1. The Tobacco Institute of Southern Africa ILLICIT TRADE IN CIGARETTES 25 March 2015 COMESA BUSINESS COUNCIL 25 March 2015 COMESA BUSINESS COUNCIL

2. TISA Overview TISA represents the entire tobacco value chain incl. farmers, leaf processors, leaf merchants, manufacturers, importers and exporters of tobacco products; in the legal industry. TISA’s mandate extends into the SACU/SADC region. TISA believes public / private partnerships between governments and tobacco sector in the region and globally is the only sustainable solution to address all matters related to the tobacco sector, including the combat of illicit trade in tobacco products. TISA views the escalation of Illicit Trade as a serious threat to the sustainability of the legal tobacco industry, eroding Government revenue, while total consumption could be stable or even increasing, threatening governments’ health objectives.

3. What is illegal trade & its impacts? Collective loss on excise only est. at over US$490Mn for SAA in 2013; 99% of which loss to SACU excise pool Manufacturing Capacity Tobacco Processing Plants Export Processing Zones

4. Industry Collaboration in Combatting Illicit Trade Operational capabilities across the supply chain Active Participation and Pro Active Ongoing Engagement Regional Engagement Full Support on Administrative Controls aimed at Illicit Training & Enablement Increased awareness of illicit & tactical projects

5. Proposed Solutions Research, Analysis & Information Sharing Administrative Actions Enforcement Actions Engagement/ Integrated Approach

6. Closing Remarks Legal tobacco sector should ensure good governance and remain compliant in all respects. All actions by the legal tobacco sector in partnership with governments in the region. Proposal for consideration:  AIT COMESA SUB-COMMITTEE integrated across countries and in cooperation with the legal tobacco sector.  Communication and integration amongst trade blocs. The legal tobacco sector is ready and committed to cooperate with governments and trade blocs in the region. Improved compliance and reduced illicit incidence contributes to better trade facilitation and improved investor confidence.

7. Thank you Confidentiality Notice and Standard Disclaimer: This document is confidential and may contain non-public, proprietary and privileged information. It reflects TISA’s understanding of the market based on information available at the time. Figures and statistics referred to herein, represent an industry view based on external research and publicly available marketing information. The definition of “illicit trade” for purposes of this document includes any product sold to consumers below R16,50, and/or being non-compliant to the Tobacco Products Control Act, No 83 of 1993 (as amended). The various brands referred to herein are assumed to be manufactured and /or distributed by the corporate entities who publicly claim to do so. TISA accepts no responsibility or liability whatsoever with regard to the information or statistics quoted incorrectly or out of context from this presentation by any person. The Tobacco Institute of Southern Africa