More needs to be done for SA to start winning war against illicit trade, says Sars Commissioner

The decision by British American Tobacco (BAT) as we entered the new year to shut down its only plant in South Africa, placed the spotlight firmly back on the surging illicit cigarette trade.

Off the back of this 'cautionary tale' from the tobacco industry, Edward Kieswetter has penned an opinion piece titled Illicit trade hollowing out SA’s economy and rule of law.

The SARS Commissioner (South African Revenue Service) warns that, from black‑market cigarettes and illegal alcohol to counterfeit goods, fuel adulteration and smuggled gold; this shadow economy is no longer peripheral - it is structural.

"Its effects are visible in battered industries, lost jobs, social erosion, weakened governance and billions of rand syphoned from the fiscus every year", he writes.

"Illicit tobacco is not an isolated failure; it is a gateway into a far wider criminal economy. The same networks that trade illicit cigarettes frequently diversify into illegal mining, gold smuggling, illicit alcohol, counterfeit goods and complex money‑laundering schemes."

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Kieswetter notes that counterfeiting has expanded at the expense of smuggling, with its market share rising from 24% in 2017 to 31% in 2024 and its value nearly doubling from R4.9 billion to R9.8bn. As a result, fiscal losses have grown by an almost 10% compound annual growth rate since 2020.

He also lists the ways in which SARS has upped its game to curb the growth of this illicit economy, which include rebuilding its enforcement capability across the spectrum. Operations - often carried out jointly with the police, the Border Management Authority (BMA), the Hawks and the Financial Intelligence Centre - have resulted in record seizures, significant recoveries and the collapse of several large syndicates, the SARS chief goes on.

He emphasizes that enforcement success increasingly depends on integration and that they are not winning the war - yet.

This shadow economy accounts for over R100 billion annually, says Zinhle Tyikwe, CEO of the Consumer Goods Council of South Africa (CGCSA).

In conversation with Stephen Grootes, she comments that it not only affects the country's ability to create employment, but also affects the health of South Africans. Think of fake medicines and even counterfeit toys.

"We are giving our children toys where we don't know what chemicals are in those plastics. As a society we continue to do this, because it's cheaper. We do understand the challenges that people are going through but we really need to be aware.... We've suffered with our children dying because of consumer goods that were kept unsafely."

It's imperative that, at a community level, we create awareness of the dangers of these products, and how buying them funds the illicit trade, which harms our economy, she says.

Scroll up to the audio player to listen to the interview with the CGCSA chief, and click here to read Kieswetter's detailed opinion piece