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Blood cigarettes: cigarette smuggling and war economies in central and eastern Africa
  1. Kristof Titeca1,
  2. Luk Joossens2,
  3. Martin Raw3
  1. 1Research Foundation-Flanders, Institute of Development Policy and Management, University of Antwerp, Antwerp, Belgium
  2. 2International Expert on Illicit Trade in Tobacco, Framework Convention Alliance, Brussels, Belgium
  3. 3UK Centre for Tobacco Control Studies, Division of Epidemiology and Public Health, University of Nottingham, Nottingham, UK
  1. Correspondence to Dr Kristof Titeca, Research Foundation-Flanders, Institute of Development Policy and Management, Prinsstraat 13, Antwerp 2000, Belgium; kristof.titeca{at}ua.ac.be
  • Competing interests None.

Footnotes

  • Funding KT's work on this project was supported by the Research Foundation, Flanders and the Institute for Development Policy and Management, University of Antwerp, to whom he is extremely grateful.

  • Ethics approval Field research was conducted by the first author. His research followed all necessary research protocols of both his funding institution (Research Foundation, Flanders) and his research institute (Institute of Development Policy and Management). As this research project did not involve trials on humans or animals, the codes of ethics in Belgium do not require a separate and specific ethics review for financing this project. However, the research institute of the first author verifies through its screening and monitoring procedures that relevant ethical standards are adhered to by the staff employed.

  • Provenance and peer review Not commissioned; externally peer reviewed.

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Introduction

Cigarette smuggling is a global phenomenon with a clear rationale: it is highly profitable and allows cigarette manufacturers to expand their markets. Major companies, such as British American Tobacco (BAT) and Philip Morris, have been accused of making use of smuggling networks. For example, research by the Center for Public Integrity accuses tobacco company officials at BAT and Philip Morris of being directly connected to organised crime in various countries (Hong Kong, Canada, Italy, United States).1 Action on Smoking and Health (ASH) makes similar accusations against BAT.2 In July 2008 and April 2010 in Canada three tobacco companies pleaded guilty and admitted ‘aiding persons to sell or be in possession of tobacco products manufactured in Canada that were not packaged and were not stamped in conformity with the Excise Act’.3 4

Further, cigarette smuggling is detrimental to health policy5 6 and the WHO Framework Convention on Tobacco Control (FCTC) emphasises the importance for tobacco control of combating illicit trade.7 Smuggling undermines tax revenue and promotes corruption8; by lowering price, consumption is increased9; and smuggling promotes the development of new markets and better exploitation of old ones.10 For example, smuggling may lower the price of Western tobacco brands, making them affordable to more people.9

Cigarette smuggling is a significant problem in Africa. In 2007 Africans smoked an estimated 400 billion cigarettes and the illicit market was estimated to be 15% of the total market,11 meaning over 60 billion smuggled cigarettes were consumed in Africa.12

This paper examines cigarette smuggling in central and eastern Africa. As in other countries in Africa13 and elsewhere,9 the high level of smuggling in central and eastern Africa has been used by cigarette manufacturers such as BAT to lobby for lower taxation14 15 and to influence public policy.16 Particularly in Uganda, BAT has argued that the high level of smuggling and consequent loss of revenue is caused by high taxation.17 However, research on cigarette smuggling in Europe9 18 showed that smuggling was not primarily caused by large price differences between different countries but ‘by fraud—by the illegal evasion of import duty’.9 The price argument therefore ‘grossly underestimates the pedigree and sophistication of parallel trading circuits’.19

This article illustrates the sophistication of this illegal trade in central and eastern Africa. It suggests that other factors, such as long and porous borders, government corruption and the presence of criminal elements play the major roles in cigarette smuggling, rather than tax/price differences. This paper draws on qualitative and ethnographic data that reveal the human consequences of smuggling and the weaknesses of implementation mechanisms for controlling it.

