West Africa becomes major smuggling hub for illicit tobacco.
A report released by the United Nations Office on Drugs and Crime (UNODC) in July 2009 explained how west Africa is becoming a key illicit tobacco trade hub for the whole continent, distributing counterfeits tobacco and smuggled 'cheap whites' generic cigarettes. These, it said, are primarily made in China, Vietnam, and neighbouring east Asian nations, as well as eastern and southern Europe (for instance Bulgaria), and even Belgium and Luxembourg (in the case of cheap whites). According to UNODC's paper Transnational Trafficking and the Rule of Law in West Africa, these cigarettes often arrive through free trade zones such as Jebel Ali in the United Arab Emirate of Dubai. "As a result, the route from producer to consumer can be surprisingly roundabout," the report explained. "The companies orchestrating this trade are often headquartered in offshore investment centres in another part of the world entirely."
Many illicit cigarettes enter west Africa at the ports of Lome in Togo; Cotonou, Benin; and Tema, in Ghana. Most of these cigarettes are technically destined for Mali, Burkina Faso or Niger, but their actual final destination is often richer markets in north Africa, where illicit markets can be huge: Libya smokes more than 6 billion illicit sticks per annum; Algeria 5.5 billion; and Egypt 4.25 billion, according to World Health Organisation (WHO) figures.
Illicit imports also arrive in Francophone Guinea (where political turmoil has been increasing since December 2008's military coup). These are officially destined for Guinea markets but volumes "greatly exceed estimated domestic demand," said the UNODC report. Surplus cigarettes are stockpiled in northern Guinea and eventually driven up unpatrolled roads and the Niger River towards Mali, where they are sold to its large domestic illicit market or taken through the Sahara to north African countries.
Mauritania is another major trafficking hub, where smuggled product is supplied to Senegal and Algeria, and also supplies much of the illicit market in Morocco, which is worth about US$60 million annually.
The Sahara is a key factor in this trade: it makes distribution difficult of course, but for smugglers tough enough to withstand its heat, porous lightly patrolled borders await. Most illicit cigarettes destined for eastern north African countries such as Libya or Egypt must first cross the Saharan desert. And smugglers, who are often legal cigarette distributers and importers as well, pay between US$450 to US$680 for local guides to help them cross the Sahara. The UNODC notes: "It is virtually impossible to control the thousands of kilometres of borders between Mali, Niger, Algeria, Libya or Egypt."
And make no mistake, this potentially dangerous work is lucrative. Overall, an impressive 60% of the north African illicit cigarette supply comes from west Africa, with a flow worth US$774 million annually. The report explained: "Demand is [high] in north Africa, including Algeria, Egypt, Libya, Morocco and Tunisia, and west Africa acts as a conduit to these countries. While these five north African countries represent only 16% of the continent's population, they smoke 44% of its cigarettes." The UNODC said 21 billion illicit sticks were smoked in north Africa during 2007, worth US$1.1 billion taking account of national price regimes.
And local west African markets are hardly small themselves. In 2007, while "west Africa represented only 17% of consumption of all cigarettes smoked in Africa (in 2006), comprising 30% of Africa's population," this still amounted to 11 billion illicit cigarettes, representing about US$455 million in retail sales. Populous Nigeria and Cote D'Ivoire are by far the biggest markets in the region, with Nigerians smoking 35% of west Africa's illicit sticks, and Cote D'Ivoire smoking 23%. However, when looking at the proportion of national markets commanded by illicit products, Guinea-Bissau is the clear winner, with the former Portuguese colony smoking more than 80% of its national market supplied illicitly, according to the UN report, the highest proportion of illicit sticks in the continent, (Libya is a close second). Across Africa, the report estimated that approximately 15% of Africa's consumer demand for cigarettes is met with illicit product: with about 60 billion illicit cigarettes being sold across the continent in 2006. The third highest proportion of a national African market commanded by illicit tobacco products is Mali, with 40%, said the UNODC, with Liberia, Togo, Burkina Faso and Sierra Leone having illicit market shares of around 20%.
Cigarette companies of course have concerns about these problems. Globally, British American Tobacco (BAT) has been particularly proactive in highlighting the dangers of the illicit tobacco trade. "The black market is driven by ever higher tobacco taxes, particularly when taxes and therefore prices in neighbouring countries are much lower," a company statement has proclaimed. "Weak criminal penalties, poor border controls, low arrest rates and corruption in some parts of the world add to the problem. We see it as vitally important that governments establish workable tax regimes and economic policies that do not create conditions for illicit trade, with strong border controls and effective laws to combat it."
A senior manager for BAT Nigeria told Tobacco Journal International that although it was very difficult to measure the true impact of the illicit cigarette trade in west Africa due to its inevitably secretive trading environment, it had probably cost the Nigerian industry more than GBP 60 million (Euro 69 million) over the last three years.
And while the UNODC report asserts the trade in fake cigarettes is booming in West Africa, it is interesting to note that Nigerian ports are not highlighted as key entry points. Indeed, when it comes to Nigeria significant progress in tackling the illegal trade has been made, according to BAT Nigeria's regulatory affairs and external communications manager Ade Adefeko.
"In Nigeria there has actually been a great deal of success in fighting the illegal trade in the domestic market due to the close cooperation between the government and the industry. It is estimated that in 2000 the illicit trade in Nigeria could have been as high as 80-90% of the market.
"Since then the legitimate local industry has been working with Government agencies to address this and illicit trade today is most likely to be in the region of 12- 25%. "This implies that with the right policy mindset--ie collaborative approaches that are fully cognisant of local market dynamics--real success can be achieved across West Africa," he argued.
