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Yusuf Abramjee to address Eastern Cape Illicit Trade Symposium in East London on Wednesday

November 13, 2017

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Yusuf Abramjee, anti-crime activist and Namola’s Chief Ambassador is to address the Illicit Trade Symposium in East London on Wednesday. He also heads-up #MakeSAsafe
Here is some background:

EASTERN CAPE ILLICIT TRADE SYMPOSIUM HOSTED BY THE EASTERN CAPE SOCIO-ECONOMIC CONSULTATIVE COUNCIL EAST LONDON, 15 November 2017
Background and Overview At 34%, South Africa has one of the highest incidences of illicitly traded tobacco incidence in the world. The country is amongst the top 5 (five) illicit markets globally. In 2013, an estimated 31% of all cigarettes consumed in the country were illicit.

Uniquely, over 60% of these cigarettes are manufactured in South Africa and not declared for taxes, with the balance being smuggled into the country by an ever-growing network of criminals and syndicates. In terms of impact on the fiscus, more than R24 billion in tax revenue has been lost since 2010 or roughly R4 billion per year.

Independent research figures indicate that in 2014, 26% (twenty-six percent) of the national illicit cigarette trade was occurring in the Eastern Cape. In June 2015, the incidence was 28% and by November 2016 the prevalence had reduced to around 15% for that month and according to The Tobacco Institute of Southern Africa, the movement of illicit goods fluctuates haphazardly due to increased efforts of the Safety and Security Cluster.

Sometimes the illegal traders will “lie low” for a month or two, when things get “hot” and when they feel safe again, they flood the market with a few brands. Growth in locally produced illegal cigarettes has eroded the value chain in the legal cigarette market.
Over the last five years, the volume of legal cigarettes sold by British American Tobacco as a dominant corporation in the market has decreased from 22bn sticks to 15bn sticks and resulted in the loss of 600 jobs.
Further, it has been identified that Illicit products are key contributors towards non-communicable diseases.
Similarly, South Africa struggles with a growing trend of illicit alcohol, specifically wines and spirits. Increasingly, there is a growing problem of unlicensed bakeries producing substandard bread that does not comply with nutritional standards.

This bread is sold cheaply to poor families, mainly in the township, depriving the consumers of vital nutrients that are required to be part of a balanced diet.
The Minister of Finance in tabling the Medium-Term Budget Adjustment Statement of 2017 highlights the need to build capacity in areas of capital markets, tax collection, combatting illicit financial flows.

He reiterates that we must continually strengthen tax morality and deal with any underlying causes that may undermine it, such as public concern about government corruption, poor governance or those undermining or abusing the fairness of the tax system.

Such abuse is embedded in Illicit trade which is not just tax non-compliance for those involved but this practice further erodes the tax revenue base from the market and thus a major reduction from sin-taxes.

Other than revenue challenges, illicit trade undermines the achievement of the targets set out in the Prevention of Non-Communicable Diseases Strategy 2013-2017, respectively to reduce alcohol and tobacco consumption by 20% by 2020.

Where government policy has thus far focused on restricting access to these products, illicit trade has opened wide gaps to enable new entrants into these habits. For instance, government fiscal policy has focused, since 1994, on making tobacco products more expensive by raising the minimum collectable tax on a cigarette to 52% per pack.

Currently, that amount sits at R16.20. Nevertheless, it is still possible to procure a pack of cigarettes for R6.50 in some places.

Townships and city centres are awash with loose cigarettes retailing for R0.50.

The result is that where South Africa should be seeing a decreasing incidence of smoking due to higher prices and tough economic conditions, the reverse is likely to happen with smoking rates having a plateau.
This has been made possible by cheap tobacco, which is easily accessible to under-age smokers.
The Eastern Cape Illicit Trade Symposium is aimed at raising awareness amongst policymakers about the challenges of illicit trade in all its forms.
Speakers will be drawn from across industry, law enforcement agencies and government to reflect on ways to curb and mitigate the growth of illicit trade.
ECSECC was founded in July 1995 as an institutional mechanism to forge a meaningful partnership between Government, Business, Labour and the NGO sector, to address underdevelopment and poverty in the Eastern Cape.
The local government sector and the higher education sector joined ECSECC in 2003.

ECSECC is an organisation that uses knowledge for setting the development agenda of the Eastern Cape in order to advance provincial development imperatives in the context of national policy. This is done primarily through supporting strategy development, planning and design of interventions for the provincial and local government.
ECSECC seeks to drive planning and programme design that contributes to social and economic transformation. In order to ensure strategic plans are put into action.

ECSECC is involved in project conceptualization, packaging and planning for execution in collaboration with government departments and entities that will be responsible for implementation.

• Advise and assist provincial government to achieve an integrated development strategy for the province and its constituent regions, in order to address the economic development of the province particularly the needs of deprived communities and underdeveloped areas;
• Facilitate and coordinate the implementation of development programmes between all key stakeholders in the province of the Eastern Cape;
• Facilitate development by providing an avenue for formal inputs into the policy-making process of government;
• Support government in advancing efficient service delivery;
• Empower communities and the grassroots structures of civil society to engage in development; and
• Assist the provincial government in developing policies and strategies that will facilitate the growth of the provincial economy

Source: Namola