Cigarette smuggling also offers opportunities for rebel groups, who use it to finance their activities. A number of rebel groups are active, especially in the Democratic Republic of the Congo (DRC). These rebels are accused of serious human rights abuses, including mass murder, torture, rape and forced recruitment of children.20–22 The second Congo war began in August 1998 in the DRC and was the biggest interstate war in African history, directly involving nine African countries. The war officially ended in July 2003 but a number of armed groups remained active in eastern DRC. Since 1998 millions of people have been displaced from their homes, and over five million people have died in the DRC through the direct and indirect consequences of the conflict.23

Methods

Researching illicit trade has inherent limitations24 and little is known about cigarette smuggling in this region; for example, it is missing from a global smuggling analysis in the WHO Tobacco Atlas25 and little has been written on the subject. Where written sources exist those concerned (such as government authorities) are reluctant to make the data (for example, estimates of the amount of smuggling) available for security reasons.18 Primary data collection—field research—is also difficult, for obvious reasons: participants are secretive about their operations and distrustful of inquisitive outsiders; and it can be physically dangerous as smugglers can use violence and cooperate with rebel groups.

A crucial issue in this kind of research is therefore gaining respondents' trust, so we relied on anthropological methods. Anthropology involves long-term immersion in a community to gain acceptance and establish trust and rapport, and on qualitative methods like participant observation, interviews and surveys. It is a discipline which emphasises that human interactions can only be fully understood by including the context in which people live.24 This paper is based upon long-term field research on the organisation of smuggling networks in the Congo-Uganda-Sudan border region.

Using anthropological methods KT gained the trust of some Ugandan smugglers. During the initial phases of the field research in 2004–2005, KT made contact with a group of fuel smugglers who in turn introduced him to others in the wider smuggling economy.26 27 Crucial in this kind of field research is cooperation with local people who facilitate entrance to these environments.24 KT therefore used two former smugglers (to some extent still engaged in the smuggling economy) as research assistants. Their cooperation was crucial in gaining the trust of actors in the regional smuggling economy. The fact that KT has been working with these traders since 2005 with no leaks of sensitive information also helped to establish his trustworthiness.

Interviewees

Over 400 interviews were conducted over 6 years (2005–2010), 184 (44.5%) with smugglers (table 1). Interviews were also conducted with government and customs officials. Relationships of trust were established with several customs officials who became key informants. Others directly and indirectly related to the smuggling economy were interviewed, including politicians, journalists, intelligence officers and civil society representatives. Interviews lasted between 30 and 150 minutes.

Table 1

Number and type of interviews

In order to avoid bias we interviewed people from different social backgrounds, different networks and from both large-scale and small-scale smuggling operations. This allowed continuous cross-checking of information from different informants. For example, information from certain smugglers was cross-checked with information from other smugglers and also from customs officials, other government officials, ‘legal’ traders and various other actors. Similarly, information was cross-checked in different locations, as interviews were conducted in three main locations: (1) Arua, a major trading hub in north-western Uganda close to the Congo and Sudan borders, where many smugglers are based; (2) Aru and Ariwara, major border trading towns in eastern Congo and central points in the regional smuggling economy28; (3) the Uganda capital Kampala, with ministry officials, intelligence officers, journalists and tobacco industry people.

Primary data

Tape recorders were tried initially but because the interviews dealt with such sensitive and illegal issues they generated distrust and were abandoned. KT took detailed notes instead. These were transcribed immediately after the interviews and data categorised into themes such as ‘confiscation practices’, ‘government involvement’, ‘rebel groups’ and so on. In this way information on specific subjects could be compared and cross-checked in consequent interviews with the same and other actors. Thus the analysis proceeded using ‘continuous review’. The research also relied on participant observation as KT spent time sitting in the ‘offices’ of smugglers, where deals were made and goods exchanged, and sometimes travelling with smugglers to border areas or other trading centres.

Secondary data

Insights from the primary data were verified and supplemented through an analysis of secondary sources including reports from non-government organisations (NGOs), multilateral organisations and newspapers. UN reports on the war economy in eastern DRC were especially useful. The UN appointed a group of experts who provided evidence on the complicity of state and non-state actors in the war economy in eastern DRC.29 30 These reports also provided useful and well-researched information on the role of cigarette smuggling for rebel groups. With regard to newspaper reports, research was done in the archives of the most important Ugandan newspapers (Daily Monitor and New Vision) in their digital and physical archives, using the key words ‘cigarette’, ‘Supermatch’ and ‘smuggling’ over the last 10 years. These key words were in turn used for the global African news website ‘allAfrica.com’, which collects press reports from African newspapers.

