamini-Zuma citing health reasons for the U-turn. “This will have a dire impact on the already shattered economy”, said Luthuli. The government has since backtracked on this decision. This is a very tricky situation that the government finds itself in given that it has to save lives and the livelihood of its citizens.
According to Luthuli, “there is a possibility of a syndicate planning its next move of producing counterfeit facemasks, substandard hand sanitisers and unauthorised antiviral medication, as witnessed in some European countries.” This could have dire consequences on the brands that operate in these industries and subsequently the consumers who will fall victims of substandard products.
More demand for PPE
Luthuli further added that, although Business Against Crime SA welcomes the gradual opening of industries like mining, agriculture, some call centres and emergency repairs, which will help save some jobs in the country. Unfortunately, the same opening of the economy which will see 1.5-million workers head back to work and this will result in higher demand for masks and other personal protection equipment (PPE) and further create fertile ground for counterfeit medical products.
In conclusion, the government needs to work together with industry in reaching a common ground flattening the curve of illicit trade and also to protect consumers from fake, falsified and substandard medical products and medicines. Consumers also need to be educated about the impact on impact of counterfeit products.
