By: Lonwabo Mtyeku | Photo Credit: Sourced
Cape Town, 26 February 2026 — National Treasury has acknowledged that while progress has been made in tackling South Africa’s illicit economy, sustained enforcement, legislative reform and institutional capacity-building remain critical to closing the gap between policy intent and measurable impact.
Speaking in the context of Budget 2026 discussions, Finance Minister Enoch Godongwana emphasised that illicit trade, tax evasion, smuggling and financial crime continue to undermine revenue collection, distort fair competition and erode public trust in the fiscal system.
A Persistent Fiscal and Economic Threat
The illicit economy spans multiple sectors — including tobacco, alcohol, fuel, counterfeit goods and precious metals — and is estimated to cost the fiscus billions of rand annually in lost revenue. Beyond the direct tax losses, illicit activity weakens legitimate businesses, reduces job creation and entrenches criminal networks.
Treasury officials have framed the fight against illicit trade not merely as a revenue collection issue, but as a broader governance and economic stability imperative.
Strengthening SARS and Enforcement Agencies
A central pillar of the anti-illicit strategy is the continued strengthening of the South African Revenue Service (SARS).
Since its rebuilding phase began in recent years, SARS has focused on restoring investigative capacity, enhancing data analytics, and improving customs enforcement. Budget 2026 allocates additional resources to compliance programmes, border management systems and digital tracking tools aimed at curbing under-declaration and smuggling.
Collaboration between SARS, the South African Police Service, the Hawks and the National Prosecuting Authority has also intensified, with multi-agency operations targeting organised criminal syndicates operating across supply chains.
Border Controls and Technology Integration
Treasury confirmed that modernising border posts forms part of a broader reform agenda to tighten customs oversight while facilitating legitimate trade. Six priority public-private partnership projects are currently underway to reduce congestion and strengthen surveillance capabilities at key commercial crossings.
Advanced cargo scanning technology, digital documentation systems and improved risk profiling are expected to enhance detection rates without stifling trade flows.
Legislative and Policy Measures
Government is also reviewing excise frameworks, licensing requirements and compliance monitoring in high-risk sectors. Proposed reforms aim to reduce loopholes exploited by illicit operators while ensuring that regulatory burdens on compliant businesses remain proportionate.
The Minister noted that enforcement must be accompanied by policy certainty and fair taxation structures to avoid inadvertently incentivising underground markets.
A Long-Term Commitment
Despite incremental gains, Treasury cautioned that dismantling entrenched illicit networks requires sustained political will, consistent resourcing and institutional resilience.
“Combating the illicit economy is not a single intervention; it is an ongoing process of strengthening systems, closing loopholes and ensuring consequences for non-compliance,” officials indicated during post-Budget briefings.
For South Africa’s broader economic recovery strategy, success in curbing illicit trade is closely linked to fiscal sustainability, investor confidence and equitable market participation.
As Budget 2026 shifts from announcement to execution, the effectiveness of anti-illicit measures will serve as a key barometer of the state’s enforcement capability — and its ability to protect both public revenue and legitimate enterprise.
