Illicit trade is stunting Africa’s development, depriving
governments of customs and tax revenues that would otherwise
be invested in education, health care and infrastructure. That
was the message from The Economist Events’ fourth Global
Illicit Trade Summit on June 25th 2019. In Ethiopia, where more
than 120 government o cials and business leaders gathered for
the summit, illicit trade accounts for 48% of the national textile
market, 45% of tobacco trade and 30% of pharmaceuticals sales.
People who buy contraband and counterfeit goods are rarely
aware of the provenance of these goods, or the damaging impact
their trade has on legitimate businesses and on government
co ers. “The public needs to have greater knowledge and
understanding of the adverse e ects of illegal trade,” Debele
Kebat, commissioner of the Ethiopian Customs Commission, told
the summit. “Our citizens are unintentionally aiding and abetting
smugglers.”
Mafi a-style gangs, militia groups and corrupt o¬ cials actively
trade illicit goods, and one group will often control a product or
territory. The goods vary from country to country. In Ethiopia,
electronics, medicines and cigarettes are smuggled in; minerals
and co ee are smuggled out. The goods are carried on pack
animals, concealed in vehicles and trains, or mixed in with legal
shipments.
A third of illegally imported pharmaceuticals are substandard or
expired, and around 90% of illegally imported tobacco products are
counterfeit, said Fenta Mandefro, an assistant professor at Addis
Ababa University. Company bosses are reluctant to invest in brands
or expand production in Africa, feeding in to the continent’s chronic
problems of instability and poverty. Mr Mandefro estimates that
Ethiopia lost 17,000 jobs between 2015 and 2016 because of illegal
textile, pharmaceutical and tobacco imports.
“Illicit trade not only undermines legitimate business and the
integrity of brands,” said Fady Rahme, vice-president of corporate
development for the Middle East and Africa at JTI. “It deprives
governments of an important source of revenue. The problem
can only be tackled when the public and the private sector work
together.”
Yet there is a vicious cycle at play. Illicit trade holds back national
development, forcing governments to raise taxes. This further
fuels the black market. “Governance in Africa has been very weak,”
said Martin Ewi, a senior researcher at the Institute for Security
Studies. To tackle the problem of illicit trade, it is essential to
combat corruption and promote a culture of transparency.This needs to be a bottom-up, as well as a top-down, process.
Collaboration between governments, regional and international
NGOs and the private sector is important, but it must be
accompanied by community-level action, said Debele Kebat of
the Ethiopian Customs Commission.
Most studies to date have focused on the economic losses
that countries have su ered due to illicit trade, said Kudzai
Madzivanyika, the business policy and programmes manager at
the Common Market for Eastern and Southern Africa (COMESA)
Business Council. Flipping this to emphasise the economic gains
that could be realised if industries in Africa were allowed to fully
develop would deliver a powerful message.This summary was written by The Economist Events’ sta .GLOBAL ILLICIT TRADE SUMMIT 2019
Under the lens
June 25th 2019 – Addis AbadaADVERTORIAL
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