Tobacco Bill will 'blow a hole in the informal economy'

The Control of Tobacco Products and Electronic Delivery Systems Bill (Tobacco Bill), which is open for comment until 9 August 2018, imposes tough new restrictions on the sale and use of tobacco products. It will prohibit in-store display of tobacco products, prohibit the sale of single cigarettes, and prohibit payments from manufacturers and wholesalers to retailers to stock their brands.

In an accompanying socio-economic impact assessment, the Department of Health says it approached only two large retailers for comment, namely Pick n Pay and Shoprite Checkers. It claims that these retailers foresee no impact to their revenue or employment levels as a result of measures that would forbid them to display tobacco products or tobacco advertising at point of sale.

The assessment admits that representatives of small retailers or the informal sector were not invited to comment. Those representatives have now made submissions on the proposed bill, and their comments undermine the conclusions of the government’s socio-economic impact assessment that the bill will have limited impact on the retail sector.

The South African Spaza and Tuckshop Association (SASTA) and the African Cooperative for Hawkers and Informal Business (ACHIB) both released statements that express firm opposition to the proposed Bill. SASTA is an NGO which represents spaza shops, tuckshops, general dealers, hair salons, and clothing stalls. ACHIB is a national body representing hawkers and informal businesses, which it describes as “small, micro and survivalist informal and semi-formal enterprises of the smallest and most vulnerable kind in the country”.

The two organisations each raise similar objections to the bill. The first is to the prohibition of in-store display of tobacco products. For many small-scale traders, not displaying a product implies not showing anything for sale.

“The ban on point of sale displays will make it impossible for our constituency to sell tobacco products legally, and this ban serves no discernible health objective,” argued Rumbidzai Kangara, Gauteng provincial secretary of ACHIB and herself a small business owner.

“The major beneficiaries of the display ban will be larger retail stores who have both staff and space to provide designated counters for a far greater variety of brands,” she said. “The losers and targeted group will be the small retailers, informal traders and hawkers for whom the potential loss of revenue could be enough to put them out of business.”

A second major objection is the prohibition on selling single cigarettes without their government-prescribed packaging.

“A huge majority of all our sales is in single cigarettes,” said Rose Nkosi, the president of SASTA. “Our customers cannot afford to buy full packs, especially at tax-paid prices. If only full packs are available, our customers will only be able to afford to purchase illegal tobacco which is what they will do. This measure effectively bans our entire cigarette trade. Like the display ban, it will force all our members to either break the law or close up.”

Thirdly, Nkosi notes that the bill seeks to prevent retailers from being paid by manufacturers or wholesalers to stock their brands. She sees this as “a direct prohibition on a source of income for some of our members”.

“Looking at these three measures alone,” she said. “It seems that the department wants to blow a hole in the informal economy. We understood that the primary objective of this government was to stimulate economic activity and lift people out of poverty. Why then is this bill so determined to stimulate economic decline in the township economy?”

Kangara raised another fear: “The regulation ... will make smoking in townships legally impossible due to their density, indirectly making it even more difficult for our constituency to sell cigarettes.”

“If there is an attempt to enforce these provisions and restrictions on point of sale displays,” Nkosi argued, “it will lead to the complete destruction of these small businesses.”

Kangara believes that the bill is unrealistic and does not take the realities faced by hawkers, street traders and other informal businesses into account.

“The proposed law may backfire if the response of this sector is to continue selling tobacco products regardless of the law and regardless of where or how they are sourced,” she said, adding: “The fact that unrealistic regulations are often not obeyed or enforced does not mean that they are harmless. Such laws tend to promote bribery and corruption. They tempt and encourage police and inspectors to intimidate defenceless traders and demand favours from them.”

“It is with particular concern,” said Nkosi, “that we note the impact assessment that was included with the bill makes no mention of spaza and tuckshops, an industry that will lose much of its customers and income because of the inability to sell tobacco products at the point of sale (which is often the entire store). This shows very clearly that whoever drafted this bill has lost touch completely with the realities of life for most South Africans, especially SMMEs.”

She concludes: “We believe that people should be free to display and market their merchandise, and that consumers should be free to buy legal products including tobacco products and that we should be permitted to incentives monies from tobacco sellers in return for stocking and displaying their products.” DM