The article reproduced below in html format is from the FCA Bulletin 97 p.6 (pdf). It is by Dr. Kristof Titeca.
Cigarette smuggling in Africa has been relatively little researched.
Yet it plays an important role in regional smuggling economies, general fraudulent practices and even war economies.
Cigarette smuggling and fraud are rife in the Democratic Republic of Congo (DRC), Uganda and particularly Southern Sudan.
Sudan has an estimated annual consumption of 1 billion cigarettes. Yet, it is estimated that about 3 billion cigarettes annually enter the Southern Sudanese market. The remaining 2 billion are therefore suspected of being smuggled to neighbouring countries.
There is a major illicit flow of cigarettes from Sudan back into Uganda and Kenya, as well as to the Central African Republic, Chad and Ethiopia.
One could argue that taxation plays a role in this, as taxation in Sudan is significantly lower than in Uganda. However, other factors are even more important.
First, there is the problem of weak state capacities in the region. Even if taxes were equal, there still is the problem of state enforcement, as many states are not capable of controlling long borderlines.
Moreover, there is the problem of corrupt government officials, which of course stimulates smuggling practices. Many of the cigarettes smuggled in and out of Southern Sudan evade taxation, although taxes are lower there than in neighbouring countries.
Smugglers instead resort to bribing government officials or rely on smuggling routes.
Secondly, there are embedded smuggling networks, with long historical roots, which are alsowell organised. A major factor in this is that similar ethnic groups living on different sides of (colonial) borders remain closely connected to each other. Traders can easily tap into these smuggling networks and have easy access to an available market.
Thirdly, various criminal elements in the region, as well as rebel groups, rely on cigarette smuggling. The rebel group ‘Armed Forces of the Congolese People’ (FAPC - ‘Forces Armées du Peuple Congolais’) held power in certain areas of northeastern DRC between 2003 and 2005.
Several UN reports describe how the group financed itself through controlling certain trading routes, with cigarettes being an important commodity. Cigarettes are an ideal commodity for criminal organisations - they are small and easy to transport and find a ready market.
As with ‘blood diamonds’, which contribute to financing major human rights abuses, it can be argued that there also are ‘blood cigarettes’.
Although manufacturers claim they are not responsible for smuggling practices in neighbouring countries, the illegal trade in particular brands of cigarettes is a direct contributor to serious abuses of human rights. Manufacturers should therefore remain legally responsible for their products throughout the supply chain. In summary, these factors help us to understand why levels of cigarette smuggling are higher in low-income countries even though prices are lower.
The institutional context, rather than levels of taxation, is favourable for smuggling practices.
Moreover, in a low-income context where price is a very important factor influencing the purchase of cigarettes, tax evasion and fraudulent practices become an attractive option for cigarette traders. Naturally, this has a negative impact on effective health policies.
It has been shown how low-income smokers are particularly responsive to price changes, and this is certainly the case in low-income countries in Sub-Saharan Africa.
Dr. Kristof Titeca
The author is a Postdoctoral Fellow from the Research Foundation – Flanders at the Institute of Development Policy and Management (University of Antwerp, Belgium) and has conducted extensive anthropological research into smuggling practices in central and eastern Africa since 2004. [email protected]
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