R67bn lost to illicit trade, 87 000 jobs on the line

Illicit goods account for close to $500 billion in global trade, according to recent data, representing a significant drain on the international economy – and South Africa is far from immune.

Locally, illicit trade is estimated to cost the country R200 billion in uncollected taxes each year, adding further strain to an already stretched fiscus, eNCA reports.

Finance Minister Enoch Godongwana has warned that the problem also endangers consumers and puts jobs at risk.

Abraham Nelson of the Consumer Goods Council of South Africa said around R67 billion in direct taxes is being lost to government annually, with 87,000 direct jobs under threat as a result.

He described the emergence of an illicit economy operating in parallel to the legal one, arguing that compliant businesses are now forced to compete not only with each other but with an illicit market that undercuts them on price.

That price advantage is a key driver of the problem, with cheaper illicit goods drawing some consumers away from legitimate retailers. Some of these goods enter the country through its ports of entry, while others are manufactured locally – in both cases depriving government of tax revenue it needs to fund service delivery.