British American Tobacco Plc (BAT) has said illicit cigarettes account for more than half of the South African market after a long ban on the sale of tobacco products forced smokers to look elsewhere, reports Bloomberg.

More than a year after the five-month ban was lifted, the illicit industry has a majority grip on the sector, the company's regional unit said in a presentation to South African lawmakers on 31 August. The sale of contraband will deprive the government of ZAR 19.1 billion (USD 1.31 billion) in unpaid duties in the current fiscal year, it said.
South Africa is likely to generate ZAR 11.5 billion in duties on cigarettes and related products in the year to March 2022, BAT said. This compares with a National Treasury budget estimate of ZAR 13.1 billion, the report said.
South Africa banned the sale of tobacco, ostensibly to curb the spread of the coronavirus – one of the government's most controversial measures to combat the pandemic. But smokers quickly found ways to obtain the products, fuelling the black market.
A study by the University of Cape Town found that 90 per cent of smokers were able to buy cigarettes during the ban – usually at inflated prices. BAT and Japan Tobacco Inc. took legal action against this, and a court ruled that the ban was unconstitutional. The government has since announced that it will appeal.
Even before the crackdown on legal sales, South Africa was one of the world's largest markets for illicit cigarettes, according to a 2018 report by the Tobacco Institute, which is funded by the country's producers. According to the report, the government also increased excise duties on cigarettes and tobacco products by 8 per cent in February, leading to a 9 per cent increase in legal retail prices but a reduction in prices in the illicit market, BAT said.