Limitations

Although interviews were conducted with a variety of actors and in a variety of locations, the contraband smuggling networks were the prime units of analysis. This led to a number of limitations. First, this study could not therefore rely on any systematic access to data, such as available written documents or quantitative information. Moreover, large-scale surveys were not possible. Second, because this study focused on these smuggling networks, phenomena that were not directly part of these were not studied. For example, raw tobacco leaves are not part of these smuggling networks and were therefore not addressed. Third, the qualitative field research was limited to one particular location, the Ugandan-Congolese-Sudanese border region.

Results

General smuggling patterns

There is a particularly intense trade in smuggled cigarettes between Kenya, Uganda, Sudan and the Democratic Republic of Congo (DRC). Illicit cigarette trade in Uganda works in the following way: cigarettes are bought in Kenya, where they are produced, or arrive from further afield such as the Far East. Because these are destined for DRC or Sudan they do not pay any tax in Uganda as they are in transit. Nevertheless, they finally end up in Uganda. The most common scenario for doing so is that they first travel through Uganda to the DRC or Sudan and are then smuggled back in Uganda (see figure 1). The reason for this is that trucks in transit are monitored by the Ugandan customs authorities and on entry are sealed by them. Breaking the seal before leaving the country leads to major fines. Thus trucks first go to DRC and Sudan (where the seal is broken) then cross back into Uganda. Alternatively, but more risky, cigarettes are directly ‘dumped’ into Uganda. Whatever route is used, the result is the same: since they were in transit Ugandan tax was not paid so they are cheaper than legal, taxed cigarettes.31–35 There is close cooperation between traders on different sides of the border in smuggling exported cigarettes back into Uganda.36–39 A good example was one of our informants, O:O is a smuggler based in Arua who specialises in fuel and cigarettes. He works with two middlemen based in Mombasa, Kenya, who purchase these commodities for him. He also works with other middlemen who work at a more regional level, and physically travel with the cigarettes, accompanying the truck driver. O works together with Congolese trader A, whose papers he uses to obtain transit papers. Thus formally the cigarettes appear to be destined for Congolese trader A in Ariwara, DRC, because of which no Ugandan taxes are paid. However, either these goods never reach the DRC, and remain in Uganda, or they are smuggled back into Uganda. To smuggle goods back into Uganda, one of the middlemen hires ‘transporters’. These are men who bring smuggled goods on their bicycles into Uganda, using smuggling routes.40

Figure 1

Based on United Nations, Map No. 3862 Rev. 4 May 2003. United Nations Cartographic Section.

O was fairly typical; most traders work similarly. For example, a Congolese cigarette trader told us, “I normally work with a Ugandan friend who also deals in cigarettes; he uses my name and then sells them in Uganda.”41

Interviews with traders, customs officials and tobacco industry officials working at national level suggested that 15–20% of the Ugandan market is smuggled cigarettes.42 The annual Ugandan cigarette market is two billion cigarettes, thus annually between 300 million and 400 million cigarettes are smuggled into Uganda, representing an annual tax loss of around $4 million.42

Sudan plays a central role in the regional cigarette smuggling economy. This became clear when examining the number of cigarettes being imported into the area. Southern Sudan has an estimated annual market (consumption) of one billion cigarettes,42 yet it is estimated that about three billion cigarettes annually enter the southern Sudan market.42 According to smugglers, journalists, government officials and people in the tobacco industry, the remaining two billion are smuggled to neighbouring countries: Uganda, Kenya, the Central African Republic, Chad and Ethiopia.42

Reasons for smuggling

It could be argued that differences in taxation are the main reason for these smuggling patterns as tax in Sudan and Congo is lower than in Uganda. However, our field research suggested that other factors are more important. Firstly, even if taxation were equal in the different countries, in the context of limited enforcement capabilities, the illegal importation of untaxed cigarettes will still continue, particularly in places such as eastern DRC or southern Sudan where state capacity is very weak. As an assistant commissioner of the Uganda Revenue Authorities said with regard to the DRC43 and Sudan: ‘there simply is no structured, credible and reliable administration to talk to, which makes it hard to prevent smuggling and track down smugglers’.44

Second, customs and government officials highlighted their limited enforcement capacity, which prevented them fully monitoring the long and porous borders. A Ugandan customs official explained:‘The border with Congo and Sudan is very, very long, and there are many smuggling routes. It simply is impossible for us to control everything that crosses the border. So what do many people do? They take their bicycles, buy their goods in Congo and bring them to Uganda. There is not much we can do about this’.45

