By Mzukona Mantshontsho
Commissioned by the Consumer Goods Council of South Africa (CGCSA), a groundbreaking study by Econometrix (ECMX), South Africa’s leading independent economic research consultancy and forecasting company, established in 1982, has revealed the devastating scale of the illicit economy in South Africa in the first comprehensive, analytically rigorous estimate.
A report by ECMX indicates that illegal mining is South Africa’s biggest illicit market, even ahead of the historically problematic tobacco black market.
Together with gambling, the three sectors account for 58% of the country’s overall illicit economy, conservatively estimated to be worth R280 billion across 12 sectors.
Illegal mining is estimated to be worth R60 billion, with gambling at R55 billion and illicit tobacco at R45 billion.
ECMX published the findings of its study yesterday Thursday 3 September, in another bid to quantify the devastating impact of sectors undercutting an already struggling economy.
The ECMX study is not an isolated problem within a limited set of industries, but affects the entire economy by crushing legal businesses, eating into tax revenue, displacing jobs, exposing consumers to unsafe products and fuelling organised crime.
South Africa’s GDP is R126 billion smaller within the regulated economy, and compliant businesses forfeit R193 billion in formal production.
Factories, jobs and local economic activity have vanished or failed to materialize.
South Africa loses out in tax revenue due to illicit trade, holding back the government’s ability to fund infrastructure, healthcare, education, policing, housing, social protection and industrial development, while increasing pressure on borrowing and debt-service costs.
The threat to national security
“In several sectors, illicit trade is closely linked to organised criminal networks involved in customs fraud, smuggling, counterfeiting, money laundering and corruption. These networks frequently operate across multiple industries, adapting their methods in response to enforcement activity and exploiting weaknesses in border management, regulatory systems and supply chains,” said Director and Chief Economist at ECMX Dr. Azar Jammine.
The report covers alcohol, clothing, textiles, footwear and leather, food, automotive fuel, gambling, mining, non-alcoholic beverages, pharmaceutical products, tobacco, cosmetics and personal care, chemicals and toys and games. While each sector exhibits unique market characteristics and illicit trade mechanisms, together they illustrate the broader economic consequences of illicit activity across South Africa’s productive economy.
South Africa’s Future
“The report highlights the importance of a coordinated approach to dealing with illicit trade, as lawful businesses feel it the most, therefore we need to see meaningful collaborations from this report,” said Jordi Borrut, CEO at Heineken Beverages.
In a recorded footage called “The Reckoning” that was played at the Report Launch, attendees were shown the murky world of illicit trade, from pesticides, counterfeit alcohol, and tobacco, where illicit trade happens in broad daylight and money being made, with no threat of being caught.
The footage gave a shocking number of 6 children dying a month from gruesome deaths from food products bought from local vendor outlets. Consumers buy because they buy cheaper products, given our unemployment statistics recently reported by Statistics South Africa at 33.6%, translating to 8, 5 million in numbers.
The findings demonstrate that illicit trade is not simply a law-enforcement issue – it is fundamentally an economic development issue, with a call for action from all stakeholders, businesses, activists, and anybody that cares that, we will not have the schools, health facilities, sports and recreational facilities that our children will go to because of illicit trade in the future.
We hold the power to make wrongdoing unpopular, and wrongdoers know that their days are numbered, they will be exposed and there will be consequences of wrongdoing.
“Ultimately, the choice is not simply between tolerating or combating illicit trade. It is a choice between allowing scarce economic resources to continue flowing into the shadow economy, or redirecting them towards productive investment, sustainable employment, stronger public finances and inclusive economic development,” said CGCSA CEO Zinhle Tyikwe, in a panel discussion.
“While the announcement of Operation Ukubusa to disrupt the illicit economy is a welcome step in the right direction, South Africa’s future is being held to ransom by the criminal enterprises behind the illicit trade,” said Dr. Shamal Ramesar, Head of Research at Drinks Federation South Africa (DF-SA) – uniting South Africa’s alcohol industry, promoting responsible drinking and driving initiatives for a safer, prosperous nation. “At DF-SA in April 2026, we formed a Responsible Task Force, through partnerships with Aware.org and SAB Sharp; we lead initiatives and educational programs to foster a culture of responsible drinking. These targeted interventions are designed to reduce harmful drinking behaviours and promote a more informed society, concluded Dr. Shamal Ramesar.
Operation Ukubusa, South Africa’s National Illicit Economy Disruption Programme, was announced by President Cyril Matamela Ramaphosa during his February 2026 State of the Nation Address.
Impact on Workers
By diverting demand away from compliant firms, illicit trade suppresses formal production, wholesale activity, logistics, retail, distribution and related business services. Lower formal-sector activity constrains job creation, reduces wage income and limits opportunities for skills development and career progression.
Methodology
“Measuring illicit trade is inherently difficult because illicit markets are largely hidden from official statistics. The report therefore adopts a triangulation approach, combining Statistics South Africa Supply and Use Tables (SUT), National Accounts and Non-Observed Economy (NOE) estimates with customs and mirror-trade analysis, SARS seizure data, industry and regulatory information, and sector-specific research,” said Dr. Johannes Jordaan, Econometrician at ECMX.
“For sectors with established illicit-trade research, such as tobacco and alcohol, existing studies provide an important reference point. Where comparable sector-specific estimates are unavailable, bespoke illicit-penetration estimates were developed by triangulating available indicators of illicit activity”.
“These estimates represent evidence-informed modelling assumptions rather than directly observed measures of the illicit market. Lower-bound, central and sensitivity estimates were used where appropriate to reflect the uncertainty associated with measuring hidden markets. The resulting sector-specific illicit-market estimates provided the starting point for estimating the economic activity displaced by illicit trade,” concluded Dr. Johannes Jordaan.
Neo Momodu, Lead Executive: Legal, Public Policy & Stakeholder Engagement at the CGCSA concluded: “This report has come at the right time in September, a month of birth; we will be sharing this report with Business against Crime, and like-minded organization to keep the conversation going, to turn evidence into action. So together, all of us here at the report launch, have to work together to get the powers that be in South Africa, to take action.
Image Supplied by Econometrix.
