Cooperative Government and Traditional Affairs Minister Nkosazana Dlamini-Zuma argues in court papers that the flourishing illegal trade in cigarettes spurred by the lockdown ban on the legal tobacco business mitigates the economic impact of the prohibition.
Tobacco giant British American Tobacco SA (Batsa) says the controversial ban on cigarette sales has cost it between R300 million and R350 million in lost revenues per week, harmed the prospects of South Africa’s tobacco farmers, who sell roughly 90% of their stock in the local market, and cost the fiscus roughly R2.4 billion in lost taxes during the first eight weeks of the lockdown.
But Dlamini-Zuma, citing a study by Genesis Analytics, states: ‘(A)n ironic feature of the impact of the ban is that to the extent illicit trade in cigarettes grows, the adverse economic impact of the ban will be reduced.’
Thus, any analysis which predicts ‘maximum economic damage’ from the cigarette ban is ‘on the face of it not credible’, given the economic activity from the illegal cigarette market.
The ‘new trade in illicit tobacco products’ might also make up informal traders’ losses from legal cigarette sales.
According to a Fin24 report, these are among the statements in a more than 500-page affidavit lodged in court by Dlamini-Zuma in favour of keeping the 12-week ban on the sale of cigarettes and tobacco products in place, opposing a second court bid, by Batsa, to resume legal trade.
The report says the main focus of her argument in retaining the temporary ban is that emerging research supports the view that smoking leads to more severe cases of Covid-19, and that the ban is necessary as a precautionary measure to safeguard South Africa’s healthcare system.
Judgment in the first case, launched the Free Trade Independent Tobacco Association and heard last week, has yet to be handed down.
Dlamini-Zuma anticipated that ‘a significant portion of the market will move back to purchasing cigarettes legally once the ban is lifted’.
She says in the papers: ‘I reiterate the ban is not a permanent measure. It will be lifted as soon as this can safely be done, having regard for the state of the Covid-19 pandemic in our country, the capacity of our healthy systems to cope with severe Covid-19 infections requiring hospitalisation, and high care, intensive care and ventilation in our hospitals, and the risk posed by smokers of severe Covid-19 disease.’
Positive cases rose yesterday by 4 966 to 92 681, and the toll rose to 1 877.
The National Treasury announced yesterday that the New Development Bank (NDB) – formerly called the BRICS Development Bank – would be giving South Africa a US$1 billion loan to help the country fight the pandemic.
It welcomed the Emergency Assistance Program Loan, saying it was working with the NDB ‘on final technical and administrative requirements’. Final details would be published ‘once all processes have been concluded’.
The NDB said in a separate statement that it wanted to help South Africa roll out a better healthcare response and to provide a social safety net for the most vulnerable, who were bearing the brunt of the economic consequences of the pandemic.
In other virus-related news
- Brazil reported a one-day record of nearly 55 000 infections, making it the second country after the United States to pass one million cases;
- Europe recorded more than 2.5 million cases, making it the worst-affected continent;
- Chile’s death toll nearly doubled yesterday to more than 7 000 under a new tallying method that included probable fatalities from Covid-19;
- President Donald Trump’s campaign announced that six members of an advance team working in Tulsa ahead of Trump’s rally there had tested positive;
- Prosecutors in Portugal said they had launched an investigation into a birthday party attended by scores of people which could have led to many new coronavirus infections; and
- Zimbabwe’s health minister Obadiah Moyo – arrested on Friday after the government came under pressure from the opposition and on social media over a scandal surrounding the procurement of coronavirus test kis and equipment – was charged with corruption yesterday. The charge relates to the irregular awarding of a contract to a new Dubai-based company producing testing and protective kits.