Illicit trade threatens economic stability

Recently announced crackdowns by government and organised business on illicit imports are expected to affect clearing and forwarding agents by raising compliance costs, increasing liability risks and tightening operational efficiency Government is losing an estimated R100 billion a year in excise duties and VAT through smuggling. Business Leadership South Africa (BLSA) estimates the country loses roughly R250 million per day to illicit trade. Estimates by the Consumer Goods Council of South Africa (CGCSA) put the value of the illicit economy at around 10% of GDP. The value is growing, due to a combination of sophisticated smuggling rings set up during the Covid lockdowns, lax border controls and duty increases to the point where the risk of being caught is outweighed by the benefits of evading tax. The Transnational Alliance to Combat Illicit Trade says illicit trade remains one of the most significant threats to South Africa’s economic stability, governance and global reputation, in its 2025 review of South Africa. “South Africa continues to grapple with the pervasive effects of illicit activities across sectors, including alcohol, tobacco, foodstuffs, agrichemicals, pharmaceuticals, counterfeiting, mining and wildlife trafficking. “These illegal activities undermine legitimate businesses, deplete tax revenues, undermine international trade and exacerbate social and economic inequalities,” it adds. In December 2025, the CGCSA announced the establishment of multi-industry illicit economy task forces. “There is no doubt that illicit trade is one of the most significant threats facing South Africa and is also a threat to economic stability, investment, ob creation and governance,” said the CGCSA chief executive officer Zinhle Tyikwe. “This challenge now requires decisive, collective and multi- faceted action to restore integrity to the Fast-Moving Consumer Goods (FMCG) sector and safeguard South Africa’s economic future.” The task forces “will implement a coordinated approach to dismantle illicit trade networks, focusing on the most affected product categories: liquor, tobacco, food, cosmetics and pharmaceuticals, clothing and toys”, she says. According to the CGCSA, SA has one of the world’s highest illicit cigarette trade levels of up to 74.5% of the total local cigarette market. Illicit alcohol trade cost the country an estimated R16.5bn in lost revenue in 2024, which is 13 times the amount Treasury expects to raise from above-inflation excise increases in 2025/26, the organisation estimates. The situation has become so serious that President Cyril Ramaphosa devoted three sentences to it in his 2026 State of the Nation address: “We are addressing the threat posed by the infiltration of illegal and counterfeit goods to South African jobs and industry. “We are establishing a National Illicit Economy Disruption Programme that brings together key state agencies and other stakeholders, including the private sector. “Through effective use of data analytics and Artificial Intelligence, we will target high-risk sectors like tobacco, fuel, alcohol and other counterfeit products,” he said, before moving on to the Madlanga Commission. ER