The bans on cigarette and alcohol sales have dramatically boosted the fortunes of criminal syndicates and even seen gangs expanding their activities into these markets as their regular criminal activities have been disrupted by the lockdown, Business Against Crime South Africa (Bacsa) has revealed.

In an April 29 webinar hosted as part of the Illicit Trade Dialogues that Bacsa – a division of Business Leadership South Africa – is running as part of its campaign against illicit trade in South Africa, Bacsa MD Tebele Luthuli said earlier dialogues – pre-lockdown – had ascertained that R100-billion was lost to the fiscus yearly owing to illicit trade, with R35-million a day lost to the illicit cigarette trade and R100-million a day lost to illicit trade in alcohol.

“The National Treasury is now reallocating the budget to find funds from wherever it can to fight Covid 19. How much more could have been in the kitty without illicit trade?” she questioned.

Transnational Alliance to Combat Illicit Trade (Tacit) director-general Jeffrey Hardy added that, across the globe, criminals were cashing in on the Covid-19 crisis, particularly in the health sector with masks and sanitisers and in pharmaceuticals where they “capitalise on fear” by promoting false remedies.

“This is what they’re good at: exploiting fear,” he said. Tacit had issued an international product fraud and medicinal alert on April 2, “trying to spread the word to as many governments as possible, warning them to take rapid steps to raise awareness of the fraud and to stay away from fake remedies”.

Hardy noted that South Africa was one of fewer than ten countries that implemented an alcohol ban and three of those governments had reversed that policy. “So only a small group of governments think that it is effective policy. We label it an anomaly.”

The three governments had reversed the alcohol ban “primarily because of the unintended consequences that are real: people have died because of the spikes in the consumption of illicit alcohol.

In the Dominican Republic, 109 people died after drinking an illegal alcohol beverage with a high methanol content – which people were led to believe combated Covid-19. In Mexico where alcohol sales are banned during lockdown, nine people had died from drinking illegally produced alcohol.”

“That is tangible feedback that this is the wrong policy to pursue,” he posited.

Hardy pointed out that the World Health Organisation, in its public policy, emphasised that if restrictions were too strict, it would open the door to illicit traders.

Tacit listed several negative outcomes of banning alcohol, including that a spike in demand in illicit alcohol leads to negative health risks and is counterproductive to the anti-Covid-19 health effort.

Moreover, it cited the economic impact – governments were grappling with preserving economies and maintaining jobs but bans resulted in building the market shares of illicit traders.

Also, it noted that the longer illicit trade lasts, the bigger the drain on tax revenues; and said that prohibition laws create an open window for criminal syndicates, which is more difficult than normal for government officials to combat as they are preoccupied with Covid-19.

Luthuli said while the alcohol ban did clear up hospitals, helping them in readiness for any surge in Covid-19 contagions, government should at least allow the export of alcohol. “That is money lost daily that is urgently needed.”

She posited that the bans had not only boosted illicit trade but also spurred lootings and burglaries of alcohol. “So it is boosting criminality from that perspective and it’s particularly worrying that South African Police Services members are implicated.”

IQ Business economist Sifiso Skenjana spoke of the opportunity to “use the crisis” to block existing gaps and leakages and developing community structures to combat illicit trade.  

For example, we know that a lot of illicit goods come through ports, and ports are now closed. How do we improve protocols to ensure the kinks and gaps and leakages in the economy are more tightly managed?”

Community activists could also be roped in to fight illicit trade. “We’ve seen that community-based projects such as stokvels work well. So how do we create infrastructure in communities to use an approach that will enforce more conducive behaviour than bad behaviour? We could build retail capacity in townships to ensure people play by the rules. This will result in better developmental outcomes in society.”

He said this was not self-policing in the literal sense but using societal pressure to combat illicit trade. “In stokvels, people pay but if they don’t, there is societal pressure on them to do so. So, imagine in informal communities you develop retail clusters in how they source and sell goods, so that anyone not in that cluster gets outcasted.

"This is an opportunity to look at those structures to strengthen the resilience of retailers in marginal contexts and so also stop illicit trade in those environments.”