According to a report by South African media IOL on January 2, the South African Revenue Service suffered tax losses of more than 20 billion South African rand (approximately US$1.078 billion) due to the illegal tobacco trade last year.
It is reported that the 20 billion rand could have been used to pay for solar systems that would free 20 small towns from the state-owned power company.
Byers Theron, head of the customs department, pointed out that tobacco has long occupied the top spot in South Africa's illegal economy. About 15 million illegal cigarettes are lit every day, three-quarters of which are sold in informal retail stores.
The Transnational Alliance to Combat Illegal Trade (TRACIT) noted in its report that despite being Africa’s largest and most diversified economy and the only African representative in the G20 and BRICS economic organizations, South Africa faces multiple aspects of illegal trade. Trade challenges include areas such as alcohol, cigarettes, fisheries, mining, counterfeit electronics, pharmaceuticals, food and clothing. The scale of these illegal trade losses is staggering, depriving economies of vital revenue and resources that could otherwise benefit from increased investment in infrastructure and improved living conditions for citizens.
The South African Revenue Service estimates that illegal trade costs the South African economy up to 100 billion South African rand (approximately US$5.4 billion) every year. Business Leadership South Africa (BLSA) estimates that the country is losing about ZAR250 million in tax revenue every day.
In addition, according to estimates by the Organization for Economic Co-operation and Development (OECD), South Africa loses US$3.5 billion to US$5 billion every year due to illicit financial flows, equivalent to more than 1% of its gross domestic product (GDP).
The figures reveal the serious problems South Africa faces in dealing with illegal trade, which not only damages national finances but also hinders sustainable economic development.