Government Blamed for Illicit Tobacco Failure as 230 Jobs Hang in the Balance

• British American Tobacco South Africa will shut its Heidelberg factory on 15 January 2026, putting around 230 jobs at risk as illegal cigarettes dominate the market
• The company that produces Dunhill and Palm cigarettes employed over 1,000 people directly in their factories
• Tax Justice South Africa has blamed government inaction, saying authorities failed to dismantle organised crime networks

SOUTH AFRICA-The closure of British American Tobacco South Africa’s Heidelberg manufacturing plant has intensified criticism of the government’s failure to curb the country’s booming illicit cigarette trade, with industry watchdog Tax Justice South Africa (TJSA) warning that years of inaction have now cost hundreds of jobs.

British American Tobacco South Africa (BATSA) confirmed on 15 January 2026 that it will cease production at its Heidelberg, Gauteng factory following years of declining sales.

This they attribute to illegal cigarettes, which now account for an estimated 75% of the local market, roughly three out of every four cigarettes sold in South Africa.

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The shutdown places around 230 jobs at risk and threatens the livelihoods of workers’ families and surrounding communities.

TJSA blames the lack of government intervention

In a statement, the TJSA described the development as “damning proof” that authorities have failed to decisively dismantle organised criminal networks operating in the tobacco sector.

“This shows what happens when you fail to tackle illicit trade: legitimate businesses are compromised, honest jobs are destroyed, and vital tax revenue is lost,” the organisation said.

According to TJSA, the illicit cigarette market flourished during the era of State Capture and was significantly accelerated by the five-month tobacco sales ban imposed during the Covid-19 pandemic.

The prohibition created fertile ground for criminal syndicates, which allegedly expanded distribution networks and entrenched their market dominance.

How much do illegal cigarettes cost the economy?

Tax-evading cigarettes are estimated to deprive the fiscus of nearly R30 billion annually in excise duties, revenue that would ordinarily be directed toward public services such as education, housing and security.

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Enforcement failures have also come under scrutiny. TJSA pointed to the 2023 “Gold Mafia” exposé, which alleged that billions of rands linked to illicit cigarette proceeds were laundered offshore with the assistance of officials from major banks. To date, no arrests have followed those revelations.

“This factory closure shows that misguided regulation, endemic corruption and enforcement failure have real economic consequences. Every year of inaction strengthens organised crime and weakens the state’s authority. Without decisive action, South Africa will continue to lose revenue, credibility and control,” TJSA said.

South Africans' reactions

Public reaction has mirrored the watchdog’s concerns, with many blaming government policy for driving consumers toward cheaper illicit products.

Claudine Glibert French said:

"Legal cigarettes are overtaxed. People can't afford it anymore."

Trevor Burnett wrote:

"ANC is fully responsible for the loss of these jobs and the ex employees loss of income."

Steven Pretorius commented:

"Legit smokes are too expensive for most smokers."

Marc Roos stated:

"As with all taxes in SA, they are simply too high. The higher the taxes, the more the population will find ways of evading them. The government is pricing itself right out of the market with exorbitant taxes."

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Andries Olivier said:

"Everyone is missing the real reason. Illicit trading is a direct result of over-taxation of the legal industry! Watch, the alcohol industry is soon to follow."

Another industry faces job losses

In a related article, Heineken faces layoffs as the brewing giant cuts 6000 jobs over the next two years. The company said retrenchments are the cause of a sharp decline in sales, with the sharpest drop in Europe and the Americas. The company employs around 5000 South Africans, and layoffs have caused alarm, considering the country's already high unemployment.

Briefly News also reported that Coca-Cola South Africa said that almost 700 South African employees may lose their jobs as it planned to retrench employees in 2025. The beverage production company is reportedly planning on closing its plants in the Eastern Cape and the Free State. The company's head of communications said that Coca-Cola's decision is inspired by the need to adapt to changing industry conditions.

Source: Briefly News