Although this statement highlights an important dynamic, it should not be overestimated. Most of these routes are rather difficult to pass and only allow small consignments to pass on bicycles; trade in cigarettes is also considered risky by everyone involved as cigarettes are often confiscated and smugglers punished by government authorities. Contraband cigarettes are taken seriously by government officials. As one cigarette smuggler argued: ‘Smuggling cigarettes is not like smuggling motorcycles or other commodities. Smuggling cigarettes is much more dangerous! You can be jailed or killed for this!’46 Not every trader wanted to take such risks. Thus connections with government officials were needed to safely smuggle cigarettes across the border. This was especially the case for larger quantities of cigarettes, which were often smuggled in vans or trucks and therefore used ‘traditional’ roads, which were subject to more state control. Only a handful of large-scale traders had the necessary connections with high-level actors in the customs authorities, army and government on the different sides of the borders (ie, with Ugandan, Congolese and Sudanese officials), which guaranteed safe passage of the commodity. As one customs official explained:‘When big consignments of goods want to pass, they (the large-scale smugglers) contact our boss, who then tells us: when you see this and this truck coming, you have to let it pass. Of course, he also gives us some little appreciation for this.’47

Customs officials also consistently pointed to the involvement of high-level government authorities in cigarette smuggling.48 49 Connections with governmental authorities were needed to smuggle large quantities of cigarettes across the border, and government officials only work with a limited number of traders. As one customs official explained: ‘It is better to work with those you know than with those you do not know’.50 These factors particularly explain why the percentage of smuggled cigarettes in this region is not higher: smugglers believed that cigarette smuggling is strongly punished by government authorities and only a handful of traders have the necessary government connections.

In this situation traders often paid no taxes at all: as explained above, tax was not paid on the cigarettes in Uganda, and often not on arrival in Sudan or DRC either, and they are then smuggled back into Uganda. As one large-scale middleman argued: ‘We often do not pay taxes in Sudan or Congo: we simply pay some Kitu Kidogo (bribe). We then sell them there or we bring them back into Uganda.’51

Our interviewees told us that cigarette smugglers did not limit their activities to cigarettes alone, but also included other profitable contraband such as fuel and batteries. This became clear during the long-term participant observation with the smugglers who were continuously dealing with other contraband goods, being well informed about the dynamics of supply and demand in specific locations. As one smuggler explained: ‘it is too dangerous to focus on one commodity. For example, I myself mostly deal in cigarettes, because they are very profitable. However, the market can suddenly become flooded with cigarettes, because of which I am stuck with my cigarettes. It therefore is better to trade in other commodities as well!’52

Our interviews and participant observation revealed that for bigger traders illegal minerals were also part of this regional trade:Ugandan smuggler J is one of the biggest traders of north western Uganda. His main commodities are cigarettes, batteries and minerals. He buys gold in eastern DRC, sells it in Kampala, Mombasa, Nairobi or the Far East, where he buys other manufactured goods such as cigarettes and batteries. These are in turn exported to eastern DRC, where he buys minerals.53

J was representative of many other bigger traders engaged in illegal commodities. The smuggling networks trade in a variety of goods; cigarettes are at the centre but they are connected to other goods such as smuggled minerals, which makes them ideal for other criminal organisations—such as rebel groups—to tap into the trade. This is what happened in eastern Congo, as explained in the next section.

Cigarette smuggling and the war economy in eastern DRC

The presence of criminal organisations, such as rebel groups, facilitates cigarette smuggling, and smuggling played a direct role in the war economies in north eastern DRC, bordering Uganda and Sudan (see figure 1). From 2003 to 2005 the rebel group Armed Forces of the Congolese People (Forces Armées du Peuple Congolais, FAPC) was in power in some areas of north-eastern DRC, controlling the important trading towns in the area.29 This rebel group financed its activities in several ways. First, it controlled taxation policies in the area. Second, it controlled the extraction of minerals in the area.54 Third, it financed itself through the ‘monopolistic control over key export trades’.30 Although international reports54 mainly focus on the trade in minerals, another key export trade is the trade in cigarettes, especially the Supermatch brand manufactured in Kenya.29

