Latest news with #Tracit
News24
07-05-2025
- Business
- News24
SA faces rising trend of fake drugs as law enforcement battles to curb illicit sales
An independent report on illicit trade has found that counterfeit medication to deal with issues like weight loss has been on the rise in SA. While such medication poses a risk to consumer health, the report notes that laws in SA cannot deal with the problem effectively. According to the Tracit, SA ranks 60th out of 158 countries in effectiveness in combating illicit trade, costing the country an estimated 10% of its GDP. For more financial news, go to the News24 Business front page. The sale of counterfeit pharmaceutical products from online platforms and vendors has been growing in popularity as more SA consumers try to source cheaper versions of scheduled medications such as Ozempic, a medication for diabetes that is also widely used for weight loss. The trend has taken root as regulatory gaps make it difficult for law enforcement to stop illegal sales, according to an independent report from the Transnational Alliance to Combat Illicit Trade (Tracit), which was released this week with Business Unity South Africa (BUSA). Tracit is an independent NPO that aims to combat illicit trade globally. The report, titled SA's fight against illicit trade: A strategic view, found that SA's current regulations were not equipped to hold third-party platforms accountable. Illicit sales also posed a risk to consumers' health and safety, including strokes and high blood pressure, the report said. According to the Tracit report, the popularity of counterfeit medication and pharmaceutical products, both online and in the informal economy, were driven by factors including weak trade enforcement at borders, more consumers seeking cheaper alternatives, a lack of public awareness around counterfeit goods, and a lack of capacity for the courts and law enforcement to hold guilty parties and companies accountable. Although South Africa's pharmaceutical regulatory framework meets international standards, a lack of a strategic framework and clear enforcement responsibilities leaves the system vulnerable to counterfeit infiltration. Efforts to mitigate these risks must focus on strengthening enforcement mechanisms, modernising regulations, and closing gaps in the pharmaceutical value chain to protect public health and safety. SA's fight against illicit trade: A strategic review Health bodies such as the South African Health Products Regulatory Authority (SAHPRA) had already raised the alarm over counterfeit Ozempic-like medication or Glucagon-like Peptide-1 (GLP-1) products last year, the report said. Online platform weaknesses The report also found that the growth in online platforms had led to more hotspots for the illicit trade of vapes and cigarettes. Looking at SA's online platforms, Tracit said: 'Key deficiencies [relating to online platforms in SA] include inadequate regulations establishing platform liability for third-party illicit sales, insufficient transparency measures such as seller verification, limited proactive risk management by online marketplaces, and weak consumer recourse mechanisms […] 'Existing frameworks, including the Medicines and Related Substances Act, have not sufficiently evolved to address digital commerce, resulting in critical vulnerabilities.' Tracit found that SA had been particularly vulnerable to illicit trade, ranking 60th out of 158 countries on its 2025 Illicit Trade Index. Among the top performers on the index, which indicates how capable countries are able to fight illicit trade, are Denmark, followed by the US, Finland, and Germany. While SA scored above the global average and landed at 52.4 out of 100 in Africa, the index found that supply chain weaknesses, corruption, and the prevalence of illicit trade in cigarettes, alcohol and pharmaceutical products had hampered its ability to achieve a higher score. The report also found deficiencies in SA's postal and parcel delivery service systems, saying that better regulations were needed to combat smuggling through international and domestic mailing systems. Speaking at the report's launch, Tracit director Esteban Guidici said that modern illicit trade was often facilitated through small parcels. Guidici said reports from the Consumer Goods Council found that SA lost 10% of its GDP every year due to counterfeit goods and illicit trade. '[Like all countries], South Africa is grappling with national post [offices] and private couriers. It is flooded with them, and all the illicit goods are inside because of a lack of controls. When it comes to pharmaceutical products, [these are] often sent through small parcels to avoid detection.' Meanwhile, other recommendations from Tracit included establishing a public-private Interagency Anti-Illicit Trade Coordinator with BUSA and BLSA, to combat illicit trade locally, including a Pharma Crime team. The coordinator, which will form part of the national government, would aim to raise awareness of illicit trade, provide financial resources to law enforcement, and enforce more aggressive anti-illicit trade regulations.
