Newsletter No. 8 http://www.ncscolour.co.za 13 March 2020
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South Africa losing R250m a day because of illicit trade – BLSA
By Simone Liedtke
Illicit trade is one of the biggest contributors to the strain that South Africa’s fiscus is currently experiencing, as the country is losing about R250-million a day in tax revenue as a direct result of illicit trade.
Illicit trade is defined as the production, import, export, purchase, sale or possession of goods failing to comply with the domestic legislation of any country.
Following a dialogue session on Tuesday, Business Leadership South Africa (BLSA) CEO Busi Mavuso, in an interview with Engineering News, lamented that South Africa’s economy was characterised by low growth, which was further exacerbated by contributing factors such as illicit trade.
In addition to the financial impacts, illicit trade also had an impact on the country’s social wellbeing and health, contributed to crime, undermined regulations, resulted in political interference, contributed to reputational damage to legitimate brands and marred the achievement of the United Nations Sustainable Development Goals (SDGs).
These, in turn, impact businesses in South Africa, which is why BLSA, according to Mavuso, became involved in raising awareness about this challenge
“It is about time that business leads this discussion on illicit trade and the impact thereof on the economy and tries to come up with ways in terms of how to actually deal with it,” she said.
Tuesday’s dialogue session was focused on discussing the findings of a report, commissioned by BLSA and conducted by Gordon Institute of Business Science lecturer Dr Anastacia Mamabolo, which identified and looked at illicit trade in three sectors – tobacco, alcohol and clothing and textiles.
The illicit trade in the tobacco industry is estimated to be between 30% and 35% of the total formal market in South Africa, and 42% of the informal market.
With the most prevalent of cigarette packs sold at below the minimum collectable tax (MCT) of R20.01 per pack, the study found that the government was losing between R7-billion and R8-billion a year.
Cigarette packs falling into this illicit category were found to be sold for less than R20 a pack – the average being R10 a pack, in all provinces, ranging from 26.7% in Limpopo to 37.3% in the Northern Cape.
By volume, the total illicit alcohol market is 14.5%, and valued at about R12.9-billion.
In size by volume, the illicit trade segment here comprises smuggling (28%), tax leakage (24.8%), counterfeit (24.3%) and artisanal products (22.9%).
When turning to value, smuggling still remains at the top of the ladder (39.5%), with counterfeit (38%) and artisanal products (17.7%) following close behind.
Owing to this, government is losing an estimated R6.4-billion in excise tax and job losses are a result.
In the clothing and textile segments (including footwear and leather), the study noted that no official estimations of illicit trade were available.
However, with the most common culprit being that of undervaluation, the study indicated that the under-declaration of customs value in the clothing and textile industry had increased from R5.2-billion in 2014 to R8.5-billion in 2018.
In turn, the economic impact of this has led to the closure of many South African factories in the industry, which has resulted in more than 80 000 jobs having been shed in textile and 100 000 jobs in clothing.
In a broader sense, illicit trade, as a result, influences South Africa’s compounded unemployment rate, which is currently at its highest ever at 29.1%.
During a panel discussion following Mamabolo’s presentation on Tuesday, BLSA division Business Against Crime South Africa’s MD, Tebele Luthuli, lamented that, in 2019 alone, the South African government lost R36.5-billion owing to illicit trade.
She said households often turned towards cheaper items, that were not always legal, in efforts to pinch their pennies in the face of the country’s low growth environment and languishing unemployment rate.
It is for this reason that Mamabolo highlighted the need for “a sense of urgency” in South Africa and among business to address illicit trade.
“Awareness is key,” she said, adding that regulation and implementation thereof, as well as the assessment of available resources, would be key in making this a successful endeavour.
Moreover, Coronavirus leading countries to either shut their borders or temporarily discontinue trade could hamper global supply and, therefore, contribute to a conducive environment for illicit trade to prosper, according to IQ Business chief economist Sifiso Skenjana. Engineering News
Luxury brands gather in Ghana for inaugural Africa Luxury Dialogue
The first Africa Luxury Dialogue event took place in Ghana recently, presented as a forum that explored the luxury landscape in West Africa.
Hosted by Accra-based boutique digital marketing and media agency WaxPrint Media, the event programme featured representatives from international luxury brands in all sectors – including LVMH Moet Hennessy, Versace Collection, Mercedes-Benz, Kempinski Hotel and Remy Martin – alongside Ghanaian and Nigerian luxury entrepreneurs and thought leaders like Roberta Annan, Fred Deegbe, Jewel Arthur, Ken Kweku Nimo and Tamara Jonah-Goka.
Also among the 300 influential professionals, influencers and celebrities were attorney NanaAma Botchway, beauty personality Debbs Bjuku, New York-based celebrity stylist Rachel Johnson, actress Salma Mumin, actress/producer Ama K. Abebrese, and media personalities KOD, Lexis Bill and Eli Kharis.
