British American Tobacco will begin negotiations with the South African government instead of taking legal action to overturn a national ban on cigarette sales now in its sixth week.<\/p>\n
South Africa blocked the trade of tobacco products in late March as part of a lockdown to contain the spread of the coronavirus, and was set to lift the restriction last week before a last-minute u-turn.<\/p>\n
BAT said at the time the government should reverse the decision or face the risk of legal action.<\/p>\n
President Cyril Ramaphosa\u2019s administration needs to make a \u201crenewed and stronger effort\u201d to \u201cpermanently close down the illegal supply lines of tobacco that have been established over the past number of weeks,\u201d BAT, which makes Peter Stuyvesant, Dunhill and Lucky Strike cigarettes, said in a statement.<\/p>\n
\u201cReopening the legal, taxed and regulated tobacco market must be part of the solution.\u201d<\/p>\n
BAT shares rose as much as 1.7% in Johannesburg, where it has a secondary listing, on Wednesday, after four sessions of losses.<\/p>\n
The stock has gained 16% this year, giving the company a market value of R1.6 trillion ($87 billion).<\/p>\n
South Africa\u2019s decision to ban the sale of tobacco and alcohol products has resulted in a \u201cthriving illicit economy\u201d and effects of the lockdown and a slowing economy could see a shortfall of R285 billion in tax revenue for the year, Edward Kieswetter, the commissioner of the South African Revenue Service, told lawmakers on Tuesday.<\/p>\n
Both moratoriums could be lifted as part of a phased easing of lockdown restrictions, with controlled sales penciled in for so-called Level 3, the next stage of the economy\u2019s re-opening.<\/p>\n
\u201cWe urge government to consider an approach that will address their concerns, while also ensuring legitimate businesses can contribute to this country\u2019s economy and future growth,\u201d said a BAT spokesperson.<\/p>\n
Before the Covid-19 crisis and the lockdown, South Africa started to make progress in tackling the rampant illicit trade in cigarettes, which was costing South Africa more than R10 billion a year, according to BAT.<\/p>\n