Tobacco regulations will limit investment, job creation and have significant impact on small businesses writes Warren Dreyer. Photo: Bloomberg
JOHANNESBURG - Tobacco regulations will limit investment, job creation and have significant impact on small businesses.

President Cyril Ramaphosa's commitment to implementing the kind of changes that will put South Africa on a trajectory for growth is by now well known.

These changes include putting in place the kind of economic and policy climate that will encourage and attract investment, both local and international.

The president, in his State of the Nation address, also spoke of the importance of reducing the regulatory barriers that prevent small businesses from prospering.

As the owner of eight specialist tobacco stores, employing close to 60 people, I am deeply encouraged by these commitments.

I am, however, deeply concerned that the tobacco legislation that has just been approved by our cabinet will undermine everything our new president is aiming to achieve.

The new legislation, published for comment on Wednesday this week, prohibits the display of tobacco products across all retail outlets. This means that as a specialist tobacconist, I will be prohibited from displaying the actual product that I sell.

I have earmarked capital to increase my current investment from 13 to 18 stores in 2018/2019. This is a significant investment for a small business such as mine, especially considering the high cost of rental space in malls and investment in securing product, equipment and the right staff.

Now it is obvious that if this legislation were to be approved, my business, like hundreds of specialist tobacconists across South Africa, will be directly and significantly impacted. Many of us will need to close our doors, or at least retrench employees.

So often in the past we have seen how the unintended consequences of regulations wreak havoc in an industry or a profession far beyond those ever envisioned by the bureaucrats and policy makers. This is why the potential impact of a policy needs to be properly investigated and affected parties consulted, before the law is drafted.

The Department of Health’s stated rationale for these point-of-sale restrictions is to curb impulse purchases by consumers, prevent the triggering of a craving in ex-smokers, and prevent young people from taking up the habit. However, I cannot see how restricting the display space in a specialist tobacconist store will address the department's concerns.

Specialist tobacconists, by the virtue of what we sell, are not a destination for impulse shoppers. What’s more, we already comply with strict regulations. We don’t sell to customers that are under 18 years of age.

If the government sincerely wants to curb smoking, it could do so in a way that addresses the problem while not interfering with the livelihoods of small business owners.

A good start would be to impose formal age restrictions for those who may enter tobacconists, penalise proxy purchasing and launching education campaigns which would yield the kind of successes that the department wants.

My plea is that the government, including the president and his advisers, consider very carefully the impact that this sort of legislation will have on all sectors of industry and society, on our sustainability as small business owners, and on our ability to retain and create jobs.

More specifically, our call is for the Department of Health to exempt specialist tobacconists, whose very existence hinges on their ability to display their wares.

The Minister of Health is a member of the cabinet. He is well aware of the economic challenges facing South Africa right now, and the value of encouraging the growth of small business.

This regulation is not his only option. There are alternatives available which could help achieve the same objectives without the unintended consequence of damaging the economy or destroying small business. I can only hope he makes the right choice.

Warren Dreyer is the owner of JJ Cale Tobacconists.

The views expressed here are not necessarily those of Independent Media.

- BUSINESS REPORT