Deputy director general of the Transnational Alliance to Combat Illicit Trade (Tracit), Stefano Betti, has warned that South Africa’s fight against illicit tobacco products is falling short, calling for stronger legislation, tighter enforcement and greater political follow-through.
Stefano Betti, deputy director general of the Transnational Alliance to Combat Illicit Trade (TRACIT). Image supplied
Speaking at the recent EMEA Security Conference & Exhibition in Cape Town, Betti said while authorities have taken steps in recent years, these efforts remain insufficient to dismantle entrenched illegal supply networks.
“There is much more that can be done,” Betti said, pointing to gaps in legislation and the need for stronger controls to combat money laundering linked to the illicit tobacco trade.
He referenced ongoing legal battles involving the South African Revenue Service, noting that while authorities are pursuing the right approach, such cases are complex and slow-moving. Even when enforcement actions succeed, he cautioned, the underlying infrastructure that supports illegal tobacco distribution often remains intact.
“The networks and infrastructure created by the cigarette ban during the Covid-19 lockdown don’t just disappear,” he said. “That is what makes this so difficult to eliminate.”
The tobacco sector, he said, is among the hardest hit. Recent estimates indicate that illicit cigarettes could make up between 50% and 75% of the market, fuelled largely by local manufacturers under-declaring production to evade taxes.
This has led to pricing distortion.
“While taxes on a legal pack of cigarettes can reach around R25, illegal products are being sold for as little as R5. It creates a completely uneven playing field,” Betti said.
The EMEA Security Conference & Exhibition serves as a global platform designed to advance collaboration, knowledge exchange, and strategic action to combat counterfeiting and illicit trade.
It brings together brand owners, law enforcement agencies, customs authorities, policymakers, and technology innovators to strengthen cross-border enforcement and promote coordinated regional responses.
Betti described South Africa’s illicit trade landscape as “deeply concerning”, highlighting the scale of the country’s informal economy, which is estimated to account for roughly 20% of overall economic activity. While not inherently illegal, he said such environments create fertile ground for illicit trade to thrive, driven by cash-based transactions and limited oversight.
He also pointed to the growing influence of organised crime, citing global rankings that place South Africa among the worst-affected countries in terms of criminal network penetration across sectors.
Corruption remains a major risk, with estimates suggesting that up to half of customs officials could be vulnerable to corrupt practices, Betti said.
He mentioned other sectors, including alcohol, where the illicit market has grown significantly in recent years, costing the fiscus billions in lost revenue and, in some cases, leading to fatal health incidents linked to contaminated products.
Despite the challenges, Betti acknowledged that progress is being made.
He said the establishment of the Border Management Authority in 2023 was a key reform aimed at improving coordination across border control functions. He also pointed to efforts by the National Prosecuting Authority to strengthen capacity in tackling complex economic crimes, including asset recovery.
At an international level, South Africa’s removal from the Financial Action Task Force grey list was applauded as a positive development, signalling improved compliance with global anti-money laundering standards.
Betti further welcomed a recent presidential initiative targeting the illicit economy, which focuses on the use of data, technology and improved coordination between the public and private sectors.
Still, he stressed that political will must now translate into measurable results.
“The picture is mixed,” Betti said. “There is recognition at the highest level that something needs to change. But that commitment must now be turned into real, operational impact.”
Brigadier Kobus Lategan, head of the South African Police Service Emerging Economic Crimes Unit, said law enforcement is preparing to significantly scale up its response to illicit trade through a coordinated national operation.
Speaking at the conference, Lategan revealed that the operation, launched under direct instruction from President Cyril Ramaphosa, will bring together multiple government entities to tackle intellectual property crime and counterfeit goods at a national level.
While details remain limited, he described the initiative as “massive” and said it will mark a shift in how authorities operate.
Lategan said the strategy centres on intelligence-led enforcement, proactive disruption, targeted raids, strengthened investigations and careful public communication.
“We cannot do this alone. If we don’t work with other departments and the private sector, we won’t achieve the results,” he added.
