The present danger of illicit trade in tobacco products
History has shown consistently that whenever there is substantial demand for a product, unscrupulous elements invariably spring up to exploit the market. They do this in many ways such as creating and smuggling counterfeit products into the market, circumventing laid down rules in terms of taxes, import and excise duties requirements, sale of banned products, among others. This illegal trade of the product undermines a country’s economy in many ways.
Cigarettes are the most illicitly traded products in the world. This is because the product is light, easy to conceal and easy to transport across vast distances and across international borders. Trade in illicit products also provides a good return to the actors.
Information on the website of the World Health Organisation, (WHO), reveal that governments collectively lose between $40.5 billion in revenue to illicit trade in tobacco and in some cases, illicit tobacco accounts for between 40% and 50% of the country’s tobacco market. Illicit tobacco trade is also more prevalent in low and middle-income countries than in high-income countries.
The Financial Action Task Force, (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laun
dering, terrorist financing and the financing of proliferation of weapons of mass destruction reported in 2012 that illicit trade in tobacco was prone to money laundering and the illicitly generated proceeds were used to fund other crimes and terrorism.
There are several global programmes aimed at tackling the scourge of illicit trade in tobacco. WHO, through the Framework Convention for Tobacco Control, (FCTC), which is a comprehensive treaty that provides an internationally coordinated response to tobacco regulation and control and sets out specific steps for governments in addressing tobacco use, has established the Protocol to Eliminate Illicit Trade in Tobacco Products. This protocol is an international treaty with the objective of eliminating all forms of illicit trade in tobacco products through a package of measures to be taken by countries acting in cooperation with each other.
Multinational tobacco companies such as British American Tobacco and Philip Morris have also partnered with the International Police, INTERPOL, to create an international framework to combat illicit trade in tobacco products. Nations also collaborate through frameworks of the United Nations such as the United Nations Convention against Transnational Organised Crime (UNTOC) and the United Nations Convention against Corruption (UNCAC).
Illicit trade in tobacco products remains prevalent in Nigeria. It may not be unconnected with the increased spate of terrorism, banditry and other forms of organised crime and calls for a more effective approach to curbing the threat in Nigeria as it is a major way by which perpetrators fund their operation and launder illegal funds. Of particular concern are parts of Northern Nigeria which have been devastated by terrorism and where widespread illicit tobacco trade can be readily exploited for terrorism financing.
Some factors fostering illicit trade in the country include Nigeria’s history of enforcement and control, which promotes the perception that the likelihood of getting caught and punished is very low, and therefore attracts illicit traders to our markets.
Nigeria’s land borders provide little resistance to smugglers and this combined with the numerous illegal entry points into the country signal to the illegal operators that they can operate within the country with relative ease. This continues to make Nigeria very attractive.
In 2015, Nigeria passed the National Tobacco Control Act NTCA, to accommodate the provisions of the FCTC. The NTCA is Nigeria’s comprehensive set of laws for the regulation of the tobacco industry and comprises elaborate clauses including: regulation of smoking; prohibition of tobacco advertising promotion and sponsorship; tobacco product sales; regulation of tobacco product content and emission disclosures; tobacco product packaging and labelling; licensing of tobacco dealer; enforcement; education, communication, training and public awareness.
While the full implementation of the NTCA is still being awaited, it is important to note that Nigeria, in a bid to strengthen the fight against illicit trade, also signed the protocol for the elimination of illicit trade in tobacco products on March 8, 2019. Nigeria thus became the 51st country to ratify the treaty.
With this development it is hoped that institutions will now be strengthened and relevant infrastructure made available to efficiently tackle this scourge.
Proper and effective policing of our borders is critical, if the fight must be won. The Nigeria Customs Service must step up their efforts in all our ports, increase the number of personnel so that all entry points are adequately manned and secure barricades provided at all illegal entry points. Arrangements must also be put in place for adequate training even on the provisions of the new protocol as well as other international best practices.
Commercially, it poses a danger to the investments of industry operators as bigger chunks of businesses are lost to illicit traders who are able to sell at far cheaper prices as they do not pay any taxes or duties on their illegal products. Also very importantly, the economy loses income from lost taxes and duties due to the falling incomes of the legal tobacco industry.
In 2018, tobacco products were among the top non-oil export products for Nigeria. A lot of products were exported to neighbouring West African countries. It is imperative that Nigeria takes the lead in the fight against illicit trade in tobacco products and drive the participation of other West African countries to secure our export market as well as the Nigerian market.