Restrictions on movement, border closures and a complete ban on cigarette sales in South Africa during lockdown are posing problems for tobacco farmers and traders in Southern Africa, as Tendai Marima reports
The sight of gloves, hand sanitisers and masks amid piles of tobacco leaves has become the new normal on the auction floors of Malawi and Zimbabwe, where a delayed selling season is underway following ongoing disruption caused by Covid-19. The responses of Southern Africa’s authorities to curbing the spread of the disease – which include restrictions on movement, border closures and a controversial temporary ban on cigarette sales in South Africa – have raised fears that the crucial industry will suffer a severe blow in the months ahead.
In Zimbabwe, farmers say that tight restrictions on movement introduced since the emergence of the pandemic make it difficult to sell their produce. Charleston Musodzi, a farmer from Karoi, a small town over 200km north of Harare, says regulations have made it hard for him to reach the markets where he sells his crop. Idiosyncratic police interpretations of national lockdown rules complicate matters further.
“I can’t travel because the police say a special letter is required for this phase of the lockdown. The president said farmers are allowed to move freely but now the police on the road won’t let me through. If I can’t go to the market, how do I sell my tobacco, how do I earn anything?”
At the end of March, Zimbabwe’s President Emmerson Mnangagwa imposed a country-wide lockdown, with a special exemption for farmers and other essential workers. At the time of writing in mid-May the tobacco season is underway after a month’s delay, but farmers are struggling to reach Harare’s auction house. Although the government promised to decongest the floor of the main auction centre by setting up exchanges elsewhere, they have yet to materialise.
Many farmers have no choice but to visit the capital – a journey complicated by official and unofficial restrictions. Exports to Europe have stalled due to limited flights; ZimTrade, a local import-export association, is exploring alternative markets in the region to cover the vast shortfall.
For some, the travel regulations and the slow movement of business could lead to riskier choices, including smuggling into South Africa across the Limpopo River. Fuel tankers, cargo trucks and border runners are used in the illicit trade, and the South African Revenue Service (SARS) estimates that over 60m cigarettes illegally enter South Africa each year. Illegal activities, already fuelled by Zimbabwe’s high excise duties and crime syndicates on both sides of the border, may receive a substantial boost following South Africa’s ban on tobacco sales during the pandemic.
South Africa tobacco ban
In late March, South Africa introduced a sweeping ban on both alcohol and tobacco sales in a bid to free hospital beds and protect the vulnerable in preparation for the pandemic. The lockdown measures – among the strictest in the world – have proved hugely controversial. British American Tobacco South Africa, a manufacturer with a 78% market share of the legal cigarette market, says that the ban will force consumers into the arms of black marketeers.
“It will unintentionally force 11 million smokers to go outside of their neighbourhood in search of outlets willing to defy the ban, as we’ve seen in some media reports… This would lead to greater movement of people and more interactions than if smokers were able to buy cigarettes at their nearest legal outlet at the same time as buying all their other essential goods,” the company said in a statement.
Edward Kieswetter, the SARS commissioner, estimated that in April alone the government lost R300m ($16m) in taxes due to the prohibition. The tobacco manufacturing industry in South Africa is estimated to be worth close to R30bn and is supported by nearly 8m adult tobacco users. The industry contributed R10.9bn in excise duty to the fiscus in 2017/2018, but illegal trade grew to 33% of the total market in 2018, according to an industry report from Research and Markets.
Sinenhlanhla Mnguni, chairman of the Fair Trade Independent Tobacco Association (FITA), an industry lobby group, claims the cigarette ban has increased black market trade and urges the government to ease the prohibition in order to recoup state revenue and prevent job losses.
“Uplifting the ban would, amongst other things save jobs, bring more money into the state coffers, stimulate the economy, and decrease the psychological impact on South Africans of the lockdown period,” Mnguni said in a statement.
Nevertheless, the prohibition has some support among world health experts. While studies differ on the impact of coronavirus on smokers, the World Health Organisation says that smokers are likely to be more vulnerable to Covid-19 due to the possibility of transmission of virus from hand to mouth while smoking, and the prevalence of lung disease or reduced lung capacity among smokers, which it says would greatly increase the risk of serious illness.
In South Africa, smoking already results in 44,000 deaths a year, equivalent to 121 deaths a day, according to figures published by the South African cancer society.
While the government has eased restrictions to allow the manufacture and export of tobacco products from South Africa, the prohibition on local sales continues to be the focus of legal challenges from the industry. The continued ban on sales is likely to have implications for farmers and legitimate traders across the region.
Malawi tobacco faces uncertain future
In Malawi, tobacco accounts for 11% of the country’s GDP and more than 60% of its export earnings. A month of auctions between April and May raked in over $10m in sales of burley and flue-cured tobacco.
“This year’s harvest has been good, I hope I can sell enough to support my family for the rest of the year,” says Goodwill Banda, a small-scale contract farmer. But while social distancing around auction houses keeps sales alive, the industry also faces long-term structural challenges. The low prices that farmers receive from dealers mean many are highly reliant on child labour, a practice that deprives children of their education and ultimately fuels the cycle of poverty.
On 1 November 2019, the US restricted imports of tobacco from Malawi and its Customs and Border Protection (CBP) agency issued a withhold release order on tobacco and products containing tobacco from Malawi, citing child labour practices. With storm clouds already gathering for the Malawi industry, South Africa’s ban on cigarette sales risks further undermining regional supply chains already hit by restrictions on movement and border difficulties.