South Africa Losing Billions to Illicit Tobacco — and Big Companies Are Cashing In

South Africa is losing billions of rands each year to the booming illicit tobacco trade, experts from the University of Cape Town (UCT) have warned. The illegal cigarette market, they say, is not a shadowy street operation—but a sophisticated, profit-driven network led by major tobacco companies operating within the country.

In an analysis published in the Sunday Times on October 5, 2025, researchers Corné van Walbeek and Samantha Filby highlighted that more than half of all cigarettes consumed in South Africa today are illicit, meaning they are sold without paying the required excise taxes.

“Illicit cigarettes do not fall from the sky,” they wrote. “They’re manufactured, distributed, and profited from by tobacco companies, most of them based in South Africa. These companies profit while the fiscus and the healthcare system pay the price.”

Billions Lost to Tax Evasion and Smuggling

According to the experts, the South African Revenue Service (SARS) and the National Prosecuting Authority (NPA) face a massive enforcement challenge. The trade has cost the state tens of billions of rands in lost excise and VAT revenue over the past decade, starving essential public services like healthcare and education of critical funding.

While the government once led Africa in tobacco control—with strong policies that curbed smoking rates and boosted tax income—weak enforcement and rampant smuggling have reversed much of that progress.

“Unless enforcement is strengthened and the government acts against those driving the illicit market, the country will continue to lose billions each year,” the researchers warned.

Industry Tactics Under Fire

The illicit tobacco industry takes many forms, from large-scale smuggling and under-declaration of products to the operation of unregistered factories. Industry insiders say the trade is now largely driven by domestic manufacturers deliberately evading tax.

A recent analysis of consumption data shows that the share of illicit cigarettes has surged from less than 25% in 2017 to over 60% by 2025, coinciding with lax oversight and selective enforcement.

Experts also pointed to the failure to implement a robust track-and-trace system—a global standard that helps governments monitor tobacco production and sales. Although tenders for such a system were issued as far back as 2019, progress has been slow and inconsistent.

Public Health and Policy at Stake

The researchers stress that the illicit market not only drains the treasury but also undermines public health efforts, making cheap cigarettes easily accessible to minors and low-income smokers.

“The country’s once-effective tobacco control system has been hollowed out,” said van Walbeek. “If nothing changes, the losers will be ordinary South Africans—paying the price in weaker health services and lost economic opportunity.”

Conclusion

The authors urge the government to prioritize criminal prosecution of complicit companies, reinforce tax enforcement, and revive national anti-smuggling strategies.
Without decisive action, the illicit cigarette economy will continue to thrive—while South Africa’s fiscus, healthcare system, and citizens foot the bill.