Battle has just begun for smaller manufacturers, says Fita

The recent lifting of the ban on cigarette and tobacco product sales – after almost five months – was met with a collective sigh of relief from the industry at large. But Sinenhlanhla Mnguni of the Fair Trade Independent Tobacco Association (Fita) says for smaller manufacturers, at least, the battle is just beginning.

“It’s make or break for us now,” Mnguni told Saturday Citizen. He said they were far from out of the woods but that it was too early to gauge the medium- to long-term impact, with the next two months expected to paint a clearer picture. Mnguni continued to raise concerns about the spike in illicit trade under the ban – one of the key reasons he said Fita launched its headline-making court case against government.

“The illicit trade in cigarettes was thriving and we were seeing substantial amounts of stock coming through our borders. We were concerned we were going to struggle to contain the increased trade, even when cigarettes could be sold legally again.

“In addition to creating a bigger headache for law enforcement, that would cause the legitimate market to shrink even further, which has a knock-on effect on the fiscus,” he said.

Mnguni said the current market was “completely different” to that before the ban and Fita’s members were now putting all their efforts into getting their businesses back up and running. This, he said, was in part why Fita eventually last month agreed to settle its case against government over the ban instead of pressing ahead with an appeal of the High Court in Pretoria’s findings against it.

British American Tobacco South Africa (Batsa) recently took a swipe at Fita members in a statement citing research conducted by the Research Unit on the Economics of Excisable Products.

Batsa quoted the research as saying: “RG, from the Zimbabwean-owned and controlled Gold Leaf Tobacco Corporation, has exploded in sales over the course of the lockdown.”

Fita has since denied any of its members benefitted from the ban in any way and Mnguni was this week unwavering on this. Of RG specifically, he said there were “misconceptions” around the brand.

“There’s also Remington Gold, which comes from Zimbabwe and which we did see coming into the country,” he said. He nonetheless conceded Gold Leaf’s RG had also found its way on to the local market during this period.

“But there are so many possibilities and scenarios which could explain what was happening,” he said – adding “round tripping”, for example, could have seen the brand exported out of the country and then smuggled back in.

“I wouldn’t be surprised if opportunists in neighbouring countries – knowing the porous nature of our borders – were smuggling cigarettes back in,” he said.

“But the smugglers would have benefitted from that because they’re the ones bringing it across the border. It wouldn’t have benefited manufacturers.”

Mnguni said Fita intended on taking its concerns around the illicit trade further, at a later stage. What we saw during lockdown wasn’t just criminal syndicates, it was ordinary people who were selling cigarettes,” he said.

“It became a free-for-all for everyone and we need to have some level of confidence in our law enforcement.”

– bernadettew@citizen.co.za

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