Hidden threat to South Africa’s economy

Counterfeit goods pose a significant threat to South African businesses and the broader economy and are estimated to cost the economy R100 billion a year. 

Trademark and anti-counterfeiting expert at Spoor and Fisher, Paul Ramara, told eNCA that South African businesses are struggling to compete against counterfeit goods and that the problem is getting worse. 

Ramara stressed that counterfeit goods are not unique to South Africa but are a global phenomenon, making up between 7% and 10% of total international trade. 

However, the problem is growing rapidly in Africa, particularly in South Africa. 

Through customs, the South African Revenue Service (SARS) is responsible for processing goods at South African ports.

Currently, SARS can only check between 10% and 15% of all goods entering the country due to a lack of resources and a need to facilitate trade efficiently. 

Ramara said it is simply impossible for SARS to check every single container that enters the country. 

Moreover, SARS is mandated to collect customs duties on the goods and tax where applicable – not fight counterfeit goods. 

Ramara said South Africa is in a fortunate position relative to the rest of the continent in that SARS is a well-run institution, and the country has legislation dedicated to dealing with counterfeiting. 

“I do anti-counterfeiting work across Africa, and I can tell you that in South Africa, we are very lucky to have the Counterfeit Goods Act of 1997 that specifically fights counterfeiting.”

This Act enables companies to register their trademarks with SARS, indicate which goods they produce are likely to be counterfeited and outline the security features they have to ensure their products are genuine. 

This information is stored by SARS and distributed to all customs officials at ports of entry to South Africa. 

Despite this, SARS estimates that illicit trade costs the economy R100 billion annually and robs the country of valuable resources.

Counterfeit electronics and luxury goods are among the largest contributors to illicit trade in South Africa, alongside cigarettes, alcohol, fishing, mining, pharmaceuticals, and food. 

Earlier this year, SARS’ National Customs Enforcement Team joined forces with the police and defence force to intercept truckloads of illicit cigarettes.

In June, SARS’ Customs Division began to destroy illicit and smuggled cigarettes, valued at R43 million, at the Beitbridge border post.

The illicit and smuggled cigarettes were seized in multi-agency operations and dedicated and intelligence-driven operations as part of the Customs Division’s tobacco strategy.

“This is part of ongoing efforts to enhance the effectiveness of customs in combating illicit trade, particularly in tobacco and cigarettes,” SARS said.

“We will use all information gathered by enforcement agencies to follow up and prosecute those who are involved in these syndicated crimes,” SARS Commissioner Edward Kieswetter said.

“All those who are involved, irrespective of their nationality, will face the full might of the law. We will continue to carry out our enforcement work without fear, favour or prejudice.”