Expert in economic intelligence, Pierre d’Herbès discusses the causes and consequences of the parallel tobacco trade in Africa. Responsibility of manufacturers, insufficient anti-smoking legislation, taxes that are too low or even poor traceability: an overview of a multi-faceted problem.
While figures are difficult to estimate, it is estimated that sub-Saharan African countries lose more than $100 million in tax revenue per year due to the parallel trade in cigarettes. What are the consequences of cigarette trafficking on populations?
They are multiple. Indeed, parallel tobacco trade deprives African countries of budgetary revenue. A dead loss for some of the poorest countries in the world which struggle to finance or maintain their infrastructure or to finance schools, hospitals, etc. The exact figures are indeed difficult to evaluate, just at the ECOWAS scale, losses are estimated at 700 billion CFA francs, or 1 billion euros, according to data from the Consortium for Economic and Social Research (CRES).
Let us not forget the health consequences since trafficking boosts smoking which undermines the fragile health systems of most states on the continent and weakens their anti-smoking public policies. However, in fact, the number of smokers is increasing in Africa despite a low level of prevalence. [de consommation du tabac, ndlr] in its population. This can be explained by the rapid growth of the continent’s population and the fact that the prevalence rate is much higher among young populations. This is why the “aggressive marketing” of tobacco manufacturers, to use the terms of the World Health Organization (WHO), specifically targets young people in these countries.
The situation could get worse. According to a report from the Alliance of African and Mediterranean Leagues Against Cancer (ALLIAM), French-speaking Africa would in fact only be at the beginning of its “smoking epidemic” without strengthening health measures. However, industry lobbying is very active in curbing anti-tobacco legislation, as evidenced by the 2023 Index on Tobacco Industry Interference in Africa from the Alliance for Tobacco Control in Africa ( ACTA).
It is sometimes difficult to understand the underlying mechanisms of the parallel cigarette trade. Where do the cigarettes sold on parallel markets actually come from?
We will find two kinds of cigarettes on parallel markets: cigarettes produced legally by manufacturers and counterfeit cigarettes. Although counterfeiting tends to increase, it remains largely in the minority compared to “legal” cigarettes, but sold outside regular marketing channels.
In Europe, the circulation of contraband cigarettes is well documented. Tobacco manufacturers thus supply smuggling circuits by selling their products to wholesalers in Eastern Europe or the Balkans, who then reship them illegally to countries with high taxes, or even as far as North Africa. Another method is the oversupply of Western European countries with low taxes, particularly with a view to supplying the French consumer, who is particularly taxed. Thus, a country like Luxembourg received three billion cigarettes in 2020, while the country’s domestic consumption is around… 600 million.
In Africa, we notice the same strategy of market overabundance by tobacco manufacturers. Countries like Mali, in the grip of security chaos for more than 10 years, have been voluntarily overstocked with billions of cigarettes, as demonstrated in 2021 by a series of OCCRP surveys. Delivered via ports in the Gulf of Guinea countries, the cigarettes were transferred to the northern regions of Mali controlled by armed rebel or jihadist groups. From there, the cargo is broken down through the trans-Saharan trafficking routes to Libya, or to Sudan via Niger. It should be noted that the situation has not really changed. A 2023 study of Global Initiative against Transnational Organized Crime on organized crime in Mali, indicates that billions of contraband cigarettes still transit through Mali to the Sahel and North Africa.
Tobacco trafficking also has global security consequences, according to several experts…
Absolutely and it is very well documented. The oversupply of conflict zones is not accidental, particularly in northern Mali. The armed groups made up of nomads and semi-nomads who operate there are the main linchpin of regional trafficking (gold, migrants, drugs, weapons, etc.), particularly to North Africa and Europe. They generally play the role of escorts, conveyors on the ancestral trade routes of the region or they charge rights of passage. However, they are rarely the organizers of the sectors, even if certain groups tend to gain strength in certain segments such as gold. All this allows them to generate regular income. Problem is, the region has for years been the scene of a conflict between armed rebel groups from the north, jihadist groups and the states of the western Sahel. Every day the situation gets a little worse.
De facto, tobacco trafficking, generally associated with other contraband products, directly or indirectly fuels the war effort of these armed groups, some of which use terrorist methods. Ultimately, even though the French army was fighting these groups on behalf of the G5 Sahel countries, the tobacco majors and the Malian government were helping to finance them… Today France has left, leaving all the no more room for inflation in regional trafficking, including tobacco.
What measures do you think should be put in place to best combat these parallel tobacco markets? From a more general point of view, other measures are also mentioned and considered effective in limiting smoking prevalence. What policies could African countries pursue, from a public health point of view, to combat this “pandemic”?
The challenge here is to be able to deploy a reliable traceability system independent of tobacco companies. With this in mind, the text of the WHO Protocol on the subject is a reference. It is explicitly intended to deploy a strict system that guarantees full transparency in all stages of the tobacco supply chain. At the same time, tobacco manufacturers are trying to impose their own system, Codentify. Although the rights were sold in 2016 to a Swiss company, Inexto, investigations showed that financial and operational links remained with the tobacco majors: a blatant contradiction with the WHO protocol. However, there are several organizations capable of providing independent traceability systems.
Apart from traceability, public anti-tobacco policies are fundamental. They are the responsibility of the States here. It is important to point out that it works, this year the UN welcomed the drop in the prevalence rate in Africa, even among young populations. The arsenal is quite vast: banning advertising, raising awareness of health risks, plain cigarette packets or even taxation to increase prices. In May 2024, an article from The Conversation cited in this regard a study carried out in 16 African countries which showed that higher taxes could make young people reduce their consumption. However, excise duties on tobacco packets in Africa represent less than 30% of their price. This is one of the lowest figures in the world.
Obviously regional cooperation is also important. On the tax front, harmonization at the scale of multilateral bodies appears as important as in Europe. From an operational point of view, without being truant, the fight against smuggling requires improving governance: more precisely intelligence services and customs. The latter are almost absent in certain regions such as Northern Mali or lack resources in port and airport areas. Not to mention corruption issues…
