The ranking raises fresh alarm about the country’s struggle to clamp down on illicit activity.

 

The report underscores how corruption, lax enforcement, and policy shortcomings are fuelling black market trade, particularly in sectors like tobacco, and draining billions from the national purse. Public health and safety are also under threat.

Philippe van Gils, Director of Illicit Trade at TRACIT, spoke on the issue, acknowledging SA’s efforts in certain areas but warning that major gaps remain.

“SA performs relatively well in aspects such as taxation systems and border regulations,” he said. “But weaknesses persist in tackling criminal networks, controlling supply chains, and addressing sector-specific illicit trade.”

Van Gils pointed to successful models elsewhere, like a regional initiative in Latin America where law enforcement and private companies share intelligence through a secure digital platform. He believes SA could spearhead a similar initiative across the continent.

“There’s real potential for SA to take the lead in cross-border co-operation, not just within Africa but eventually within international platforms like Brazil, Russia, India, China, and SA,” he added.

Among the most pressing concerns is the illicit tobacco trade, which now commands over 60% of the domestic market. According to TRACIT, this costs the government an estimated R18 billion ($972 million) annually in lost revenue.

Van Gils noted that inconsistent enforcement, lenient penalties, and poorly aligned fiscal policies have widened the gap between legal and illegal tobacco products, making illicit cigarettes far more attractive to consumers.

“There’s also the issue of missed opportunities with reduced-risk products,” he explained. “Many global companies have developed alternatives such as heated tobacco and nicotine pouches, but SA’s current draft legislation does little to encourage smokers to switch to these less harmful options.”

He further criticised the lockdown-era tobacco ban, saying it unintentionally strengthened the black market.

“Before COVID, illicit tobacco made up about 30% of the market. After the sales ban, that figure doubled. It’s proof that bans don’t work, they simply hand market share to criminal syndicates,” Van Gils said.

Reversing those effects, he warned, will take sustained effort and stronger political will. But with coordinated action, he remains optimistic that the country can begin to recover.

Public awareness also needs urgent attention. Van Gils called for education campaigns to inform consumers about the broader consequences of illicit trade, not just on the economy, but on society as a whole.

“Illicit trade is not a victimless crime,” he said. “It finances organised criminal groups, some of which are involved in arms and human trafficking. And it diverts funds that could be used for schools, hospitals, and infrastructure.”

He stressed the importance of a multi-sectoral response, noting that while different industries, from pharmaceuticals to apparel, face unique challenges, they also share common vulnerabilities.

“Sharing knowledge and co-ordinating across sectors can lead to more effective policy solutions,” he said. “The fight against illicit trade requires everyone at the table; government, business, and the public.”

--ChannelAfrica--