Illicit trade thrives as South Africa bans alcohol and tobacco sales
The country’s pandemic policy offers a case study in the effects of prohibition
As the taverns and drinking spots filled up with revellers in Xhora Mouth, deep in South Africa’s rural Eastern Cape, Lynne Wilkinson worried that the crowds celebrating Christmas would bring a new wave of coronavirus infection to an isolated region with few hospitals and clinics.
Bulungula Incubator, a charity where Wilkinson is acting director, had worked with villagers to manage the risk of big indoor gatherings. But tavern patrons at holiday time were much harder to convince.
That was until President Cyril Ramaphosa imposed a ban on all alcohol sales as the second wave of the pandemic rolled in. It was the third of four such bans in South Africa in the past year, all aimed at clearing hospital beds of wounded drunks to make coronavirus treatment easier — as well as to limit incentives for big gatherings.
The effect was immediate even with Xhora Mouth’s relative isolation. “It was almost as if you pulled a control switch,” Wilkinson says. “Because it’s so impossible to manage the taverns . . . that made a big difference.”
South Africa has been unusual during the pandemic in that it placed bans on sales of not only alcohol but also tobacco, in order to prepare hospitals for surges in Covid cases. The latest alcohol ban, targeting sales for off-site consumption, came as recently as Easter. That has made South Africa a study in how illicit markets have responded to lockdowns.
Legitimate drinks and tobacco players took an instant economic hit as their customers turned to illegal supplies. “We have had three bans totalling 19 weeks of lost trade days, with R36bn ($2.5bn) loss in sales revenue for the industry and R29bn loss in tax revenue for government since the start of the lockdown this time last year,” says Sibani Mngadi, chair of the South African Liquor Brand owners Association.
South Africa is not alone in facing the problem of illegal tobacco. A 2018 Euromonitor report concluded that 7.8 per cent of the global cigarette market was illicit and that this cost governments about $40bn in lost tax revenue.
Even before the pandemic, the extent of this trade was a threat to both the South African public purse and to law and order, with analysts noting that there was a history of official corruption over cigarette smuggling. While South Africa has an R20 tax per packet, with a diamond stamp to show that duty has been paid, prices below this are not uncommon.
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