Hundreds of thousands of people in the tobacco value chain may have to join the unemployment queues
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The research has spoken!
That was the response from the South Africa Tobacco Transformation Alliance (SATTA) to new research by UCT’s Research Unit on the Economics of Excisable Products (REEP) on the impact of the ban on cigarette sales.
“The research — the only study we are aware of into the impact of the cigarette ban —shows one thing: that the ban has done nothing but stimulate illegal activity, and should be lifted immediately,” says SATTA.
“Alarmingly, the REEP report points out that the longer the ban continues, the harder it will be to get rid of criminal cigarette networks. Government’s arguments for banning cigarette sales have been destroyed by research. Plain and simple.”
At the beginning of the lockdown, government claimed it wanted to stop people sharing cigarettes as it believed this would contribute to the spread of Covid-19.
“But the research reveals that more and more smokers are sharing cigarettes now — in some cases, the figure has gone up 430% in two months,” says SATTA. “So the ban has been a failure.
“Government claimed that banning cigarette sales would stop people from buying cigarettes. But the report reveals that 91% of smokers were found buying illegal cigarettes in May, and the figure now stands at 93%. Another failure.
“The research also showed that illicit cigarette traders are making massive profits, as the average price of some illicit brands increased by 457% during the lockdown. That is money that is lost to the fiscus. Yet another failure.”
SATTA is a co-respondent to a court application — due to be heard next week — to have the ban lifted, and firmly believes that the UCT research supports its arguments. Its members include tobacco farmers, processors and manufacturers.
“We have long argued that government is losing out on much-needed tax revenue during the ban: in our estimation, R36-million a day. Now there is an additional, compelling reason to lift the ban: the research unit’s finding that all the ban is really doing is entrenching the black market.”
SATTA said government would come to regret its decision to ban the sale of cigarettes, but that this may come too late.
“Right now, tobacco farmers are threatened with the loss of their businesses, tobacco processors have had to put their business on hold, and thousands of jobs are at risk across the value chain.
“Every day that goes by, every new bit of scientific evidence, shows the importance of getting rid of this ban and going back to producing and selling cigarettes as we were before Covid-19.
“But by that time, we fear, hundreds of even thousands of people could have joined the unemployment queues alongside millions of other South Africans who have lost their livelihoods during the Covid-19 lockdown.”
SATTA recently launched a national campaign to have the ban lifted.
“The fight against illicit trade is also one of the two pillars of our current #LiftTheBanSA campaign to have the ban lifted, the other being the need to save the jobs of the 296 000 people involved in the legal tobacco value chain,” says SATTA.
“South Africa is the only country in the world where cigarettes have been banned as a result of Covid-19. This has been devastating for our economy, and has put the entire value chain on hold. The ban must be lifted, and lifted soon, to save the livelihoods of everyone involved in their production.