The Scourge of Illicit Trade in South Africa: A Tale of Inaction and Bad Policy Making

The announced planned closure of the British American Tobacco South Africa’s (BATSA) factory in Heidelberg before the end of 2026 seems to have come as a shock to those who were not paying attention to the repeated calls for government to decisively address the scourge of illicit trade. It is also shocking that policymakers are acting shocked, for they are the ones who ignored or dismissed those pleas.

The planned closure of the factory comes as the Portfolio Committee on Health is finalising the Tobacco Products and Electronic Delivery Systems Control Bill. The Bill seeks to put in place more stringent regulations for tobacco and vaping industries. One of the key complaints about the Bill is that as it stands currently, it will spur illicit trade across nicotine categories. This message has been raised by both the vaping and tobacco industries. Throughout its engagement with the process, the Vapour Products Association of South Africa (VPASA) has referenced ballooning illicit trade in tobacco as a cautionary tale for policy and lawmakers. It thus comes as a surprise that policymakers and, to some extent, labour unions, specifically the South African Federation of Trade Unions (SAFTU) would express shock at what is an inevitable outcome of government’s disinterested approach towards tackling illicit trade.

In countless hearings conducted by the Portfolio Committee of Health in the processing of the tobacco bill, Members of Parliament and anti-tobacco campaigners consistently dismissed the dangers posed by illicit trade as some sort of ruse by industry players to hoodwink policy makers. This is despite countless studies conducted by reputable bodies, including IPSOS and the UCT’s Research Unit on the Economics of Excisable Products, which have found illicit tobacco trade to range between 56%-75%. During NEDLAC consultations on the Bill, government refused to accept that illicit trade was a problem.

It will be interesting to see how the announcement of the factory closure and inevitable job losses will shape narratives moving forward. Regardless of ideological positions, policymakers should accept that illicit trade is a problem in South Africa. The Minister of Finance, Enoch Godongwana seems to have finally accepted that this is the case. In his Medium-Term Budget Policy Statement in November 2025, he conceded as much. This is an encouraging development, which recognises that policymaking should move beyond wishful thinking and grapple with the facts as they obtain. A lot will hinge on the government intervention that Godongwana and Minister of Trade, Industry and Competition Parks Tau are developing to confront illicit trade.

In a coordinated policy environment, the government intervention would result in two things: firstly, a moratorium on excise increases on vaping products, and secondly, a rethink of the tobacco bill to ensure that the problematic provisions, such as plain packaging and retail display bans, are jettisoned. To persist with the Bill as it stands would be tantamount to Parliament burying its head in the sand and hoping for the best. This is no basis for making policy.

In a dynamic policy environment, Parliament would seriously investigate the projected socio-economic impact of the proposed bill. South Africa is currently facing overwhelming joblessness, with youth unemployment reaching unsustainable levels. As a result, it is crucial that policy amendments do not worsen the current situation. The current socio-economic impact assessment produced by the Department of Health in 2018 and signed off by Cabinet is seriously out of date, poorly conceived, and an unserious attempt to mask the ideological underpinnings of what is a thoroughly bad policy proposal. A cursory glance at the document clearly shows that the drafting was a slapdash, mechanical undertaking that sought to justify, rather than interrogate government’s policy preferences, without any earnest attempt to model impacts, both positive and negative. The document makes only flimsy quantitative claims about the projected impact of the Bill. Zero attempt is made to plot projected quit rates, timelines, and economic effects. Instead, the document relies on simplistic assertions about positive outcomes, without adducing any empirical data to support its claims.

As South Africa seems to be turning the corner in economic terms, government must tighten policymaking. Parliament must take its policy and law-making role seriously and refuse to be a rubber stamp for policies that are likely to worsen unemployment while giving succour to illicit players.