Much attention has been focused on corruption in recent years ― specifically, the proceeds of bribery and theft by government officials.
South Africa is not short of crafty politicians and rogue business people who don’t think twice about looting state coffers. Their greed punishes the poorest of the poor, who depend on government services and grants to assuage hunger.
Corruption must be fought with every ounce of strength citizens of good conscience have. There is, however, another ill threatening the future of South Africa that is as pervasive as the scourge of corruption: the illicit economy.
The annual performance plan by the South African Reserve Bank tabled in parliament provides a sobering reading of the scourge of the illicit economy, an activity that ramped up when the agency, under the wayward leadership of Tom Moyane, disbanded key outfits meant to fight back against syndicates.
Edward Kieswetter leaves the South African Revenue Service (Sars) office in a much better position than the organisation he inherited. Key entities have been rebuilt, and the relationship with big business has been restored. However, the illicit economy can no longer be treated with kid gloves.
The reality is that Sars and its sister law enforcement agencies are faced with a marauding menace of syndicates wreaking havoc with the economy.
In the performance plan, finance minister Enoch Godongwana estimates the annual cost of illicit activities to the economy at R700bn (10% of GDP).
Losses in illicit trade alone cost the fiscus more than R100bn each year. Godongwana is correct when he says these figures are not abstract but represent stolen futures, diverted resources and broken public trust.
Tough talk alone will not yield results. The move by President Cyril Ramaphosa earlier this year to establish a national illicit economy disruption programme, which brings together state agencies and other stakeholders, including the private sector, is a step in the right direction.
However, the agencies must be freed and given resources to fight back against the syndicates that have been allowed to run amok for years. Every resource of intelligence, technology, policy instruments and fiscal tools should be deployed to launch an unprecedented assault.
As we have seen with the demise of British American Tobacco’s South African business, the thriving illicit economy is not without victims. The cigarette maker will, at the end of the year, mothball its plant in Gauteng and resort to an import model to supply the domestic market after illicit cigarettes — constituting more than 60% of the market — drove it out of business.
Authorities must unite around efforts to defeat this scourge. Addressing these challenges requires co-ordinated efforts across government agencies, including Sars. To this end, the work of the illicit economy disruption programme must be visible and results undeniable. Too much is at stake for this programme to be just another good-on-paper government intervention without discernible results or progress.
The impact of state capture on the rise of the illicit economy is undeniable, as are irrational policy decisions. Data shows that between 2014 and early 2025, the illicit economy expanded rapidly, outpacing legitimate economic growth and becoming deeply entrenched.
Sars and independent analyses attribute this growth to institutional weakening during the state capture era (particularly 2014-18), systemic border and customs corruption, cross‑border syndication and the Covid‑19 lockdowns. The prohibition of legal tobacco and alcohol sales during lockdowns created supply vacuums that were quickly filled by organised crime.
These are hard lessons we should have learnt. Good governance, a clean and efficient police service and smart policy choices will go a long way in aiding the war that must be launched on the illicit economy.
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