Best in­ten­tions for pub­lic health can have un­in­tended eco­nomic con­se­quences, writes

CityPress - - Business - Zouei­hid is the chief ex­ec­u­tive of­fi­cer of Bri­tish Amer­i­can To­bacco SA So­raya Zouei­hid

South Africa cur­rently faces some of the gravest eco­nomic chal­lenges of re­cent times, with a grow­ing clam­our for res­o­lu­tion of crises af­fect­ing sev­eral crit­i­cal sec­tors.

As our gov­ern­ment seeks to per­suade in­vestors that South Africa is open for busi­ness, it is per­haps op­por­tune to con­sider how some of gov­ern­ment’s best in­ten­tions to re­solve so­ci­etal chal­lenges can have un­in­tended con­se­quences for busi­ness con­fi­dence.

At the same time, it is im­por­tant to con­sider what busi­ness brings to the ta­ble and how much it is worth to the econ­omy to en­sure that ap­pro­pri­ate mar­ket in­fra­struc­ture is in place and that reg­u­la­tion en­cour­ages, rather than hin­ders, eco­nomic growth and job cre­ation.

To­bacco can be a po­lar­is­ing sub­ject and mean­ing­ful de­bate about the best route to great­est bal­anced ben­e­fit is all too fre­quently lost in po­lar­is­ing ar­gu­ment. We recog­nise that health con­cerns around the use of to­bacco prod­ucts are le­git­i­mate. But we be­lieve the best way for­ward re­lies on bal­anced, ev­i­dence-based reg­u­la­tion of what is a le­gal prod­uct, while tak­ing into ac­count the sig­nif­i­cant eco­nomic con­tri­bu­tion that the sec­tor brings to South Africa.

We al­ready bring a lot to the ta­ble, as a newly pub­lished re­port by Quan­tec Re­search shows. Bri­tish Amer­i­can To­bacco is the largest to­bacco man­u­fac­turer in South Africa and the sec­ond-largest listed com­pany on the JSE, em­ploy­ing over 2 100 peo­ple. Our value chain sus­tains over 72 000 jobs, in­clud­ing 25 000 in spazas, house-shops, tav­erns and other re­tail out­lets which sell our prod­ucts, some 5 800 to­bacco farm­ing jobs, as well as tens of thou­sands of jobs in sec­tors rang­ing from trans­porta­tion to busi­ness ser­vices. Most of these jobs are within small, in­de­pen­dent black-owned busi­nesses.

Our econ­omy-wide con­tri­bu­tion to South Africa’s GDP amounted to R18.4 bil­lion in 2015, or 0.52% of the coun­try’s GDP. We raised R14.5 bil­lion in tax rev­enues – or 1.52% of gov­ern­ment’s to­tal in­come – enough to pay for 93 700 low-cost homes. Since 2013, Na­tional Trea­sury has col­lected more than R43 bil­lion from the pro­duc­tion and sale of cig­a­rettes we pro­duce.

Grow­ing en­vi­ron­men­tal and com­mer­cial pres­sures have, though, re­duced this con­tri­bu­tion over the past three years and placed sig­nif­i­cant pres­sure on the vi­a­bil­ity of our Hei­del­berg fac­tory in Gaut­eng, where we are one of the largest em­ploy­ers in the prov­ince. We have been forced to shed over 700 jobs, which has, in turn, had an ad­verse knock-on ef­fect on our value chain – for ex­am­ple, the num­ber of re­tail jobs sus­tained by our op­er­a­tions has de­creased by over 10 000, while the num­ber of farm­ing jobs has been re­duced by some 1 500. The over­whelm­ing ma­jor­ity of these jobs were at small and medium-sized en­ter­prises. Such de­clines also clearly re­duce gov­ern­ment’s tax take, re­duc­ing the amount of money avail­able to re­de­velop our econ­omy and sup­port de­liv­ery of the Na­tional Devel­op­ment Plan.

While ex­ter­nal busi­ness chal­lenges will al­ways ex­ist, it is crit­i­cal that when new mea­sures to reg­u­late to­bacco are con­sid­ered, the sig­nif­i­cant eco­nomic con­tri­bu­tion of the sec­tor is re­mem­bered and the po­ten­tial un­in­tended con­se­quences of ex­treme poli­cies on this con­tri­bu­tion are taken into ac­count.

Learn­ings from other coun­tries demon­strate that pub­lic health ob­jec­tives can be de­liv­ered through bal­anced, less ex­treme ap­proaches, while at the same time pro­tect­ing eco­nomic liveli­hoods across the value chain. Given the cur­rent state of the econ­omy and the fact that thou­sands of peo­ple and small busi­nesses – di­rectly or in­di­rectly – rely on in­come gen­er­ated from to­bacco, such an ap­proach is per­haps even more im­por­tant here in South Africa.

It is crit­i­cal, there­fore, that gov­ern­ment con­duct a ro­bust reg­u­la­tory im­pact as­sess­ment, based on wide­spread con­sul­ta­tion across the value chain, to iden­tify and fully un­der­stand po­ten­tial risks, as well as how to mit­i­gate them.

To­bacco is a le­gal prod­uct, re­spon­si­ble for sus­tain­ing tens of thou­sands of jobs across the coun­try and gen­er­at­ing bil­lions of rands in much-needed tax rev­enue. We have an obli­ga­tion to con­duct our busi­ness re­spon­si­bly and we fully em­brace our duty to do so.

A whole-of-gov­ern­ment ap­proach to pol­i­cy­mak­ing, where pub­lic health ob­jec­tives as well as other na­tional pri­or­i­ties of eco­nomic growth, job cre­ation and so­cial in­clu­sion are fac­tored in, is there­fore crit­i­cal.

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