Tax Justice SA demands urgent action to curb illicit trade as British American Tobacco plant set to close

The closure of British American Tobacco South Africa’s (BATSA) manufacturing plant is damning proof that authorities’ failure to curb the illicit cigarette trade is destroying jobs, draining public revenue and eroding the rule of law, according to Tax Justice SA (TJSA).

The company announced on Thursday that it will shut its factory in Heidelberg, Gauteng, after years of plummeting sales caused by the illicit cigarette market, which now accounts for an estimated three out of every four cigarettes sold in the country.

The facility is currently running at just 35% of capacity, a decline the company attributes directly to the unchecked growth of illicit cigarettes. While BATSA will stop manufacturing locally, it said it remains committed to South Africa and will shift to an import-based supply chain to continue supplying adult consumers.

The closure places approximately 230 jobs at risk in the Lesedi Municipality and is expected to have broader economic consequences for suppliers, logistics operators, and contractors that rely on the factory.

TJSA says the decision is the predictable outcome of allowing organised criminal networks to operate openly while enforcement agencies fail to act decisively.

“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,” said TJSA leader Yusuf Abramjee.

“When criminals are allowed to operate openly and at scale, investment leaves, jobs disappear and the rule of law begins to collapse.”

The lucrative illicit cigarette trade, which flourished during the years of State Capture, was turbo-charged by the five-month tobacco ban imposed during the Covid-19 epidemic. Criminal operators capitalised on that unworkable and unconstitutional prohibition by using their illicit networks to sell cigarettes at massively inflated prices, entrenching their control of the market ever since.

Tax-evading cigarettes now account for an estimated 75% of all sales, depriving the fiscus of almost R30 billion in excise revenue annually — funds that should be spent on education, housing and security.

Meanwhile, the failure of enforcement agencies has been laid bare. Since the Gold Mafia exposé in 2023 revealed that billions of rands from the illicit cigarette trade were allegedly laundered offshore 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.

“Every year of inaction strengthens organised crime and weakens the state’s authority. Without decisive action against illicit trade, South Africa will continue to lose revenue, credibility and control.

“A country where criminal networks outcompete law-abiding businesses is sliding towards a gangster state. This downward spiral cannot be tolerated for a single day longer.”

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