The Citizen
06-05-2025
- Business
- The Citizen
SA loses R30 billion in revenue due to illicit trade in cigarettes and liquor
When tobacco and liquor sales were banned during the lockdown, people bought from the illicit trade and did not return to the legal market. South Africa loses about R30 billion in revenue every year due to the illicit trade in cigarettes and liquor according to a new report, almost three times as much as government wanted to collect by increasing VAT. According to the Transnational Alliance to Combat Illicit Trade (Tracit) report for 2025, published today, South Africa is doing worse now than in 2019 and 2023 in combating illicit trade and other illicit economic activities across sectors, including alcohol, tobacco, foodstuffs, agrichemicals, pharmaceuticals, counterfeiting, mining and wildlife trafficking. The Transnational Alliance to Combat Illicit Trade (Tracit) is an independent, private-sector initiative established to drive change and mitigate the economic and social damages of illicit trade by strengthening government enforcement mechanisms and mobilising businesses across the industry sectors most affected by illicit trade. Business Unity South Africa (Busa) launched the report in partnership with Tracit. The report is important because it examines the scale, complexity and socio-economic consequences of illicit trade in South Africa and proposes urgent, coordinated steps to address it. ALSO READ: Illicit trade: SA economy loses R100 billion annually SA's scores for efficiency in combating illicit trade South Africa was placed at 60 out of 158 countries and 4 out of 47 African countries surveyed for the report, but the country's real problem with controlling illicit trade is illustrated by its score out of 100, which decreased from 62 in 2019 to 60 in 2023 and now to 52.4 in 2025. This score measures the country's efficiency in combating illicit trade and other illicit economic activities. Although South Africa's score was higher than the global average of 49.9 and the average for Africa of 40.8, the breakdown of the score clearly shows that while the country is better at some aspects of combating the trade in illicit goods, it is sorely lacking in others. South Africa's trade customs and border control scored 79.6, its regulatory framework and enforcement 70.4, and the taxation and economic environment 62.8. However, supervision over supply chain intermediaries only scored 21.6, and sectoral illicit trade indicators 31.6, highlighting systemic gaps in oversight, regulation, and inter-agency coordination. This table shows how South Africa compares to the global and African averages: ALSO READ: Sars loses R119 billion in tax revenue due to illicit cigarette sales since 2002 The serious threat to SA's stability, governance and international standing According to the report, illicit trade continues to pose a serious threat to South Africa's economic stability, governance and international standing. Despite its position as Africa's most industrialised economy and a prominent member of global forums such as the G20 and Brics, the country remains vulnerable to pervasive illicit activities across critical sectors that undermine legitimate businesses, erode public revenues, distort trade flows and deepen inequality. The report points out that while there have been promising developments, such as increased budget allocations to Sars, expanded inter-agency enforcement and new efforts to formalise the informal economy, progress remains uneven and difficult to sustain. The report says South Africa's continued placement on the Financial Action Task Force (FATF) grey list underscores persistent shortcomings in anti-money laundering and counter-terrorism financing frameworks. 'Illicit trade is not merely a criminal or enforcement issue but a systemic threat with far-reaching economic, fiscal and governance implications. It erodes investor confidence, endangers public health and fuels broader organised criminal activity. 'Now is a critical opportunity for the new administration to advance meaningful reforms, strengthen institutional capacity and demonstrate regional leadership. 'By tackling corruption, modernising regulatory systems and enhancing enforcement capabilities, South Africa can reclaim lost tax revenues, rebuild trust in its institutions and protect the foundations of sustainable economic growth.' ALSO READ: Crackdown on codeine: SA authorities launch digital tracking to combat abuse and illicit trade Recommendations for SA to tackle illicit trade The report makes these recommendations for South Africa to tackle the problem of illicit trade: Strengthen inter-agency coordination by appointing a national Anti-Illicit Trade Coordinator and aligning efforts across Sars, the police, the National Prosecuting Authority and regulators. Tighten controls on money laundering and enhance financial intelligence to dismantle the funding of illicit trade networks. Develop a coherent and predictable tax policy framework that avoids market distortions and reduces incentives for illicit activity. Modernise regulatory frameworks to address vulnerabilities in e-commerce, digital trade and high-risk product categories. Combat corruption within customs, law enforcement and judicial systems to restore institutional integrity and enforcement credibility. Raise public awareness and build public-private partnerships to boost education, brand protection and joint enforcement initiatives. ALSO READ: British American Tobacco to retrench workers amid 'ballooning' illicit tobacco trade in SA The threat to economic recovery and public safety 'Illicit trade remains one of the biggest threats to South Africa's economic stability and growth. Despite some governmental efforts, the scope and depth of the problem require sustained political will and comprehensive strategies to address the underlying issues. 'By addressing these issues head-on, South Africa can reclaim significant tax revenue, boost investor confidence and support its broader economic and social development goals,' the report says. Esteban Giudici, TRACIT director of programmes, says the study highlights the continued threat illicit trade poses to South Africa's economic recovery, public safety and institutional integrity. 'Despite authorities' efforts to address illegal trade, corruption and money laundering, illicit trade remains deeply entrenched and highly damaging. 'If left unchecked, it will continue to rob the government of vital revenue, distort legal markets and deter both domestic and foreign investment.' ALSO READ: Illicit goods worth R1.7 million intercepted at Botswana border post SA at crossroads to dismantle illicit networks for trade In particular, the 2025 report emphasises how inflation, high unemployment, organised crime networks and lingering post-pandemic effects have exacerbated the illicit economy, while new digital platforms and smuggling channels are also intensifying the challenge,' TRACIT director-general Jeffrey Hardy says. 'South Africa stands at a crossroads. Now is the time for bold policies and strong enforcement to dismantle illicit networks. 'That is why this year we went a step further and proposed a structured Public-Private Partnership (PPP) to support South African and regional authorities in their fight against illicit trade.' TRACI is working closely with partners in South Africa to bring the proposed Public-Private Partnership model to life in the coming months.
