WARREN DREYER: Tobacco bill threatens 500 small businesses and thousands of jobs

Never before has our country been more desperate for economic growth — and jobs. Worldwide, it is recognised that small businesses are the engine of job creation and a growing economy. Sadly, here in SA, the odds are now stacked against the ability of small businesses to flourish.

Load-shedding is the most urgent challenge, along with the soaring cost of doing business, but it is government’s policy and regulatory framework that is paralysing, instead of enabling, the growth of small businesses.  

While President Cyril Ramaphosa recognises this, and has created a dedicated unit in the presidency to tackle and remove red tape to eliminate the barriers impeding economic growth and job creation, many of his ministers and their departments are introducing new legislation that does the exact opposite. 

The department of health’s proposed Tobacco Products Control Amendment Bill, which has been introduced into parliament, is a case in point. It will ban the display of tobacco products across all retail and wholesale outlets, including cigarettes, cigars and hookah pipes, as well as reduced harm products such as e-cigarettes, vapes and heat-not-burn devices. 

This means as a specialist tobacconist, I will be banned from displaying the actual products I sell. What’s more, if one of my team mistakenly leaves a packet of cigarettes or a vape on the counter, this would contravene the law and risk a jail sentence of 10 years and a hefty fine.

A disaster in the making

I run 22 specialist tobacco stores across the country, employing 85 people. I am only one of over 500 such specialist tobacco stores in SA. I estimate that collectively we support about 2,000 direct jobs, never mind the indirect jobs both up- and downstream, or the family members these jobs sustain. The tobacco bill is a disaster in the making for businesses like ours, putting all of those jobs, and the families they support, at immense risk.

To ask specialist tobacconists to hide the core products they sell is absurd. The specialist nature of our stores means they provide no temptation for those who do not already smoke, and certainly not the youth, who are prohibited from entering our stores. Indeed, most specialist tobacconists operate on an adult-only basis — young people are not our customers.  

It is for this very reason that the UK, Australia and most other countries that have implemented extreme tobacco display bans have exempted specialist tobacco stores, and certainly why SA should do the same. If we are not the problem, it makes absolutely no sense to obliterate 500 small businesses and the thousands of jobs they sustain. It is akin to throwing the baby out with the bathwater.

The lockdown restrictions associated with the Covid-19 pandemic and more specifically government’s ludicrous tobacco ban is the purest example of why bans don’t work. The legal tobacco sector, including specialist tobacconists, abided by the rules and shut its doors. All this managed to achieve was to drive consumers underground to illicit organised crime-driven tobacco networks. 

As a result, the illicit tobacco sector gained such a prominent foothold in the sector that its market share now stands at a staggering 60% of all cigarettes sold in the country. The SA Revenue Service (SARS) is doing excellent work to try to tackle this network of criminals, but it is an uphill battle and it is unlikely that legal manufacturers and the retailers that sell these legal products will ever manage to claw back substantial market share. In the end, it is the fiscus and ultimately South Africans in general who will suffer, because illicit tobacco manufacturers evade taxes, so there is less revenue for government to spend on social services and service delivery. 

Unintended consequences

So often in the past we have seen how the unintended consequences of laws and regulations wreak havoc in an industry or profession far beyond those ever envisioned by the bureaucrats and policymakers. This is why the potential effect of a policy needs to be properly investigated and affected parties consulted before the law is drafted. More importantly, government actually needs to listen to the concerns of affected parties, and not simply adopt the policies and recommendations of global NGOs that have no real understanding of the unique circumstances of our country. 

If government sincerely wanted to curb smoking, it could do so in a way that addresses the problem while not interfering with the livelihoods of small business owners. A good start would be to impose formal age restrictions for those who may enter tobacconists, penalise proxy purchasing and launch education campaigns that might yield the kind of successes the department wants.

My plea is that parliament, the portfolio committee on health, the National Council of Provinces (NCOP) as well as the president and his red tape unit carefully consider the impact this sort of blanket legislation will have on all sectors of industry and society, on our sustainability as small business owners and on our ability to retain and create jobs.  

Our call is specifically for the department of health to exempt specialist tobacconists, whose very existence hinges on their ability to display their wares. The health minister is a member of cabinet. He is well aware of the economic challenges facing SA right now, and the value of encouraging the growth of small business. 

This legislation is not his only option. There are alternatives available that could achieve the same objectives without the unintended consequence of damaging the economy or destroying small business. I can only hope he makes the right choice. 

Dreyer is owner of JJ Cale Tobacconists.