SARS Commissioner Johnstone Makhubu kisses R68 billion goodbye

South Africa is losing R68 billion in annual tax revenue due to illicit economic activity, which damages legitimate businesses, destroys jobs, and puts consumers at risk.

This is according to the Consumer Goods Council of South Africa (CGCSA), which called for stronger collaboration between business, government, law enforcement, and civil society to combat organised crime and illicit trade.

The organisation estimated that organised crime and illicit trade cost South Africa R68 billion annually across 11 sectors.

CGCSA CEO Zinhle Tyikwe said crime affecting the fast-moving consumer goods sector and the broader economy has evolved beyond a public safety issue into an economic, investment, and national competitiveness challenge.

Speaking at the CGCSA Crime Risk Seminar in Johannesburg, Tyikwe said organised crime has become increasingly sophisticated, with criminal syndicates operating across provinces and exploiting technology.

They do this to facilitate illicit trade, counterfeiting, extortion, cargo theft, cybercrime, commercial crime, financial fraud, and attacks on critical infrastructure.

Tyikwe explained that, for the consumer goods industry, the impact of this problem extends far beyond lost sales.

“Illicit trade undermines legitimate businesses, weakens local manufacturing, destroys jobs, erodes the tax base, exposes consumers to unsafe products and funds organised criminal networks,” she said.

The tax revenue lost through illicit trade could have gone towards supporting schools, healthcare, infrastructure, and law enforcement.

“Every rand diverted into the illicit economy is a rand that cannot be invested in economic growth, job creation or public services,” Tyikwe said.

“Cargo theft, extortion, cybercrime, attacks on logistics networks, and the infiltration of illicit goods into supply chains continue to increase the cost of doing business and undermine confidence in the economy.”

The scale of South Africa’s illicit economy

Illegal cigarettes, alcohol, clothing, fuel, and pharmaceutical products were among the main categories of illicit goods in South Africa.

Together, these markets were estimated to have cost South Africa R126 billion in gross domestic product.

The black market covered by the research was estimated at R280 billion. Illegal mining alone was valued at R60 billion, while illegal gambling was estimated at R55 billion.

The Consumer Goods Council of South Africa also estimates that 88,000 jobs have been lost because of illicit operations.

This puts pressure on legitimate companies that pay taxes, comply with regulations and employ workers legally.

Tobacco and alcohol are among the largest illicit markets. The two sectors account for a combined illicit market worth R85 billion.

The Drinks Federation of South Africa reported a 55% increase in the illicit alcohol market between 2017 and 2024.

The risk also extends beyond revenue loss, as illicit alcohol can contain dangerous chemicals used to increase volume or reduce production costs.

These substances can include methanol, industrial-grade ethanol, acetone, lead and arsenic. Exposure can cause severe health problems, including blindness and even death.

The illicit fuel market is another concern. Experts warned that motorists need to be particularly careful when buying diesel, where unusually large discounts could indicate an illicit source.

Lost tax revenue

During a parliamentary briefing in February 2026, former SARS Commissioner Edward Kieswetter said South Africa’s illicit economy had grown much faster than the official economy over the previous 15 to 20 years.

“It has gone from about 5% of the GDP to probably between 12 and 15%,” he said, estimating that this placed the illicit economy between R800 billion and R1.2 trillion.

Kieswetter said the tax implications were equally significant, estimating that the state could lose between R200 billion and R300 billion in tax revenue.

“There is a strong business case to do better,” he said.

SARS commissioner Johnstone Makhubu has already said that tackling illicit trade will require greater cooperation between government agencies.

In May 2026, Makhubu said SARS needed more funding, technology, and cooperation with other authorities to tackle the illicit economy. Border-scanning infrastructure alone will cost South Africa R3.6 billion.

He has also backed intelligence-led enforcement and better technology. Recent SARS operations show that this approach is already being used.

SARS has intercepted suspected drug consignments at the Port of Durban using cargo profiling and data-driven risk systems.

Makhubu said the modernised customs system allows SARS to target high-risk shipments while facilitating legitimate trade.

SARS has also worked with SAPS and other agencies on illicit alcohol operations. In one recent case, authorities intercepted ethanol that could have resulted in the loss of around R9.1 million in duties and taxes.

Responding to the illicit economy

Tyikwe said South Africa requires a more coordinated response which strengthens intelligence sharing, aligns industry action and builds resilience against increasingly sophisticated criminal networks.

Discussions at the seminar are expected to culminate in the establishment of an Industry Anti-Crime Platform.

“This initiative builds on the important work already underway through Business Against Crime South Africa (BACSA) and the Government-Business Partnership,” Tyikwe said.

It provides an opportunity to institutionalise collaboration, strengthen intelligence sharing, align industry priorities and develop a more coordinated response to the crime threats facing the South African economy.

“If we are serious about tackling organised crime, illicit trade, extortion, supply chain disruption and technology-enabled crime, we must move beyond isolated interventions to an industry-wide approach,” she said.

“The proposed Anti-Crime Platform can provide that foundation by bringing together business, government and law enforcement around prevention, disruption, enforcement and measurable outcomes.”

Tyikwe stressed that no single organisation can address these challenges associated with the illicit trade industry alone.

“Success will depend on sustained partnerships between business, government, law enforcement, communities and civil society,” she said.

She said the collaboration between BACSA and the consumer goods industry, particularly CGCSA, demonstrates the value of coordinated action to protect businesses, employees, consumers and communities.

“Through this partnership, we have worked together on critical issues including illicit trade, organised retail crime, supply chain security, extortion, and emerging technology-enabled threats,” she said.