A New David and an Old Goliath: Africa and the Tobacco Industry

Even as Donald Trump floats a plan to respond to the US’s opioid epidemic by putting drug dealers to death, Americans often ignore another threat to their collective well-being: tobacco. This may be because Americans perceive the war against Big Tobacco as won, despite the fact that smoking kills more people in the United States than opioids.

In some ways, ignoring the threats from tobacco is understandable. Smoking rates in the US and other Western countries have steadily fallen. The historic court cases of the 1990s tied the industry’s hands and aired its dirty laundry.

If Americans and Europeans think the tobacco giants have been slain, however, they are sorely mistaken. Far from accepting defeat, Western tobacco companies like British American Tobacco (BAT) and Philip Morris International (PMI) have instead set their sights on Africa to protect their profit margins. Tough tobacco regulation in their home markets has led them to export their deadly business to the Global South.

These companies stop at nothing to target vulnerable populations on the continent, bribing corrupt government officials and attacking anti-smoking activists, while threatening African governments. They exploit poverty, pushing the narrative that tobacco cultivation will bring prosperity to cash-strapped regions, and luring African farmers with the tantalizing opportunity to be paid in cash at the end of the season.

Tobacco growers also receive an additional incentive: Big Tobacco supplies seeds, fertilizer and pesticides at the season’s onset. Farmers unaffiliated with the tobacco titans, meanwhile, are forced to buy supplies with savings or borrowed money without any guarantee their crops will be purchased. Faced with these hardships, growing tobacco becomes the obvious choice.

These tactics have proven effective: African countries south of the Sahara saw smoking rates rise 52 percent from 1980 to 2016. As the World Health Organization’s (WHO) director general, Tedros Adhanom Ghebreyesus remarked a few weeks ago, Africa has become “ground zero for the war on tobacco.”

Tedros was speaking at the World Conference on Tobacco or Health (WCTOH), a recent meeting of global health experts in Cape Town, South Africa. The conference put the spotlight on Big Tobacco’s strategies to hook Africa’s young and vulnerable on its products. Former New York City Mayor Michael Bloomberg also took part at the WCTOH, where he committed $20 million to exposing tobacco industry tactics in low- and middle-income countries.

Illicit tobacco trade is a serious problem. Tobacco is the world’s most widely smuggled legal substance. This proliferation of contraband cigarettes often occurs with the active participation of the tobacco industry.

This massive racket comes with severe costs, both financially and in terms of public health. Africa loses an estimated $12 billion annually as cigarette manufacturers and purveyors evade taxes. Illicit products attract young people, keep smokers hooked and undermine tobacco-control policies with their low prices. According to the WHO, raising excise taxes on tobacco is the single most effective tool for reducing tobacco use, but only if that tobacco goes through legal channels.

Governments worldwide are waking up and cracking down. The WHO’s Protocol to Eliminate Illicit Trade in Tobacco Products, a treaty under the Framework Convention on Tobacco Control, aims to eliminate the illicit tobacco trade via an international fabric of import, export and manufacturing licensing, and an effective track-and-trace system. The protocol could be a powerful tool, but after five years, it still needs to be ratified by five more countries to become binding international law.

Fortunately, national governments have started taking action. Big Tobacco has consistently underestimated developing countries’ willingness to embrace innovative solutions against smoking. Kenya in particular offers a model to emulate in the fight against illicit tobacco, having introduced in 2012 one of the few track-and-trace models actually capable of tracking local production and exacting the necessary tax per cigarette. Kenya’s highly successful Excisable Goods Management System (EGMS) is one of the most advanced tracking systems in the world. Before Kenya introduced EGMS, up to 32.6 percent of its cigarettes were illegal.

The EGMS features electronic digital stamps and photosensitive readers along production lines. At any point in distribution, an authorized field officer can hold inspections and arrest offenders on the spot. All distributors and retailers are criminally liable to ensure excise tax is paid, and all manufacturers and importers must be licensed. The system has dramatically hindered the country’s illicit market, and inspired a marked uptick in tax compliance. Smoking rates among Kenyan men fell by 1.1 percent between 2012 and 2015, and among Kenyan women by 0.2 percent. The system is the first of its kind in Africa, and one of only a few such schemes in the world.

The EGMS has proven so lucrative that the Kenya Revenue Authority (KRA) is trying to extend the duty sticker system to non-alcoholic beverages, such as juice and mineral water, up to 70 percent of which are counterfeit. Unsurprisingly, the sugar industry pushed back hard and helped convince a judge to quash the new taxes in March. Despite that setback, the EGMS’s success in cutting down on cigarette smuggling shows that Africa can implement its own cutting-edge schemes effectively.

Americans and Europeans could take a lesson from this. The EU is still haggling over the details of its own regional track-and-trace system, with many European bureaucrats willing to let tobacco industry-linked companies run their system. Both BAT and PMI are still looking to poor Americans as a growth market, targeting them as “an exciting opportunity for long-term growth” in the same way they do poor Africans. While Bloomberg is bringing the lessons of the global anti-tobacco fight to Africa, he should also take Kenya’s lessons back home.