South Africa is at a tipping point

Panellists at a recent Consumer Goods Council of South Africa (CGCSA) webinar say that the country has reached a tipping point with the alarming growth of illicit trade.

The CGCSA is now calling on civil society to assist in mitigating illicit trade in South Africa by reporting instances of these crimes.

According to the group, the South African Police Service (SAPS) cannot fully address the situation, and so civil society should assist by stepping up.

One of the panellists, Judge Dennis Davis, said businesspeople and businesses are increasingly reporting adverse financial effects associated with illegal trade in the country.

Davis said the tax gap currently associated with the illicit trade amounted to more than R100 billion a year.

“We’re in serious trouble…Unless there’s the political will to curb rent-seeking and attack head-on a project which has been going on for years, before state capture and certainly through state capture…I worry that the illicit economy will just continue to overwhelm society,” he said.

Mark Shaw, the director of the Global Initiative Against Transnational Organised Crime, said that the illicit trade wasn’t only an economic issue but carried many social ills with it.

When looking at murder data and violence more generally, there has been a marked upswing in the rate of violence in the country tied to the broader illicit economy, he said.

Shaw noted that there had been a 38% increase in the murder rate recorded between 2012 and 2022 in South Africa. He said the illicit economy brought violence with it, and communities bore the brunt of this.

He suggested it was time for businesses to think beyond the impact of illicit trade on the bottom line and consider that addressing the illicit economy as critical to improving the lives of ordinary South Africans.

“This cannot be solved by law enforcement alone; you really need a societal approach, building links between key players across the society to lever comparative advantages and be able to make a difference,” said Shaw.

Carina Bruwer, a senior researcher at the Institute for Security Studies, said that whether it is a transnational organised criminal network, a state institution, an individual or perhaps a multinational company – if they are not being held accountable by the courts, it is time for civil society to come forward and express their disgruntlement.

“Resources for enforcement are crucial; therefore, maybe it’s time to turn to private actors and civilians to come to the table instead of always turning to increased law enforcement,” she said.

TJ Maseiela, the chair of Gauteng’s Community Policing Forum, said that buying illegal goods has been normalised.

“We have come to a point where we need to decide…we need to make sure the government of the day makes sure these things don’t happen.”

Regarding illicit alcohol, Lucky Ntimane, the convenor for the National Liquor Traders, said that there are roughly 39,000 taverns across South Africa versus approximately 120,000 unlicensed shebeens.

“These are people selling alcohol in competition with the legal taverns, the same products, albeit they want to push higher profit margins, and illicit and counterfeit alcohol provides a great opportunity for them to make that money because they are not bound by any laws or regulations, they are not even scared of the police,” said Ntimane.

“In fact, in many instances, these guys have police in their pockets.”

Ntimane and other institutions have called for the formalisation of the unlicensed market. He noted that licensed institutions should be prioritised and brought to the forefront of the formal market.

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