South Africa is stepping up its fight against illicit trade as the government, The South African Revenue Service (SARS) , and other state agencies increase enforcement action and warn that illegal goods are damaging the economy.
The Revenue Service recently seized goods worth an estimated R245 million in coordinated operations in parts of the North West province. More than 170,000 items were confiscated during raids in Rustenburg, Brits, Marikana and Hartbeespoort.
SARS said the operation is part of ongoing efforts to stop smuggling, counterfeit goods and tax evasion, adding that it also identified several businesses for further investigation as authorities focus on breaking up illegal supply chains.
President Cyril Ramaphosa has previously said that illicit and counterfeit goods are damaging the economy, destroying jobs and undermining local businesses.
Tobacco, alcoholic beverages and branded apparel and clothing are among the top counterfeited and illicitly traded goods locally. According to a study by the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP), about 60% of cigarettes sold in South Africa in 2021 were illegal.
The study says the illicit cigarette market increased from about 30% before the Covid-19 period to around 60% after the 2020 sales ban, and has remained at that high level.
IOL also previously reported that BAT South Africa (BATSA) has reached its limit in trying to deal with the illicit cigarette trade in South Africa and is walking away from its production business.
Because of the “devastating impact of the illicit cigarette trade on the local market,” the company will close its only South African manufacturing facility in Heidelberg, Gauteng, by the end of 2026.
Illicit trade is said to be costing the South African economy as much as R100 billion annually, with recent indications suggesting that the illicit economy has grown to around 20% of South Africa’s GDP.
“We are establishing a national illicit economy disruption programme that brings together key state agencies and other stakeholders, including the private sector”. Ramaphosa said during his SONA address earlier this year.
“Through effective use of data analytics and AI, we will be targeting high-risk sectors like tobacco, fuel, alcohol and other counterfeit products,” Ramaphosa said during his SONA address earlier this month.
He also said that the programme will focus on stronger coordination between government departments, faster investigations, and stricter enforcement of existing laws to ensure that illegal operators are held accountable.
Ramaphosa emphasised that the crackdown is not just about revenue loss, but also about protecting jobs and stabilising the economy.
“Organised crime is now the most immediate threat to our democracy, our society and our economic development.”
The Chairperson of the Standing Committee on Finance, Joe Maswanganyi, has said illicit trade is a serious threat to the economy and requires urgent and coordinated action across government.
He said Parliament will engage with SARS, the Border Management Authority and police to strengthen efforts to combat the problem.
“This is a serious matter, causing damage to the economy of the country, our committee will engage with SARS, the Border Management Authority and the Police. This is a matter that needs a multidisciplinary approach; it needs all of us to find a solution.”
IOL Business