Minister in the Presidency Khumbudzo Ntshavheni on Thursday briefing members of the media on outcomes of Cabinet meeting held on 25 February 2026 in relation to SONA priorities, National Budget, fight against unemployment, International Relations among other issues.
Image: GCIS
Government has placed the fight against organised crime and the multibillion-rand illicit economy at the centre of its strategy to reduce unemployment and accelerate economic growth, arguing that criminal syndicates are undermining investment, destroying jobs and draining the fiscus.
Minister in the Presidency Khumbudzo Ntshavheni on Thursday said Cabinet believes economic recovery cannot be sustained without restoring the rule of law and dismantling criminal networks that fuel illicit trade.
Briefing the media following the latest Cabinet meeting, Ntshavheni said the fight against organised crime and weaknesses in the criminal justice system are being driven through a multi-pronged strategy, including the implementation of the National Organised Crime Combat Plan.
This includes deploying the South African National Defence Force (SANDF) in gang-ridden hotspots and re-vetting members of the police, metro police and other criminal justice institutions to remove compromised officials.
“You cannot have an economy that grows without fighting crime,” Ntshavheni said. “Organised crime has been a major challenge, and that’s why the interventions have been made to fight organised crime.”
As the economy is forecast to grow incrementally up to 2% in 2028, Cabinet has set a target of achieving 3% growth by 2029, saying that addressing electricity constraints, logistics bottlenecks and crime are critical to reaching that goal.
Ntshavheni said improvements in energy supply and incremental gains at ports and rail corridors are helping restore confidence, but tackling illicit trade remains a priority.
The illicit economy is conservatively estimated at about R40 billion annually, although the Consumer Goods Council of South Africa (CGCSA) believes it could be as large as 10% of GDP, or roughly R760bn.
Because illegal operators do not report to relevant authorities, the true scale is difficult to quantify.
In the tobacco sector alone, industry estimates suggest that around three out of every four cigarettes sold in South Africa are illicit. This translates into annual tax losses of between R18bn and R28bn.
Legitimate manufacturers, who must pay at least R26.22 in excise tax per pack, struggle to compete with smuggled cigarettes retailing for as little as R10 to R20 per pack. The result has been factory closures, job losses and knock-on effects for farm workers and their dependents.
Illicit alcohol is also a growing concern, with the liquor industry estimating that illegal sales now account for nearly 20% of total consumption, representing at least R16bn in lost revenue annually.
Beyond fiscal losses, the CGCSA has warned of serious health risks from unregulated alcohol and counterfeit pharmaceutical products. As a result, Cabinet argues that the gains from the illicit economy fuel broader criminality and corruption, weakening institutions and eroding investor confidence.
Cabinet’s renewed focus on crime comes as the labour market shows tentative improvement.
According to Statistics South Africa, the unemployment rate declined by 0.5 percentage points to 31.4% in the fourth quarter of 2025.
However, with unemployment still above 30% and millions excluded from formal work, the government believes dismantling organised crime networks and shrinking the illicit economy are essential to unlocking faster, more inclusive growth.
“We are working on the underlying issues that must be sorted so that the economy can grow and create jobs,” Ntshavheni said.
Academic research has consistently linked strong rule of law with economic success, underscoring the economic stakes of the crackdown.
In his Budget Speech, Finance Minister Enoch Godongwana on Wednesday announced that R1bn each has been allocated to the police and the SANDF to intensify efforts against organised crime syndicates involved in illicit trade.
He warned that illicit trade “represents a major threat” to economic gains, endangers consumers and robs the fiscus of billions in revenue.
“The recent announcement by a major tobacco producer that will close its local operations, is a stark reminder of the impact of illicit trade on jobs and the overall economy,” Godongwana said.
“The sophisticated and organised nature of illicit operations demands an intensified effort to curb this trade, secure prosecutions and dismantle its supply chains.”
Godongwana also noted that the South African Revenue Service is working with the Border Management Authority, the police and the defence force in joint operations targeting tobacco smuggling.
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