Tax Justice SA (TJSA) says the closure of British American Tobacco South Africa’s (BATSA) manufacturing plant is “damning proof” of authorities’ failure to curb the illicit cigarette trade in the country.
BAT South Africa announced on Thursday that it will cease local production of factory-manufactured cigarettes (FMC) and close its sole South African manufacturing facility in Heidelberg by the end of 2026 due to plummeting sales caused by the illicit cigarette market, which now accounts for an estimated three out of every four cigarettes sold in the country.
BAT closure
The decision by London and Johannesburg will mark the first time in more than 70 years that the group will not manufacture cigarettes, with imports used to serve the local market.
The cease in production by one of the country’s largest tax contributors puts around 230 jobs at risk and threatens the livelihoods of employees’ families and their wider communities.
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Destroying jobs
TJSA founder Yusuf Abramjee said illicit cigarettes are destroying jobs, draining public revenue and eroding the rule of law.
“This shows what happens when you fail to tackle illicit trade: legitimate businesses are compromised, honest jobs are destroyed, and vital tax revenue is lost.
“When criminals are allowed to operate openly and at scale, investment leaves, jobs disappear, and the rule of law begins to collapse,” Abramjee said.
Law enforcement
Abramjee claims the failure of enforcement agencies to curb the illicit cigarette trade “has been laid bare.”
Since the ‘Gold Mafia’ exposé in 2023 revealed that billions of rands from the illicit cigarette trade were allegedly being laundered and siphoned to offshore havens with the collusion of officials from leading banks, not a single arrest has been made.
“This factory closure shows that misguided regulation, endemic corruption and enforcement failure have real economic consequences, not abstract ones,” Abramjee said.
“It should now serve as a deafening alarm siren for authorities to put their house in order.”
ALSO READ: British American Tobacco to retrench workers amid ‘ballooning’ illicit tobacco trade in SA
Gold Mafia
In May 2023, President Cyril Ramaphosa, answering questions in the National Assembly, reiterated his commitment to clamping down on illicit financial activities and money laundering in South Africa, according to Corruption Watch.
Ramaphosa made the remarks weeks after the jaw-dropping Al Jazeera documentary Gold Mafia, which exposed an extensive network of gold smuggling and money laundering in Southern Africa.
The four-part docu-series implicates key individuals and senior officials in both South Africa and neighbouring Zimbabwe as being role players in smuggling gold and laundering money to the Middle East, particularly to Dubai, and other tax havens.
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