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OP-ED: HOW PRESIDENT CYRIL RAMAPHOSA’S SONA 2020 CAN ADDRESS ECONOMIC GROWTH AND JOB CREATION IN FLEDGLING INDUSTRIES

 

 

Asanda Gcoyi, Chief Executive Officer of the Vapour Products Association of South Africa, shares her insights on how the government can unlock the full potential of labour markets and champion inclusive growth in the country.

 

South Africa’s State of the Nation Address (SONA) will be delivered on Thursday 13 February 2020 against a backdrop of unrelenting economic problems in the country. A major concern for all South Africans is the issue of Eskom’s instability, gender violence and especially growing joblessness, the latter of which currently stands at 29.1 percent.

The public will be looking to the President to provide answers about reforms that the government will institute to unlock the full potential of labour markets and promote inclusive growth through broad-based job creation.

 

As the CEO of the Vapour Products Association of South Africa (VPASA), I have been privileged to gain insight into how an industry still in its infancy is able to support and contribute to these objectives. Though the vaping industry in South Africa is relatively young, it stands to make a significant contribution to employment. A 2018 economic impact study published by EIU Canback shows that the Electronic Vaping Products (EVP) market in SA generated just below R1 billion in revenue in 2017. Furthermore, this number is projected to grow by 20 percent annually. The study also details how the EVP industry has created more than 4 000 jobs in the retail and wholesale sectors with a further 10 000 jobs projected by 2027. The opportunity is now in South Africa and we expect the government to act in accordance with the scientific position taken by other countries and territories such as the UK and the EU, who are reaping the benefits of a less harmful alternative to smoking.

 

This will only be possible if the government does not introduce policy hindrance to the industry. Currently, the industry lacks the appropriate legislation and safety standards to which other products are subjected. The government has proposed two bills that will hinder the industry’s potential as a job creator, with all the value-chain possibilities it presents in manufacturing and production, research and development, and retail and wholesale.

 

The first bill, the Control of Tobacco Products and Electronic Nicotine Delivery Systems Bill, lumps vaping into the same category as tobacco products, notwithstanding the fact that it is scientifically established that tobacco and vapour products are vastly different. The second, the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, foresees an increase in tax on tobacco and EVP, which will further diminish the growth of the latter industry as EVP transaction prices are already four times that of tobacco products.

 

The vaping community calls on the President, the Minister of Finance and Parliament to address the need for proper legislation and economic incentives for nascent industries, such as the vapour industry, to drive job creation and economic growth. In our view, a tax on vaping can only support the return of smokers to tobacco products and consequently, inhibit the growth of a promising industry even before it has had the chance to lay down solid roots. Given the relatively small takings likely to be derived from such a taxation, it would seem government and Parliament may be precluding the possibility of widespread job creation and the opportunity to provide less harmful products to 10 million smokers in South Africa, at the altar of expediency.

So, Mr President, will you encourage young industries to thrive, or hit the brakes before we’ve even begun to show you how we can contribute to SA’s economic prosperity?

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