Illicit trade costs the South African Revenue Service (SARS) over R100 billion annually, and to authorities, Johannesburg’s CBD is known as ‘Counterfeit city’.
Counterfeit goods, often imitations of branded products sold at reduced prices, represent a significant threat to legitimate industries and consumer safety.
These fake products range from luxury items, clothing, and electronics to pharmaceuticals and food products.
The illicit trade of counterfeit goods harms businesses, fuels organized crime, damages the economy, and undermines consumer trust.
South Africa is no stranger to this global issue, with the South African Revenue Service (SARS) and other authorities noting a concerning rise in the trade of counterfeit goods.
South Africa’s strategic location, well-developed infrastructure, and proximity to major trade routes make it an attractive destination for counterfeiters.
The country’s economic significance in the Southern African region and its established retail sector make it a prime target for counterfeit goods, particularly those entering the market through ports and borders.
In an interview with Carte Blanche, intellectual property lawyer Mohamed Khader noted that most counterfeit goods are produced in Southeast and East Asia, Latin America, and Eastern Europe.
He explained that it is then transported by ship to Durban harbour. However, he added that the problem comes in when it lands at the port.
The goods are often destined for Botswana, and therefore, customs cannot search or check the containers, which are then trucked towards the border.
The goods are then cleared in Botswana and then rerouted back to South Africa.
Brigadier Kobus Lategan added that the problem is likely worse than we know, considering there are roughly 54 entry points into the country, and corruption is a major reason why they get through the border checks.
Regarding their destination, while these counterfeit goods make their way to all parts of South Africa, most of them end up in the economic hub.
Johannesburg CBD is referred to by anti-counterfeit units as ‘Counterfeit city’, and illicit trade costs South Africa billions.
The underground economy, driven by counterfeit products and tax evasion, severely affects the country’s ability to invest in public services such as healthcare, education, and infrastructure.
SARS Commissioner Edward Kieswetter estimates the trade costs the country R100 billion a year in lost tax revenue, with the trade in alcohol contributing R11 billion to that loss and illegally imported second-hand cars R8 billion.
South African police and customs officials frequently conduct large-scale operations to seize counterfeit goods.
In a notable case in 2023, authorities seized over R1 billion worth of counterfeit goods, including clothing and electronic items, in Johannesburg’s city centre.
The vast volume of these products highlights the scale of the problem.
This is a problem not only for South Africa but also for the rest of the world. Khader said global research has estimated that the illicit trade costs the global economy 2.5% of international trade, which is around $600 billion (R10.5 trillion).
In response to the problem, Kieswetter has set up a dedicated team within SARS to focus on the illicit trade, clamp down on major players and pursue the ill-gotten profits from this business.
He said the team has already dealt with around 1,230 cases of illicit trade and raised almost R80 billion in tax assessments, of which R36 billion has already been collected.
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