As demonstrated above, these smuggling networks are organised on a regional basis, something which the rebel group was not able to control. They could only control one part of this trading network and therefore had to rely on a range of actors in structuring this regional trade. The rebels therefore directly cooperated with the large-scale traders mentioned above. The UN reports accuse Ugandan and Congolese traders of helping the rebel group control regional networks of smuggled goods such as cigarettes.29 30 The profits of this trade were shared between the rebel group and the traders.55

The coalition of smugglers and rebels had a monopoly on the sale of cigarettes in the area; in which Supermatch cigarettes played an important role. It cooperated with a number of local traders, who shared the profits. Other actors wanting to enter this market had to act through this coalition. According to former rebel administrators, smugglers and customs officials, the rebels pushed out other Supermatch traders and had privileged arrangements with the Supermatch manufacturers: ‘orders were placed upfront at the Kenya factory and they made sure they had a monopoly on Supermatch: they were in charge here, and they did not fear to use their guns. The other Supermatch traders had no choice but going away or cooperating with rebels.56 A Congolese civil servant who is a former rebel administrator, explained: ‘the rebel leadership used their position to engage themselves in this business and push out other traders’.57

The coalition also controlled the smuggling of cigarettes back into Uganda, as tax evasion was made easier through cooperation with officials on both sides of the Uganda-Congo border.29 30 For example, a UN Group of Experts report showed that at the Ugandan customs points ‘normal citizens were usually inspected and registered, whereas FAPC members were registered inadequately or not at all’.29 The report also shows how the rebel movement benefits from negligent customs supervision, in which the FAPC ‘benefits directly from unchecked imports from Uganda, which could readily contain arms, ammunition or other military supplies’.30 These factors greatly eased cigarette smuggling.

Interviews with smugglers also made clear that smuggling was much easier during the FAPC regime. One smuggler explained: ‘During Jerome's time, things were so much easier: you received direct transport and escort! There was no payment on the road, and you were always protected! You did not even have to hide your goods.’58 A UN report for example show how, in June 2005, the Congolese army confiscated Supermatch cigarettes smuggled into the Congo with an excise tax value of approximately US$230 000. In reaction, local Ugandan army officers threatened to intervene militarily if the cigarettes were not released by the local authorities. The cigarettes were handed back to the smugglers.30

Thus cigarettes allowed FAPC to make profits in two locations: some of these illegal cigarettes were sold on the Congo side of the border and some were smuggled back into Uganda. As the UN Group of Experts argued, not only did this smuggling network sustain the rebel movement, it also created a permissive environment for the trafficking of weapons in the region.30 The rebel movement was also engaged in major human rights abuses such as summary executions, executing and torturing political opponents, arbitrary detention and torture, tolerating abuses by business allies and the abduction of children to use as child soldiers.54 59 Thus the income derived from trading activities, including cigarette smuggling, financed a movement that committed human rights abuses.

In summary, the cigarette trade helped finance FAPC and the war economy also proved extremely advantageous for the Supermatch brand: it gave them a strong sales position in the areas controlled by the rebel force, and it not only generated short-term financial gain but also long-term corporate advantage, as the product was introduced to large segments of the population. During the rebel regime Supermatch cigarettes were widely available and very cheap. As argued in the introduction, in the low-income context of Uganda and the DRC price is a key factor for cigarettes. During the FAPC regime Supermatch were sold at an incredibly low price, $0.37 per packet, thus increasing consumption.

The Supermatch brand

Supermatch is a very popular cigarette brand among smugglers in this region and the FAPC relied on them to finance its activities. Supermatch has been a particularly controversial brand in Uganda. Manufacturers Mastermind Tobacco have been accused of being involved in various tax evasion scandals.60 Press articles report how in April 2000 its factory was closed down by the Uganda Revenue Authorities (URA) on suspicion of tax evasion.61 In October 2002 Mastermind Tobacco was raided and closed by the Ugandan authorities, accused of the production of counterfeit cigarettes. Press reports claimed that Supermatch cigarettes sold on the Ugandan market with a ‘Made in Uganda’ label were coming from Kenya but were packed in Uganda.62 Moreover the owner of Mastermind Tobacco, Franco Mugabe, was accused by the UN Group of Experts of being directly involved in smuggling cigarettes with the rebel movement FAPC. A UN report identifies him as one of the Ugandan businessmen participating in the smuggling of Supermatch cigarettes.30

