This country banned tobacco sales to fight COVID-19. The result was a crime wave

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The COVID-19 pandemic is stressful for almost everyone, everywhere. But one country’s rules for combating the virus added a huge dollop of extra stress for smokers—and for the national treasury.

That country is South Africa, where tobacco sales have been banned since lockdown first took hold at the end of March. Alcohol sales were also banned, then allowed as the lockdown eased, then banned again as infection rates increased, and the lockdown was hardened.

But the prohibition on cigarettes has remained throughout, until today—it will be lifted from Monday at midnight, as South Africa relaxes its lockdown in response to a drop in new cases (the alcohol ban will also be lifted.)

Botswana and regions of India had already dropped their tobacco bans a couple months previously, leaving South Africa the only country in the world that still had one.

The result, according to researchers and anti-crime activists, was a classic supply-demand distortion, creating an explosion in the illicit cigarette trade that kept satisfying most smokers while depriving the authorities of much-needed tax revenue. Meanwhile, the ban on smokes did not stop South Africa from developing more than half of Africa’s infections.

“Restrictions on the sale of tobacco will be lifted,” President Cyril Ramaphosa said Saturday evening, as he announced the relaxation of many lockdown restrictions. Some media outlets had signalled the upcoming move earlier in the week, but South Africa’s 8 million smokers, and its 30 billion rand ($1.7 billion) tobacco industry, were not getting their hopes up.

After all, Ramaphosa announced in late April that the ban would soon be lifted. But then, under pressure from other senior lawmakers in his African National Congress (ANC) party, he suddenly changed his mind.

“We’ll have to wait and see when the regulations are published,” says Sinenhlanhla Mnguni, chair of South Africa’s Fair-Trade Independent Tobacco Association (FITA), on Saturday, immediately after Ramaphosa’s new announcement. “Of course, the president has previously announced the lifting of the tobacco ban only to then have the decision reversed.”

But why was there a tobacco ban in the first place?

Shifting reasons

Controversial as it was, the justification for South Africa’s alcohol ban was always quite straightforward: The country has a significant drinking problem, and alcohol consumption puts a lot of people in the hospital—both drinkers and people hurt by their actions. While the alcohol ban was devastating for one of the world’s top wine-producing countries, it eased the strain on a health care system that needs to focus on the coronavirus threat.

However, the official justifications for the tobacco ban shifted over time.

Initially, shops were banned from selling all but essential items, in order to minimize the time people spend there; cigarettes were not deemed essential.

A month later, when President Ramaphosa had to perform his embarrassing U-turn by lifting the ban, Cooperative Governance Minister Nkosazana Dlamini-Zuma—the politician in charge of South Africa’s anti-COVID efforts—explained that this was because of “health-related” reasons. Specifically, she referred to the phenomenon of people sharing cigarettes, and thus spreading the virus.

In May, the ban was intensified with a new rule directly targeting smokers. If caught with cigarettes, they would have to show receipts proving they bought them before the ban took effect. Police Minister Bheki Cele threatened people with fines or arrest if they could not produce the receipts.

Most people see Dlamini-Zuma, the ex-wife of former President Jacob Zuma, as being behind the ban.

In the mid-1990s, when she was serving as health minister in Nelson Mandela’s administration, Dlamini-Zuma was responsible for legislation that regulated smoking in public places—a move that successfully slashed the country’s smoking rates. This year, many allege, she was continuing her anti-smoking crusade under the guise of coronavirus regulations.

“Nkosazana Dlamini-Zuma has always been a vocal anti-tobacco campaigner. This is pretty much in line with her views on the topic,” said FITA chair Mnguni.

Yusuf Abramjee, whose recently launched Tax Justice SA organization opposes the ban, accuses Dlamini-Zuma and her colleagues of “pushing their own anti-smoking agenda.” He called this “against the constitution and the right for people to choose.”

Dlamini-Zuma’s department disagrees that she was the driving force behind the ban.

“This is nothing to do with any crusade,” said spokesman Lungi Mtshali, who stresses that the cabinet was collectively responsible for the ban, and says the tobacco and alcohol bans have both achieved the aim of protecting South Africa’s health care system.

Legal challenges

The question of the tobacco ban’s constitutionality is an open one—as is the tightly linked question of its effectiveness in protecting the health care system.

