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UCT study indicates that BATSA’s 70% illicit cigarette trade estimate is too high

Sep 22, 2022

1 min read
22 September 2022
17:45

British American Tobacco South Africa announced in August that the illicit cigarette trade comprised 70% of the total market in South Africa in the past year.

But according to a new study by University of Cape Town’s PhD candidate Nicole Vellios, BATSA’s estimate is wrong.

The results were published in an article in Econ3x3, the online economic policy publication housed at UCT’s Southern Africa Labour and Development Research Unit.

Nicole Vellios spoke with Radio Islam International to discuss her research findings.

Vellios mentioned two reasons why the BATSA estimate is incorrect: the forecast of 70% is for Gauteng, not for South Africa as a whole, whereas the number for South Africa is 34%. The second reason is that the number is for the stores that sell illicit cigarettes, not the total number of cigarettes consumed.

Furthermore, she said that BATSA exaggerated the illicit trade with the hope of swaying the national treasury from increasing excise taxes.

According to Vellios, the BATSAs’ only objective is to maximise profits and monopolise the market.

BATSA is losing market trade to illicit cigarette manufacturers who are not paying the excise tax and VAT, amounting to R23.

Hence, they use the stats to prove illicit trade is a concerning issue, albeit underhandedly.

She added that as much as the illicit trade is a massive issue, it is not as high as BATSA makes it to be.

“So, in our estimate, illicit trade is around 54% which is still a huge number,” she said.

However, Vellios said they think illicit trade is a problem because of weak chain supply control, not because of high excise taxes.

Vellios sent an inquiry email to BATSA about the 70% estimate but has not responded.

[LISTEN] to the podcast here

By Nokwanda Dlangamandla
kzn@radioislam.org.za

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