Many African countries with poor tobacco controls are an attractive destination for cigarette companies, according to a study on trends in the supply and demand of cigarettes by the University of Cape Town’s Economics of Tobacco Control Project (ETCP).
Cigarette consumption in Africa rose by 40% from R165.6-billion to R238.5-billion between 1990 and 2012.
The study, by Hana Ross, Marie Perucic and Nicole Vellios, describes the growing use on the continent as an “epidemic”.
Ross says: “Tobacco companies are thriving on the continent due to the weak anti-tobacco and tax laws in many African countries.”
South Africa is highlighted as a case where new controls have seen cigarette use fall. The study cites a survey in 2015, which found that the smoking population in South Africa decreased from 33% to 20% between 1993 and 2010 and had remained at these levels.
In the early 1990s, Egypt and South Africa contributed the most to Africa’s cigarette consumption, each producing about 40-billion sticks a year. However, by 2012 South Africa’s manufacturing had declined to less than half that of Egypt.
The report found that 62 companies produce tobacco in 30 countries on the continent. South Africa, Kenya, Nigeria, Egypt and Algeria are the five main production hubs.
Ethiopia is now a potential hub after Japan Tobacco International (JTI) acquired 40% of Ethiopia’s National Tobacco Enterprise for $500-million in 2016.
The study examined cigarette consumption in 22 countries, which are home to 80% of the continent’s population.
“While cigarette consumption is decreasing in most developed countries, it is increasing in many developing countries, where markets are often unregulated, cigarette prices are low and tobacco control laws are weak or not enforced,” the ETCP study says.
Increases in income, population size, direct foreign investment as well as improved life expectancy are identified as reasons why tobacco companies find the continent attractive. The result has been growing demand and a more affordable product.
British American Tobacco (BAT) is the main manufacturer in South Africa, producing close to 20-billion sticks annually for both local and export consumption. BAT’s brands account for 70% of cigarettes consumed in the country, the study notes.
Although South Africa’s anti-tobacco laws are more stringent than the rest of the continent’s, they are not at the same level as those in many developed countries.
Over the past 25 years, the global tobacco market has become increasingly concentrated, leading to lower trade barriers and a wave of mergers and acquisitions.
Worldwide, the trend is towards further concentration by the four major transnational companies: Philip Morris International, BAT, JTI and Imperial Tobacco.
The “big four”, together with the state-run China National Tobacco Company, dominated 85% of the tobacco market in 2014.
Thulebona Mhlanga is an Adamela Trust business reporter at the Mail & Guardian