Pierre de Vos, a professor at the University of Cape Town’s law faculty and one of the country’s foremost constitutional scholars, does not see the ban as lawful.

South Africa’s Disaster Management Act gives the government leeway to do whatever is needed to combat a declared disaster, which, de Vos explained, in this case means anything that can limit the spread of the coronavirus or lower the death rate.

“The problem with the tobacco ban is that there doesn’t appear to be an immediate link between the ban and either stopping the spread of coronavirus or lowering the death rate,” de Vos said. “The government has conflated that argument with a general public health argument. They made the argument—which is obviously a good argument—that it is bad for your health to smoke. But that is irrelevant for the coronavirus. [Banning tobacco] doesn’t mean it will stop people from getting it or, even if they get it and had stopped smoking for a month or two, that they’d survive. There’s no evidence for that.”

Dlamini-Zuma insists the medical evidence is there. But she has been hit with multiple legal challenges from the tobacco industry.

The first was a lawsuit from FITA, the group representing South Africa’s domestic tobacco producers, which argued that the ban was irrational and therefore unlawful. In what de Vos sees as a bad call, the Pretoria High Court decided in Dlamini-Zuma’s favor in late June, ruling that the decision to implement the ban had been rational—even if it was unreasonable. It also rejected FITA’s argument that tobacco is an essential product.

FITA was granted leave to appeal on Friday, the day before Ramaphosa announced the ban would be lifted—Mnguni said the organization has not yet decided its next move. Meanwhile, the Western Cape High Court was due to soon give its ruling in a similar suit, this time brought by the South African arm of British American Tobacco (BATSA).

BATSA, which got a British respiratory expert to testify that scientific evidence does not support the ban, did not respond to requests for comment on its case.

Illicit trade

A common element of both cases was the argument that the tobacco-sales ban simply pushed the trade underground. This is backed by both statistical and anecdotal evidence.

According to a June survey by the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP), around 27% of smokers tried to quit during the lockdown, a third successfully. But of those who continued to smoke, 93% managed to keep buying cigarettes despite the ban.

The main difference was that the illicit market was charging almost 250% more than official sellers were charging pre-lockdown. And what’s more, the survey pointed to a 430% increase in people regularly sharing cigarettes, because of those inflated prices.

“People are smoking whatever they can get their hands on,” said Zanyiwe Mavubengwana, a community member in the Masiphumelele township south of Cape Town. “Those things, you’re not sure if they are good for your lungs. It’s even worse for families, because more money is going out.

“Sharing will never end in our community,” she continued. “They can ban cigarettes or alcohol, but we will always share whatever we have…People will put in a rand or two rand each for that one cigarette.”

The market’s shift underground has horrified Yusuf Abramjee, a veteran anti-crime campaigner, and his Tax Justice SA group. “With the ban, the government has played right into the hands of organized crime syndicates,” he said. “We know you can buy cigarettes on social media platforms, at traffic lights, on corners.”

Tax Justice SA, which backed BATSA in its case against the government, estimates that the tobacco ban has cost the tax authorities around 35 million rand ($2 million) each day—a figure that fact-checkers found to be mostly accurate. Overall, that means around 1.4 billion rand in lost tax revenue.

“We need that money for the health system,” Abramjee said. “The money is going directly into the pocket of criminals.”

As for the source of the cigarettes people continue to buy, REEP said in its survey report that South Africa’s independent producers—specifically, FITA’s members—had “benefited disproportionately from the sales ban. They have greatly increased their share of the market within our sample, and sold their cigarettes at hugely inflated prices.”

“The multinationals have been the biggest losers during the lockdown period. Their markets have been captured by local companies and, to a lesser extent, by imported cigarettes, significantly reducing their market share,” the report read.

Mnguni, FITA’s chair, claims the REEP study was inaccurate.

“There’s no such thing as brand loyalty in the lockdown period,” he said. “Cigarettes are being exported from the country, and the fact that some find their way back in doesn’t necessarily mean the manufacturers are benefiting. We know once the ban is lifted, people will smoke their regular brands.”

“Post the lockdown, it’s going to take years to recover from the illicit trade,” said Abramjee.

Source: Fortune

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