The positive economic impact of SA’s vaping industry

by | Apr 11, 2022 | News | 0 comments

Sure, the e-cigarette movement is all about a healthier alternative to tobacco products, but have you ever given any thought to how the vapour industry makes a substantial contribution to the South African economy as well?

Budget 2022’s announcement of the introduction of a tax on vape products from 1 January 2023 has been anticipated for some time now (more about that next time), but let’s unpack just how significant an impact this niche but growing industry has on the country’s economic growth.

The stats don’t lie

Commissioned by the Vapour Products Association of South Africa (VPASA), and undertaken by NKC African Economics, The Economic Impact of the Vaping Industry in South Africa study looks at the industry’s economic contribution in terms of gross value added (GVA) contribution to gross domestic product (GDP), employment and tax revenue. The results make interesting reading.

Released in 2021, and looking at research results for 2019, the study shows that in 2019, the industry contributed R2.49 billion in GVA to the economy, paid R710 million in taxes, and employed approximately 9 500 people.

And then along came lockdown …

… and the banning of the sale of tobacco and vaping products. According to the VPASA, approximately R100 million in revenue was lost in the first four months of the lockdown by the vaping industry. Before lockdown, estimates stood at about 350 000 vapers in South Africa, with the e-cigarette market valued at about R1 billion.

The silver lining

The resilience of the industry is not to be underestimated. A study by global management consulting firm Canback revealed that the local vaping market grew by an average of 10% a year over the past decade, and the growing demand for vaping products is expected to generate more than 14,000 jobs by 2027, with growth in related employment of 13% annually during the same period. Those are some pretty significant growth forecasts.

Takeaway

In a country like South Africa, where small to medium enterprises constitute more than 98% of trade and employ up to 60% of the country’s workforce (according to McKinsey & Company), entrepreneurship and job creation are areas where the vapour industry can make a significant contribution towards a post-COVID-19 recovery, and to economic growth – areas where any contribution is to be welcomed. 

* About the Vapour Products Association of South Africa

The Vapour Products Association of South Africa (VPASA) works together with the government and other stakeholders to develop legal regulations and standards for the vapour products industry, and to ensure consumers have access to information related to vapour products and their effects. Vaper’s Corner is a proud member. Read more about VPASA here.

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