Illicit tobacco trade continues to erode SA’s economy

South Africa’s illicit tobacco trade continues to tighten its grip on the economy, draining billions in lost tax revenue and distorting fair competition across the sector.

Data quoted during the EMEA Security Conference 2026 revealed that there are at least 100 billion cigarettes consumed worldwide from the black market, with majority being consumed in SA.

Speakers at the conference held in Cape Town last week shared successes of clamping down illicit trade, however, emphasised that more needs to be done.

The conference is a regional industry event that brings together security professionals, policymakers, and technology providers from Europe, the Middle East, and Africa to discuss emerging threats, share insights, and showcase the latest security solutions.

Illicit tobacco hurts the country

Stefano Betti, deputy director general of the Transnational Alliance to Combat Illicit Trade (Tracit), was one of the speakers who was vocal about more needing to be done.

He spoke about efforts that are being made by authorities in the country, such as the ongoing legal disputes involving the South African Revenue Service. But noted these cases are inherently complex and take time to resolve.

The tobacco sector is one of the hardest hit when it comes to illicit trade, fuelled mostly by local manufacturers under-declaring production to evade taxes.

“This has led to pricing distortion. While taxes on a legal pack of cigarettes can reach around R25, illegal products are being sold for as little as R5. It creates a completely uneven playing field,” said Betti.

Dangers of illicit tobacco

It was emphasised that the illicit tobacco trade presents three deeply concerning risks with far-reaching economic and public health implications.

Firstly, these products are typically manufactured in unregulated environments that operate outside the oversight of health authorities, meaning they are not subject to any quality control or compliance with established production standards.

As a result, there is little to no assurance of what goes into these products or the conditions under which they are produced.

Secondly, evidence suggests that illicit cigarettes often contain significantly higher levels of harmful and unregulated chemicals compared to those manufactured legally, increasing the health risks to consumers and compounding the burden on the healthcare system.

Thirdly, their substantially lower price point makes them easily accessible, particularly to young people and low-income consumers. This affordability not only undermines public health efforts aimed at reducing smoking rates but also accelerates early uptake among the youth, entrenching long-term addiction and its associated social and economic costs.

BAT closure

British American Tobacco recently closed it manufacturing plant in South Africa, citing the relentless growth of the illicit cigarette trade as the primary reason.

The scale of the black market has significantly undermined profitability, making continued local manufacturing economically unsustainable.

In response, BAT is shifting to an import-based model to maintain supply in the country without the high costs associated with running a domestic plant, highlighting the broader economic and public health challenges posed by illicit tobacco.