COULD LESS-HARMFUL ALTERNATIVE INDUSTRIES HOLD THE KEY TO SOUTH AFRICA’S ECONOMIC GROWTH?

In a year when South Africa urgently needs credible growth opportunities, SONA presented a moment to spotlight industries already contributing to the economy and capable of further expansion. Yet one such sector remained largely absent from the national growth narrative: vapour products.

South Africa’s vapour products industry has evolved into a multi-billion-rand market, generating VAT, excise revenue, payroll taxes, and downstream economic activity across retail, manufacturing, logistics, compliance, and distribution. Thousands of jobs are tied to this ecosystem, many within small and medium-sized, owner-managed businesses embedded in communities across the country.

In an economy where SMEs are repeatedly identified as central to inclusive growth and employment creation, this sector represents not a theoretical opportunity, but an existing one. With appropriate, proportionate regulation, projections suggest significant expansion potential in the coming decade — more than R1 trillion in value by 2033.

Beyond economics, the industry also sits within the global harm-reduction conversation. While not risk-free, vapour products are widely regarded as less harmful alternatives to combustible cigarettes. Harm reduction does not eliminate risk; it reduces exposure to the most harmful forms. For adult smokers who switch away from combustible tobacco, this may translate into reduced long-term health burdens, an important consideration in a country facing sustained pressure on its public healthcare system.

Yet policy discourse continues to frame vapour products primarily through a lens of restriction rather than strategic regulation. The Tobacco Products and Electronic Delivery Systems Control Bill aims to strengthen public health protections, yet risks applying a regulatory framework designed for combustible cigarettes to products with a different risk profile and economic structure.

If implemented without distinguishing combustible cigarettes from less-harmful alternatives such as vapour products, the consequences of the Bill could extend beyond compliance costs. Businesses may become commercially unviable, investment could decline, and jobs will most definitely be lost, without necessarily reducing demand. South Africa’s experience during the 2020 alcohol and tobacco bans demonstrated how legal supply constraints can unintentionally accelerate illicit trade, undermining tax collection, enforcement of regulations, and consumer protection.

This is where SONA represented a missed moment. Explicit recognition of vapour products as a legitimate, regulated harm-reduction industry could have signalled a commitment to evidence-based, risk-proportionate policymaking, balancing public health objectives with economic revival.

Recognising vapour products would not mean deregulation. On the contrary, it would mean smarter regulation that includes strict youth-access controls, product standards, compliance enforcement, and decisive action against illicit operators. A differentiated approach would direct regulatory resources toward the highest-risk behaviours rather than applying uniform constraints across fundamentally different products.

The objectives of the vapour products sector align with several national priorities, such as job creation, SME development, industrial diversification, and investment attraction. In a low-growth environment, overlooking an already functioning, tax-paying, job-creating industry represents a failure to seize available economic levers fully.

South African can’t afford to sideline sectors capable of contributing to growth simply because they sit within complex policy debates. The question is not whether regulation is necessary, but whether it will be calibrated to maximise both public health and economic outcomes.

SONA has passed. The opportunity, however, remains. Evidence-based, proportionate engagement with emerging industries like vapour products still form part of a broader strategy to unlock growth, formalise markets, protect consumers, and support small businesses. In an economy searching for momentum, the greater risk may not be supporting responsible innovation, but failing to recognise it.k