But borders are still porous and counterfeit and fake cigarettes entering other west African countries still find their way into Nigeria--first heading inland. Adefeko said trucks carrying contraband often arrive at Gaya, the first customs point in Niger, which borders Benin, and then continue on to Maradi, the country's third biggest city, where smugglers offload the cigarettes into either custom or individual warehouses, to be stored prior to being smuggled into Nigeria. "A time will then be determined for safe movement of the illicit cigarettes into Nigeria through Dan Isa, then onto Jiba, and finally into Kano which is used as a redistribution point," he explained.
Last year Nigeria's Daily Sun newspaper exposed how a group of smugglers with the help of crooked customs officers moved dozens of containers of cigarettes into Nigeria through numerous routes and out of the way border posts.
The paper claimed the racket was worth Euro 13.8 million to the smuggler gang, which was under the control of an Indian man based in Benin. It stated that in 2008 alone a total of 66 containers of Superking cigarettes were smuggled into Nigeria via land borders. And other international organisations are concerned about the west African trade too. Max Vetter, manager of the Counterfeiting Intelligence Bureau of the International Chambers of Commerce, stressed tobacco counterfeiting or smuggling was "endemic in every [African] country really--the counterfeiting and smuggling of cigarettes ...". And that while the market for counterfeit tobacco products in west Africa is not exceptional itself, the region is well known as an entry point for fake goods of many kinds. It has become, he stressed a key distribution point for counterfeit Chinese and Indian pharmaceuticals.
This variety of fakes brings its own problems--for even if west African states were minded to get tougher on smuggling, it is likely that they would give precedence to fake medicine and alcohol, which can actually kill people. This general problem has been noted in an interview by Pat Heneghan--BAT's global head of anti-illicit trade. Speaking about the situation internationally, he stressed illicit tobacco sales "remain a low law enforcement priority" compared with fake pharmaceuticals and alcohol.
The transnational nature of the issue has also caught the attention of military and security bodies such as NATO. In its summer edition of the NATO Review newsletter, Organised Crime: The Unseen Enemy, NATO summarised the UN report's conclusions about what can be done to reverse west Africa's crime trends. Quoting the UNODC report's conclusions, the newsletter highlighted two possible options for solving the problem.
"The first is to address those aspects of the problem that lie outside the region," read the newsletter, quoting the report. "In many cases, this is the easier path, since law enforcement capacity in West Africa is among the lowest in the world ... Bringing order to these global commercial flows (of illicit product) would go a long way toward relieving West Africa's pain," it added. The second option could be more complicated, and involves long- term work to help West Africa become better equipped to stop its organised crime, stressed the review.
"Removing the profitability of intraregional cigarette smuggling can be accomplished through the harmonisation of licensing and taxation regimes, for example," it said. "The building of healthy states is the final goal, although there are numerous incremental steps along the way that could pay immediate dividends in reducing the environment of lawlessness."
But even then, this is no guarantee of success, especially given the prevalence of illicit product in north Africa, which has fully functioning strong states.
Libya is a case in point. Relatively rich because of its oil, and politically stable under the Great Socialist People's Libyan Arab Jamahiriya regime of Col. Muammar Gadhafi since 1968, its government has essentially failed to keep a lid on the illicit tobacco trade--it is Africa's largest illicit market. Indeed, the UNODC report said 80% of cigarettes sold in Libya are illicit, most smuggled from west Africa. The report said: "The government is not dependent on cigarette tax revenue due to its oil income, so enforcement is lax. The 'cheap whites' for the
Libyan market are produced in Luxembourg and Bulgaria, subsequently imported through Dubai to Togo and Benin".
There are two major routes to smuggle cigarettes into Libya, through the Algerian desert and from Niger through the Tenere desert, and by sea.
Libya's has a border of 5,000 kilometres of desert, which makes it hard to patrol. According to Libyan news sources, just 89 smugglers, all Libyans, were arrested in 2008. While Libya appears to be dragging its feet on clamping down on tobacco smuggling, its government Tripoli has not been entirely idle. In 2007, the Abu Dhabi-based Thuraya Satellite Telecommunications company carried out an investigation into the deliberate jamming of a communications satellite and discovered that it was being jammed by the Libyan government to stop satellite phones from being used by smugglers to evade detection by the Libyan authorities. While Libya has stopped this practice, technology is now being implemented to curb the flow of migrants in particular, but also smuggling, with last year (2009), Italian company Finmeccanica awarded a Euro 300 million (US$442.7 million) contract to supply a radar security system to monitor Libya's desert borders.
But with significant illicit tobacco flows still flooding Libyan markets, it is maybe no surprise that excess counterfeits and smuggled brands are also being smuggled out from Libya's ports to lucrative markets in Europe, although the numbers that actually initially entered Africa in west Africa are not known. According to the Irish Independent newspaper, old routes used by the Irish Republican Army (IRA) in the 1980s to import weapons from Libya are being used to smuggled cigarettes to Ireland, at a cost of between Euro 500 million and Euro 1 billion-a-year in lost taxes for the Republic of Ireland government in Dublin. Investigations by Interpol suggest Irish smugglers order cigarettes on the Internet from China--with a 40 ft container of 4.4 million counterfeit cigarettes costing just USD$120,000--which are then smuggled to Libya. From Libya the cigarettes are shipped in containers via Malta to Irish ports. Prevention is difficult given that the Irish Customs only has one container scanner. Irish authorities have said that the smugglers are large and well organised, and most probably smuggling cigarettes and tobacco from Ireland to Britain.
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|Author:||Jackson, Emma; Nuthall, Keith; Osborn, Alan; Cochrane, Paul; Corcoran, Bill|
|Publication:||International News Services.com|
|Date:||Jan 1, 2010|
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