The announcement by British American Tobacco South Africa (BAT SA) that it will shut down its Heidelberg factory, affecting more than 35,000 direct and indirect jobs, is not just a corporate decision; it is a national crisis.
The closure is a symptom of a much bigger problem: the rampant, corrosive surge of illicit and counterfeit trade in South Africa, a parallel economy so pervasive and destructive it is hollowing out legitimate industries, bleeding billions from the fiscus and threatening the very fabric of our society.
Illicit trade has become so entrenched that it now accounts for about R100bn annually, or 10% of the South African economy. In the tobacco sector, illicit cigarettes comprised 74.5% of the market in 2024, one of the highest levels globally.
The alcohol sector is similarly afflicted, with illicit trade costing the country R16.5bn in lost revenue in 2024 — a staggering figure that dwarfs the Treasury’s expected gains from excise increases in 2025/26.
But beyond the economic devastation, the illicit economy poses serious health risks. As counterfeit and illicit products often bypass regulatory oversight, they are not subject to the rigorous safety and quality standards that legitimate goods must meet. Illicit alcohol has been linked to poisoning and long-term health complications.
Counterfeit medicines and pharmaceuticals can be ineffective or dangerously contaminated, putting patients’ lives at risk. Fake cosmetics and food products may contain toxic substances, while illicit cigarettes often contain more harmful chemicals than regulated brands. The illicit economy is not only robbing South Africa of jobs and revenue — it is endangering the health and safety of its people.
In his 2025 budget speech, finance minister Enoch Godongwana acknowledged the scale of the illicit economy and confirmed that resources have been set aside to fight it. He rightly pointed out that tackling illicit trade is essential to restoring fiscal stability and protecting legitimate businesses.
However, the closure of BAT’s factory shows that resources alone are not enough. Without urgent, co-ordinated action the illicit economy will continue to undermine South Africa’s industrial base, erode investor confidence and compromise public health.
Illicit economy task forces
The Consumer Goods Council of South Africa (CGCSA), with more than 20 industry associations, have launched illicit economy task forces to disrupt illicit trade networks, advocate for smarter regulation and foster public-private partnerships. In addition, the council has introduced the MyCGCSA app, which leverages GS1 standards to verify products.
GS1 standards are globally recognised systems that assign unique barcodes and identifiers to products, enabling traceability across supply chains. By scanning and authenticating products through GS1 standards, businesses, consumers and regulators can distinguish legitimate goods from counterfeit ones.
Law enforcement agencies are already using the MyCGCSA app in their inspection, search-and-seizure operations, strengthening their ability to clamp down on illicit traders. GS1 standards are a powerful tool in the fight against the illicit economy because they create transparency and accountability across the value chain. They ensure that every product can be traced back to its source, making it harder for counterfeit goods to infiltrate legitimate markets.
By embedding these standards into everyday commerce, South Africa can build resilience against illicit trade while protecting consumers and businesses.
The closure of BAT’s Heidelberg factory is a wake-up call, an unmistakable signal that South Africa is standing at the edge of a precipice. If we do not act decisively more factories will close, more jobs will vanish, and more communities will be devastated.
Godongwana has acknowledged the scale of the problem and committed resources. But acknowledgement and resources are only the first steps. What is needed now is a platform where government, business and labour can forge real solutions together. That platform is the National Economic Development & Labour Council (Nedlac).
Nedlac must rise to this moment. It must become the engine of co-ordinated national action, in which commitments are translated into enforcement strategies, policy gaps are closed and the voices of workers, employers and communities are heard and acted on.
The illicit economy is not just a fiscal issue; it is a national emergency that threatens our economy and our health. It undermines industrial capacity, robs the fiscus of billions, and exposes citizens to dangerous counterfeit goods.
If Nedlac fails to lead, the consequences will be catastrophic: a hollowed-out industrial base, escalating unemployment and a society increasingly vulnerable to unsafe, unregulated products. But if Nedlac seizes this moment it can help turn the tide, mobilising social partners to defend jobs, protect communities and restore trust in South Africa’s economic system.
Over and above the MyCGCSA app, which helps verify products and expose counterfeits, every South African must play a role in fighting illicit trade. By rejecting fake goods, supporting legitimate businesses and reporting suspicious goods or activity through the CGCSA Crime Hotline, communities can help protect jobs, revenue and public health.
• Tyikwe is CEO of the Consumer Goods Council of SA.
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