Tribert Ayabatwa Rujiguro, the CEO of the Mastermind group (producing Supermatch) has also been accused of being involved in a number of cases of tax evasion. For example, the South African Revenue Services (SARS) halted the operations of his factory Mastermind South Africa in November 2006 in a $7.8 million (57 million rand) fraud case.63 There are also press reports of tax evasion on Supermatch cigarettes in some Congo provinces.63 Finally, press reports claimed how in January 2009, nine containers of Supermatch cigarettes produced by Mastermind Tobacco were confiscated as contraband in Ghana. The cigarettes were manufactured in the United Arab Emirates, stamped with fake ‘Sale in Ivory Coast’ stamps and destined for Mali, where, it is presumed, they were not sold.64 65 Lastly, the importance of Supermatch is also reflected in the legal sale figures. Table 2 shows the legal sales of Mastermind and BAT in Uganda (BATU).

Table 2

Legal cigarette sales in Uganda (millions of sticks)72

This table clearly shows how BAT and Mastermind (Supermatch) are the two main players in the legal Ugandan market. The fact that Supermatch cigarettes played an important role in regional smuggling networks66 therefore particularly caused problems for its main competitor, BAT. Supermatch is a particularly cheap cigarette, targeting the lower end of the market. BAT—largest corporate taxpayer in Uganda—is naturally also targeting this lower market segment. However, no similar evidence of involvement of BAT in smuggling practices was found, and BAT brand cigarettes were also less present in the smuggling networks in this region.

Discussion

Some governments have been influenced by the argument that tax/price increases lead to higher levels of smuggling.18 This research illustrates another key factor explaining why cigarette smuggling is often higher in low-income countries where prices are lower: corruption and weak state capacity. In this context cigarette smuggling is an attractive option as tax can so easily be avoided, not only for traders but also for other criminal elements in the region, including rebel groups. As there are ‘blood diamonds’, so we would label smuggled cigarettes in this region ‘blood cigarettes’: cigarettes responsible for financially sustaining rebel groups responsible for grave breaches of human rights.

These smuggling practices also undermine effective health policies by increasing consumption through low price, low-income smokers being particularly sensitive to price.67 68 In Uganda and DRC per capita GDP is, respectively, just $1149 and $330.69–71

There is therefore a need for comprehensive supply control and enforcement legislation to tackle this behaviour, at a corporate level and through criminal prosecution of individuals, which might act as a deterrent for interaction with rebel groups. However such legal mechanisms are particularly difficult in the context of weak states such as Uganda, DRC and Sudan, who might benefit from technical assistance with tasks such as drafting legislation, developing and maintaining tracking mechanisms, and investigation and prosecution of alleged offenders.13

The best option for effective international action is the WHO FCTC and its illicit trade protocol, currently being negotiated. The protocol seeks to enhance international cooperation, and to introduce supply control measures such as licensing, tracking and tracing, record keeping and due diligence. These measures could facilitate investigations into smuggling operations and make the industry liable for controlling the supply chain. The global scope and multifaceted nature of the illicit tobacco trade requires a coordinated, international response.

What this paper adds

  • Previous research on cigarette smuggling in Europe documents how smuggling is not primarily the result of different taxation levels but rather of fraud. This paper adds previously unavailable insights on how cigarette smugglers operate in eastern and central Africa through the use of qualitative and ethnographic data. These data allow detailed insight into the human mechanisms and consequences of smuggling, and the weak implementation enforcement mechanisms. They show how cigarette smuggling in Africa is the outcome of weak state capacity, high corruption levels and the activities of rebel groups.

References

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Footnotes

  • Funding KT's work on this project was supported by the Research Foundation, Flanders and the Institute for Development Policy and Management, University of Antwerp, to whom he is extremely grateful.

  • Ethics approval Field research was conducted by the first author. His research followed all necessary research protocols of both his funding institution (Research Foundation, Flanders) and his research institute (Institute of Development Policy and Management). As this research project did not involve trials on humans or animals, the codes of ethics in Belgium do not require a separate and specific ethics review for financing this project. However, the research institute of the first author verifies through its screening and monitoring procedures that relevant ethical standards are adhered to by the staff employed.

  • Provenance and peer review Not commissioned; externally peer reviewed.

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