South Africa: Study Shows WHO Anti-smoking Measures Threaten African Livelihoods

Source from:  Business Day (za)  10/31/2012

FRANCOIS van der Merwe is chairman and CEO of the Tobacco Institute of South Africa (Tisa) and Thalma Corbett is chief economist at NKC Independent Economists.

SUMMIT TV: A study by the Tobacco Institute of South Africa (Tisa) and MKC Independent Economists has revealed that the tobacco value chain across 15 countries in Africa is worth in excess of $10bn. Before we get into this fascinating study, how was this survey carried out?

THALMA CORBETT: What we started out by doing is we looked at Comesa (the Common Market for Eastern and Southern Africa), SADC (the Southern African Development Community) and Sacu (the Southern African Customs Union) … and there are 27 in total. From those we chose 15 countries that have the overwhelming majority of tobacco-related activity — that's Malawi, Zimbabwe, Tanzania, Mozambique, Zambia, Kenya, Uganda, South Africa, Ethiopia, Angola, Egypt and then Botswana, Lesotho, Namibia and Swaziland.

These countries were selected for a number of different reasons. In Malawi and Zimbabwe, the tobacco sector is the single-largest employer, so we are not only looking at large numbers of people that are employed in those sectors, we are also looking at literally millions of people that depend on the people that are employed in the sector. Staying with Malawi, tobacco is the single-largest export product, which accounts for about 45% of exports. In both Zimbabwe and Tanzania, the tobacco crop is the largest agricultural export, and in all of the 15 countries we selected tobacco contributed to foreign exchange earnings, and in all of them tax revenue generated by the tobacco sector is a very important contributor to government revenue.

STV: What was the rationale behind conducting this survey?

FRANCOIS VAN DER MERWE: The World Health Organisation (WHO) has an objective through its Framework Convention on Tobacco Control to reduce the consumption of tobacco products all across the world. The reason is very simple — because tobacco products cause harm to people's health. We as the tobacco sector support that, we know our product causes harm, but it is still consumed by more than 1.3-billion people across the world. Over the past 10 years the way in which the WHO has gone about trying to reduce consumption, they have not succeeded, and today tobacco consumption is very stable and could in fact be increasing. And because of that failure they are now going down the supply chain to the most vulnerable people in the tobacco value chain, which is the farmers out there. They are now developing guidelines that, if approved at a conference in Seoul in (South) Korea, will have devastating effects on millions of tobacco growers across the world, and that's why we've said let's conduct this study so that we can show the WHO they are talking about displacing more than a million tobacco growers in these 15 countries and 17.8-million dependants on farms in deep rural areas.

That is a problem for us. They have done this without consultation with the tobacco farmers. They are driving extreme regulation and extreme measures across the world that are failing on the consumption side — and now they're going to the most vulnerable to develop guidelines that will by decree force them out of tobacco production.

STV: There are those who say the sector is in decline. Given that it's a major presence on the African continent, should this be a concern to the millions who depend on tobacco?

FVM: We do not believe the sector is declining. As I've already said, consumption of tobacco products across the world is very stable, and even increasing. In South Africa, for instance, we can prove that consumption is on the increase, and as long as there is demand for tobacco it will be grown. The WHO needs to find another way to reduce consumption — but don't go down to the farmers, developing guidelines that will force them out of tobacco production without any sustainable alternatives. The initial mandate was to do studies and conduct research for farmers that as consumption declines they can assist farmers to go into alternative crops — but that's not happening on the demand side so now they want to cut the supply, thinking people will use less. We know that won't happen — as long as there is brisk and firm demand across the world tobacco will be grown.

STV: We are talking about a $10bn tobacco value chain, but the paradox is that Africa still has very low smoking rates, largely because most people can't afford it. How can we explain this paradox?

FVM: African countries have the lowest smoking incidence in the world — yet Malawi is the largest grower in the world with a low incidence of smoking. There is no correlation between tobacco growing and tobacco consumption, so if we do away with the growers in Malawi and Zimbabwe, Tanzania or Kenya, the smokers will still smoke, but the tobacco will come from elsewhere. The tobacco value chain brings value to those countries and supports governments and export earnings, and the livelihoods of millions of people in deep rural areas. Our question to the WHO is, what will you tell millions of people in the deep rural areas if you take away their livelihoods without talking to them and without reasonable guidelines on the demand side?

STV: There are debates about the outright banning of smoking — what are the economic implications of that?

TC: I think one shouldn't try interfere with this market by artificially restricting supply. We are looking at small-scale farmers, and most of Africa is farmers with up to 3ha of land, so it's very small and they depend on that cash for their livelihoods. Tobacco is a stable crop and there is a market so it's not easy to find alternatives to pay school fees. If we try restrict supply in these countries we are going to see other countries picking up that slack.

STV: How much does tobacco contribute here in South Africa?

FVM: In South Africa it's a very important part of the economy — there's not so many growers, but we have the full value chain. The government talks about adding value and not letting raw products leave the country — tobacco offers that to South Africa so we should protect and look after that. We have farmers, we have manufacturing and we have consumers — 7.7-million adults consuming tobacco products, with R11bn in excise and VAT paid to the government this year. It's not a small contribution, however, South Africa wants to be at the forefront and follow the guidelines of the Framework Convention on Tobacco Control to the letter and even beyond, with bans on smoking here and there and everywhere, making it difficult for the industry to operate with extreme regulations that push up the cost of compliance. Yet, as I said, people are not smoking less in South Africa and it's on the increase.

Something is wrong somewhere — they need to come to the table and be open and transparent and involve the tobacco sector in these government objectives. As I already said, we as the tobacco sector support the objectives of government to reduce consumption but the way they're doing it is not working and that's there for everyone to see.

TC: As the name says we are completely independent economists. We approached this research as we would have any other sector. This is the result of hundreds of hours of work of 10 economists across the African continent to get the numbers out. Enditem