Wednesday, December 8, 2021

Up in smoke: What does the future hold for Tobacco industry in Botswana?

In Botswana, Parliament is currently debating the Tobacco Control Bill, 2021which seeks to establish the Tobacco Control Committee and set out its functions. The new law also intends to regulate the demand and supply for consumption of tobacco and tobacco products in Botswana as well as to control its production, manufacture, sale, labelling, advertising, promotion and sponsorship of tobacco and tobacco products.

While the government relied solely on the FCTC and the Anti-Tobacco Network – a local lobby group that ensured the Bill reached the floor of parliament, the business mouthpiece – Business Botswana (BB) maintains that the custodian of the new law – Ministry of Health and Wellness has failed to appreciate the fact that the issue of smoking is multi-dimensional.

BB has accused the Botswana government of using FCTC as cover to exclude other stakeholders in the formulation of the tobacco bill.

Director-Policy Advocacy at BB – Dichaba Molobe says the WHO framework does not in any way supersede Botswana’s right to consult as a sovereign state.

“The manner in which the Bill made its way to parliament is regrettable because there was a deliberate effort not to engage any other stakeholder except the anti-tobacco activists”, says Molobe.

He adds, “We hope that this highly selective approach does not become the norm”. The FCTC is not law but a guideline. BB proposes an enforcement of existing laws. Enforcement is weak at the moment”.

Molobe argues that the fact that policy makers in Botswana are not prepared to consult industry on the impact of the law does not augur well for investor perception.

The tobacco industry involves, transport, distribution and sales to retailers, hotels, restaurants as well as the informal traders.

Official figures shows that tobacco market in Botswana is dominated by the British American Tobacco (BAT) which has close to 93 percent market share selling over three hundred million sticks a year. The company supports an estimated 25 000 livelihoods in the value chain, according to its estimates. BAT Botswana says it contributes P131 million (2020 figures) locally in taxes and additional P153 million is excise only paid to SACU. In the past three years, BAT Botswana has paid an estimated P968 million total revenues both locally and to SACU. Botswana receives upwards of P13 billion in SACU revenues. However, despite being such a monument, BAT was excluded from the formulation of the bill. Efforts by the company to engage with government were futile according to its officials and BB.

Hawkers/Informal Traders hardest hit

In a bid to gauge the economic costs of snubbing the tobacco industry in Botswana, Business Botswana recently commissioned a study with much focus on the impact of the proposed legislation on hawkers. Briggs & Associates conducted a snap survey of a random group of 114 hawkers in the greater Gaborone area. The sample was drawn from a base of more than 1800 hawkers that operate in the Greater Gaborone area. The objective of the survey was to determine the transparency of the proposed amendments, communication and consultation with traders affected, impact that the legislation would have in terms of business sustainability, effect on socio economic factors and perceptions of the proposed legislation.

Briggs & Associates found that the average number of people supported by each hawker is 5.9. Further, 16% of hawkers support 10 or more people through their business. Average period in business is 8.7 years per hawker. There has been an increase in hawkers being in business for a shorter period, but this could be due to Covid pushing people into this venture to generate income.

Briggs & Associates found that single cigarette sales account for a massive 91 percent of sales. An average of 71.3 percent of sales revenue for hawkers is generated by cigarette sales. Further, 60 percent of hawkers are aware of the Tobacco Control Bill. However, none were informed by any government authorities. All knowledge that they have comes from a recently published newspaper article. More significant to this was that there was no consultation with any of the hawkers that were surveyed. This was also evident in the responses and comments that hawkers supplied on further questions. The overwhelming responses are negative with regards to licensing, and hawkers believe this will possibly close their businesses.

The survey conducted was for 114 hawkers from an estimated 1800 hawkers in the greater Gaborone area. This excludes other informal traders like tuck shops and from home traders. There are estimated at least 20 000 similar traders across the country. These hawkers and other traders support in excess of 100 000 people from the proceeds of their business. Briggs & Associates concluded that closing the sale of single cigarettes will have a significant effect on not only smokers, but hawkers and their families as well.

“They will be criminalized the moment because they can’t sell loose cigarettes. As a result they are going to sell illegally,” opines BB’s Molobe.

Hawkers will also need a license to sell which Business Botswana feels is bureaucratic. While the industry complains that this is overregulation, President Mokgweetsi Masisi who has drawn critics over unfulfilled promises, promised to reduce such unnecessary regulation. “It is our serious intent to reduce excessive and unnecessary regulation of the economy to allow you to prosper. This is part of our improving the ease of doing business for Batswana,” an excited president said in 2019. Fast forward to 2021, the government has mandated some traders should have licenses, including tobacco sellers.

Molobe opines that the bill is poised to drive the legal tobacco underground as it serves as a perverse reward of the rule breakers and as such the fiscus is also set to lose from this legislation. “Business Botswana has done it level best to advise the government against implementing the ill-advised bill. However BB does not make law.”

The bill claims to deal with illicit trade and industry players argue it does no such thing but only goes after legal tobacco merchants. It also seeks to abolish smoking areas in restaurants and is therefore businesses feel it’s unrealistic because it is premised on prohibition.

“As we all know prohibition as failed wherever it was tried and the same is going to happen in Botswana,” says Molobe.

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