Besides the illicit cigarettes trade, the shrinking number of smokers in South Africa and the government’s effort to restrict smoking have been attributed to the legitimate tobacco industry losing market share and the state losing billions of rand.

The Fair-Trade Independent Tobacco Association (FITA) said this in reaction to concerns that British American Tobacco South Africa’s (BATSA) plant in Heidelberg, which falls under the Lesedi Municipality in Gauteng, is engaged in restructuring and reducing its production.  

The Lesedi Black Business Forum (LBBF) is concerned that the challenges will escalate unemployment in the small town, whose population mostly relies on BATSA for employment.

An attempt to get hold of BATSA for comment has been unsuccessful.  

The LBBF held a symposium on Wednesday to discuss how to save BATSA from collapsing and leaving families without an income.

Responding to questions from this reporter, FITA chairperson Sinenhlanhla Mnguni said that although illicit cigarettes have been the problem, health-conscious and government policies have also contributed. 

“There are fewer smokers in South Africa today than there were 15 years ago; many of them are no longer so brand conscious,” he said.

He said this could be largely attributed to the government’s efforts over the past 15 years to curb smoking and other consumption of tobacco products. 

“The tobacco industry, per se, as a whole, is in fact a shrinking sector in the economy,” said Mnguni.

However, he suspected that by restructuring, BATSA was trying to persuade the government to withdraw its anti-smoking policy. 

“It must also be noted that BAT has, in the past, used similar tactics globally and domestically to advance its commercial interests and to dissuade governments from passing legislation that would strengthen tobacco control. 

“This latest step, through what appears to be an astroturfing initiative, seems aimed at influencing public sentiment and dissuading the government from passing the highly contested Tobacco Bill.”

Mnguni warned that the illicit cigarette trading undermines tax collection and forces legitimate factories to shut down, contributing to the de-industrialisation of the country. 

“The effects have impacted all legitimate manufacturers, not merely one multinational. The legitimate tobacco industry has historically contributed between R12 billion and R15 billion annually to the national fiscus through excise collections alone, of which FITA members contributed a significant portion, supporting tens of thousands of jobs throughout the value chain. 

“The erosion of this base due to illicit activity directly weakens South Africa’s economy and its manufacturing capacity,” he said.

In an operation conducted on September 5, the police’s Counterfeit and Illicit Goods Units seized illicit goods, including cigarettes, worth more than R100 million in Gauteng, KwaZulu-Natal, and the Western Cape.

Other illegal goods that were seized were designer clothing, handbags, cellphone accessories, including SIM cards, processed meat products, cigarettes, automotive products, toys, medicines, agricultural stock, and electrical appliances.

However, this one-day crackdown seems like a drop in an ocean, as according to Tax Justice South Africa (TJSA), the country is losing more than R250 million every day.

The TJSA, which is concerned about the criminal syndicate who are destroying the economy, called for illicit trade to be declared a national emergency. 

LBBF President Tshepo Mazibuko described BATSA as having been, for many years, the pillar of hope for the residents of Heidelberg.  

“The British American Tobacco used to be the leading employer when it comes to manpower and contracting opportunities, but now they are on the brink of closing down, and most of the (LBBF) members have lost their contracts,” said Mazibuko. 

He said small businesses that operate in this town were struggling to survive because of BATSA’s situation. 

“The BATSA factory (in Heidelberg) used to have five divisions, but it is currently running one division that is used to process inside the factory; however, they don’t do that anymore. 

“Some products are processed somewhere else and come to the factory already processed. 

“They used to manufacture their own filters, but that has been outsourced now, and all those people who used to do this job are the ones who are retrenched,” he said.

Mazibuko supported the call for the illicit trade to be declared a national emergency.

“When we speak about illicit goods, we are not only focusing on cigarettes, and once we give space to the illicit goods, there will come a time when illicit goods will take over the majority of the market.

“Automatically, the industries that are manufacturing following the right standard and paying taxes will shut down,” said Mazibuko.

bongani.hans@inl.co.za

Source link