South Africa: Counterfeit Tobacco Trade In Southern Africa

Last Updated: 11 February 2014
Article by David Legge

Counterfeit cigarettes, clothing and pharmaceuticals as well as pirated CD's and DVD's are among the leading illegal goods that are being smuggled across South African borders on a daily basis. The high demand for these goods has led to South Africa, as Africa's largest economy, becoming a safe haven for criminals dealing in these illicit counterfeit items.

A report by the World Customs Organisation states that international sales of counterfeit goods comprises a 600 billion dollar industry which currently represents between 5-7% of total international trade.

In Southern Africa, illegal trade in counterfeit and illicit cigarettes has grown at a phenomenal pace and now comprises one of the most prevalent and problematic counterfeited items available on the black market. Low production costs and high levels of demand have made counterfeit cigarettes one of the region's most illegally trafficked goods, with some reports recording that trade in illegal cigarettes has outgrown sales of illegal narcotics.

The trade in illegal cigarettes, also known as cigarette smuggling or 'buttlegging', is a criminal offence and essentially amounts to a form of tax evasion. Every year, over R4 Billion in legitimate tax revenue is lost due to trade in counterfeit cigarettes. This is the equivalent of:

  • 74 000 new homes;
  • 66 500 new policeman;
  • 105 740 new jobs;
  • 277 777 pensions grants;
  • 400 000 electrical connections; and
  • 229 000 Educational bursaries.

The Tobacco Institute of Southern Africa has revealed that more than 60% of all counterfeit cigarettes in originate from Zimbabwe which is partly due to poor border controls. Packets are sold for about R10 a pack, compared to approximately R30 for legal cigarettes. These cigarettes pose a greater health risk as standard manufacturing guidelines are not always observed and dangerous chemical additives are frequently added during production.

Numerous international studies have discovered links between illegal tobacco trade and organised crime groups. By purchasing counterfeit/pirated goods, you are effectively supporting a worldwide network of corrupt criminal activity. Organised crime groups are attracted to the sale of illegal cigarettes as there is high consumer demand, high potential profits and relatively low criminal penalties when compared to trade in illegal narcotics. Interestingly, the Australian state of Victoria has recently declared that fines will be quadrupled for any retailers caught selling illegal cigarettes, in a radical attempt to curb trade in these products.

Some tips on how to spot illegal cigarettes:

  • Paying less than R15.00 for a pack of 20.
  • There is no silver diamond excise stamp on the cigarette packet.
  • The readings on the pack are higher than 12 mg tar and 1.2 mg Nicotine.
  • There are no health warnings on the pack.
  • Poor detailing (such as spelling and printing mistakes) on the packets.
  • Unusual taste.

In South Africa, The Counterfeit Goods Act 37 of 1997 ('the Act') allows the owner of intellectual property rights (such as copyright and trade marks) to bring civil and criminal actions against groups or individuals who are involved in counterfeiting of the protected goods.

First time offenders convicted under the Act may be punished with a fine in respect of the particular act of dealing in the relevant counterfeit goods. Such fine may not exceed R5000 per article or item. Alternatively, they may be sentenced to imprisonment for a period of no more than 3 years. Second or subsequent offenders are punishable with a fine of R10 000 or to a period of no more than 5 years imprisonment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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