Luxury not new to Africa
“The concept of luxury is not new to Africa, however it is still relatively new to many of the established global brands who are just beginning to see the region as a viable market. It was important for us to host Africa Luxury Dialogue on the continent, especially in Accra, and bring together a collective of stakeholder voices in the local luxury landscape who also have a wealth of experience in Europe, North America and Africa,” says Muhammida El Muhajir, director of strategy at WaxPrint Media.
The opening panel discussion ‘International Luxury from Global to West Africa’ was moderated by Roberta Annan, managing partner of Roberta Annan Capital Partners, and included panelists Manish Nambiar, GM of Kempinski Hotel; Asad Nazir, CEO of Silver Star Auto/Mercedes Benz; Viola Labi, GM of Versace Collection; and Armand Faure, brand ambassador at Rémy Martin, who shared their personal and professional experiences working for prestigious luxury brands in Africa and their vision for its future evolution.
The programme continued with a series of intimate interactive dialogues and presentations between luxury entrepreneurs, thought leaders and brand representatives. Fred Deegbe, founder of Heel the World Footwear, and Ken Kweku Nimo, author of Luxury Fashion in Africa: History, Brands and Contemporary Issues discussed building an indigenous African brand, and sourcing materials and manufacturing locally to meet international standards.
Aldo Manfreda, a luxury retail specialist and Tamara Jonah Goka, founder of Lionhearts Events, explored creating unique local experiences that reflect both an African and global perspective. Wellington Baiden, founder of Portal Forest Estate, and Muhammida El Muhajir, director of strategy at WaxPrint Media engaged in dialogue focused on sustainability as luxury and Baiden’s 20+ years work developing a local forest and nature eco-system as a sustainable business model.
Judith Biel, general manager at Yolo Experiences, and Elizabeth Oputa, brand manager of Moet Hennessy Nigeria discussed the hospitality industry, training customer service staff and creating spaces, events and experiences targeting luxury enthusiasts. Jewel Arthur, founder of Cre8Africa shared her vision for African luxury and experience building an interior design brand, and allowed attendees to interact with her line of furniture and home accessories during the presentation. NuAfropolitan designs is a featured retail outlet at The Galleria at Kempinski.
“The time is now for Africa and Africans to no longer simply be used as a source of inspiration but to also be acknowledged for our authentic ideation, luxury and innovation. Africa Luxury Dialogue served as a platform to begin this exciting conversation in Ghana and meet face to face with personalities that shape the narrative and concept of luxury in our region in a highly social, productive, and fast-paced atmosphere,” shared Viola Labi, the general manager of Versace Collection and founder of Woven Worldwide, a retail consultancy.
WaxPrint Media announced a commitment to further develop, guide and nurture local creative talent in the luxury space, with the launch of the agency’s creative management division. Bizcommunity
The Jacquard by Google fashion innovation
A device that allows you to transform any garment or fashion accessory into a connected object? This is the feat accomplished by Google, which has managed to convince Levi’s and Saint Laurent to incorporate it into one of the pieces in their collections. Here’s how.
It all began in 2016 when Google filed a highly unexpected patent. The name? Jacquard, like the name of the famous fabric much knighted by the fashion industry. A name that augured well, as the following year the concept was commercialised with a connected denim jacket designed by Levi’s.
By incorporating threads that detect pressure and rubbing like a telephone screen, the Levi’s Commuter Trucker made it possible to control your telephone by touching the left sleeve. In fact, the tactile area is connected to a small Bluetooth module that provides the connection with the mobile and sends notifications via an indicator light and vibrations. Compatible with Android and iOS smartphones, the connected jacket allows you to control the music player, browse the Web using voice guidance, take or refuse a call and ask for a text to be read aloud, all using a hands-free kit. The problem? Sold at the non-negotiable price of 350 dollars, the jacket can only be machine-washed ten times.
Saint Laurent’s Cit-E Backpack
This revolutionary technology has since been revised, today giving rise to a new fashion collaboration. Joining forces with Saint Laurent Paris, Google is testing its technology on an unprecedented backpack: the Cit-e. “Where it was integrated with fabric for Levi’s, this time the Jacquard is integrated with leather. The device can now be inserted into all materials,” Camille Bénéch, EMEA manager for the Jacquard project, explained to FashionNetwork.com.
The micro-computer was miniaturised and has now been reduced to a tag that can be more easily integrated into clothing. The device now offers the option of customising the bag’s controls via 20 functions chosen on the dedicated mobile app, such as taking a photo, consulting Google Maps or opening the day’s agenda.
Previously limited to the American market, Jacquard is now available on the British, French, German, Italian and Japanese markets. However, it’s price – €795 – may present a major hindrance to its purchase. Promostyl
Woolies – change to the board
After serving nearly eight years as an independent non-executive director, and as a member of the audit, nominations, remuneration, and the risk and compliance committees, Mr Andrew Higginson has resigned from the board with effect from 31 March 2020, due to a range of other commitments that will occupy his time into the future.
Did you know……..
Flax is the earliest known natural textile fabric seen used in about 5000 BC. Flax is the material used to make linen which is seeing a huge come back today in drapery and upholstery.
There is evidence that cotton and wool were used to create natural fabrics in about 3000 BC and evidence of silk use in 2500 BC in China.
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