South Africa’s massive tobacco ban fumble
The South African government’s ban on all tobacco and vaping products in the country as part of the Covid-19 lockdown was seen to be a fumble, with consequences seen through the enriching of the illicit market and large excise revenue losses for the state, among others.
Some of these ultimate consequences have now been raised as concerns over certain provisions in the Tobacco Products and Electronic Delivery Systems Bill.
The Department of Health (DoH) has emphasised that it is not trying to ban tobacco and smoking in South Africa outright through the laws but rather to limit access to these products.
The tobacco industry, however, has hit back, saying that the government has tried this before, and it simply didn’t work.
The South African government imposed a ban on the sale of all tobacco and vaping products between 27 March and 17 August 2020 as part of the Covid-19 lockdown.
The rationale was to try to reduce smoking rates and limit Covid-19 complications, as smoking increases the risk of severe illness and impacts respiratory health (thus easing pressure on the healthcare system) as well as decrease behavioural risks associated with the transmission of the virus, as some smokers share lit cigarettes.
This disrupted the cigarette market but did not eliminate smoking and sales.
“The sales ban did not have the intended objective of encouraging large-scale smoking cessation,” wrote researchers from the University of Cape Town (UCT) School of Economics Corné van Walbeek, Robert Hill and Samantha Filby.
There were “policy failures to provide smokers with appropriate cessation support and to effectively control the illicit market both prior to and during the sales ban,” they added.
What occurred was that the situation inadvertently favoured manufacturers with ties to the illicit market, allowing them to gain market share even after the ban was lifted, potentially entrenching the country’s already significant illicit tobacco trade.
“Cigarette sales continued despite the sales ban, further entrenching an already large illicit market,” wrote Filby, van Walbeek and Kirsten van der Zee in another paper.
The ban effectively closed formal retailers, pushing desperate smokers to informal outlets that sold cigarettes at inflated prices.
In the 2020–2021 financial year, legal sales volumes dropped by 48% compared to the previous year, and while there was some recovery in 2021–2022, they remained 42% lower than in 2019–2020.
The illicit market, which constituted 5% of total cigarette sales in 2009, grew to 58% by 2022, down from a peak of 60% in 2021.
Between 2002 and 2022, the government lost an estimated R119 billion in excise and VAT revenue due to this booming black market. In 2022 alone, losses totalled R15 billion in excise and R3 billion in VAT.
According to the National Income Dynamics Coronavirus Rapid Mobile Survey, the South African government lost an estimated R5.8 billion in excise revenue during the 20-week sales ban period.
The ban hurt multinationals, particularly British American Tobacco, whose market share plummeted from over 70% to 33%, while non-multinationals increased their share significantly. Post-ban, multinationals regained about 50% market share.
Some researchers argue that initially, the government’s precautionary approach to the ban was “understandable” due to pandemic uncertainties.
However, in the same breath, they say that extending the ban beyond the first five weeks seemed unjustified, especially as reports emerged of widespread availability of illicit cigarettes and indicated that most smokers continued to purchase them.
Research showed that most quitters did so within the first month, and despite evidence of widespread circumvention, the government maintained the ban for an additional four weeks.
“Had the government substantially increased the excise tax, rather than banned the sale of tobacco products, it would have achieved a similar public health outcome, received more revenue, and presumably not further entrenched the illicit market,” said Filby, van Walbeek and van der Zee.
Ultimately, a High Court judgement declared that ‘[t]he sale of tobacco, tobacco products, e-cigarettes and related products is prohibited, except for export’ (Regulation 45), was unconstitutional and invalid.
The respondents successfully argued that the the ban was an “infringement of the fundamental rights to dignity, privacy, bodily and psychological integrity, freedom of trade and deprivation of property; and on the basis that the Minister had not shown that the regulation was necessary.”
The high court, however, did not award the respondents costs, and they cross-appealed against that order.
Repeat
There have been some who say that the proposed Tobacco Products and Electronic Delivery Systems Bill could see the same consequences as the ban in 2020
The South African Department of Health (DoH) emphasises that its new laws aim to limit access to tobacco and smoking products, particularly for children, without an outright ban.
The legislation is said to look to reduce the exposure of non-smokers and children to tobacco users and impose penalties for such exposure. Deputy Health Minister Dr Joe Phaahla highlighted that there is a need to address health risks linked to tobacco, which causes millions of deaths globally.
Proponents, including Dr Catherine Egbe, stressed the urgency of passing the Bill, noting that 29.4% of those aged 15 and older use tobacco, risking severe health issues and concerns about rising e-cigarette use among youth were also raised.
However, critics argue that the Bill may stigmatise smokers and fail to offer practical solutions, potentially pushing smokers to an illicit market, as seen during the 2020 sales ban.
Kurt Yeo, the Co-Founder of Vaping Saved My Life, wrote in a piece for Business Day that the Bill “will prohibit, restrict, ostracise and entrench further stigma on smokers and those who have chosen a safer alternative.”
He argued that a prohibitionist approach fails to account for the fact that in any human population, there will be significant numbers of people who either refuse to or cannot comply with the dictates of government.
“The reality is that these measures only push the majority into the growing and potentially more harmful illicit market… the unintended yet predictable consequences of irrational lawmaking, as seen during the 2020 tobacco sales ban in the heart of the Covid lockdown,” he added.
The National Informal Traders Alliance warned the Bill could harm about 2.2 million informal traders reliant on cigarette sales.
Concerns about job losses, reduced tax revenue, and inadequate consultation have been voiced during public hearings, raising questions about the Bill’s socio-economic impact.
Filby, van der Zee, and van Walbeek wrote that for a tobacco reduction to be successful, several demand-side preconditions (e.g., low prevalence and effective cessation support) should be in place.
Yeo echoed this, saying that “to motivate people to stop smoking, we need people-centric cessation strategies and tobacco harm reduction — policies, programmes and practices that minimise the negative effects of risky behaviours.”
The Bill is still being processed in Parliament, with further public consultation set to occur.
Loading ...
