Black market trade in e-cigarettes and associated products is being driven by smuggling. Regulating the category will protect consumers, secure much-needed tax revenues, and bolster Egypt’s free-market model.
Restrictions concerning e-cigarettes, or ‘vapes’ as they are often referred to, have resulted in a myriad of illegal vape shops across the country that sell the product and its accessories, which are often smuggled into the country, according to an article on albawaba.com. Furthermore, they have been influential in online trading’s rise to prominence as people seek to acquire the products they require to quit cigarettes altogether.
Egypt’s battle against counterfeit goods is an issue that is neither new nor recent. Unfortunately, no industry is safe from exploitation, and the Egyptian market is full of counterfeit products. Both local and international brands continue to be infringed, and the country is taking every measure possible to eradicate such activities.
Last year, for instance, the Industry Committee of the House of Representatives in Egypt adopted a new legislation against fake branding and products, whether local or global, imposing severe punishments on producers, the article states. And more recently, Egyptian Prime Minister Mostafa Madbouly approved a draft presidential decree on “The Protocol to Eliminate Illicit Trade in Tobacco Products” to implement effective measures to control the supply chain.
Now the popularity of vaping across the country has led to increased demand for products, these too have subsequently entered the realm of the country’s black market. E-cigarettes and associated products are smuggled into Egypt by air, sea, and land from the East and West, making their way into the country in containers, cars or trucks, hidden among other goods, and even concealed under clothing.
The reasons for the restrictions on e-cigarettes being imposed were purportedly a lack of sufficient clinical studies to validate electronic cigarettes’ safety, the unknown long-term health consequences and effect of e-smoking when compared to regular smoking, and products containing toxic substances. However, many leading public health organizations have already acknowledged that these products are a healthier option for smokers who cannot or will not quit smoking, with e-cigarettes being been dubbed by renowned global public health institutions as better alternatives. Public Health England is a prominent example, maintaining its stance that vaping is 95% less harmful than smoking.
The e-cigarette market in the Middle East and Africa alone is forecasted to reach USD 485 million by 2025[1], growing at a rate of 9.74 percent during this period. This is particularly relevant given that Egypt has consistently had one of the largest segments of tobacco smokers in the Arab world for years. As more and more people from this segment continue to adopt vaping, purchases through prohibited channels are also increasing substantially.
Illicit trade of e-cigarettes has led to an underlying need for swift and appropriate regulation to counter black market activity. In addition to creating awareness concerning potential health risks and ingredients used in unregulated products, manufacturers, wholesalers, and retailers would be able to sell e-cigarettes and related products on the condition they meet set standards, undergo stringent quality checks, and carry relevant health warnings.
The introduction of regulations in Egypt will not only boost efforts to combat smoking and the emergence of potentially related diseases; efforts to prevent the unpermitted circulation and distribution of these products without restrictions or controls will also be magnified.
In other markets across the Middle East, including the GCC, suitable regulations for the entry of e-cigarettes into the market have been adopted, dispelling the need for consumers to acquire such products illegally.
The UAE is a prominent regional example where new regulations and standards covering a wide range of electronic smoking products have been approved and brought into effect. The Emirates Authority for Standardization and Metrology (ESMA) announced early last year that the sales and use of e-cigarettes and similar smoking devices would be legalized, which came into effect in April 2019.
Similarly, Saudi Arabia is another Gulf state where e-cigarette restrictions exist. According to Saudi legislation, vapes are classified as reduced-risk products (RRPs), those that have the potential to present less risk of harm to smokers who switch to these products as an alternative to smoking. Furthermore, vaping in the Kingdom is legal for citizens and tourists, although it is restricted in public places, including religious and cultural sites, among others.
The regulations and restrictions enacted in the UAE and Saudi Arabia make a case for an Egyptian ban reversal. More importantly, regulations that would lower contraband trade levels in Egypt is a necessity to mitigate the ongoing tax revenue losses which the Egyptian treasury is incurring.
Rather than smugglers, counterfeiters, and illicit traders pocketing money out of such illegal activities, the Egyptian government is urged to complement its previous decisions – adopting e-cigarette standards and a corresponding fiscal structure – by reversing the existing ban. Doing so will put an end to tax evasion schemes by placing this trade under the authorities’ umbrella, following suit with the majority of Arab, regional and international governments. At the same time, illegal activity and illicit trade, which is linked other forms of serious organized crime in several markets, will also be prevented.
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