South Africa: Zama Zamas Now Biggest Illicit Market, R60 Billion in Illegal Mining

• Illegal mining, driven by "zama zamas," is South Africa's largest illicit market, valued at R60 billion annually.
• The country's overall illicit economy is conservatively estimated at R280 billion, with mining, gambling, and illicit tobacco accounting for 58% of this total.
• Illicit trade reduces South Africa's GDP by R126 billion and leads to R193 billion in forfeited formal production, displacing over 87,000 direct jobs.
• South Africa loses at least R68 billion in tax revenue each year due to illicit trade, hindering funding for essential public services.
• The British American Tobacco factory in Heidelberg is closing, ceasing local manufacturing and relying on imports, as a direct consequence of illicit trade.

The pervasive nature of illicit trade extends far beyond specific industries, inflicting widespread damage across the entire South African economy.

A recent report by Econometrix has revealed that illegal mining, primarily driven by "zama zamas," now constitutes South Africa’s biggest illicit market, surpassing even the long-standing issue of the illicit tobacco trade. This comprehensive study, published on Thursday, estimates the nation's overall illicit economy to be a staggering R280 billion, spanning across 12 distinct sectors. Within this vast underground network, illegal mining alone accounts for an estimated R60 billion, making it the most significant contributor.

The report highlights that illegal gambling follows closely at R55 billion, with illicit tobacco representing R45 billion. Together, these three sectors are responsible for 58% of the country's total illicit economic activity. The "zama zamas," or illegal miners operating in both abandoned and active sites, pose a substantial threat to the formal mining industry. Their activities undermine the viability of legitimate companies across the commodity spectrum, impacting operations involving precious metal ore, platinum group metals, gold-bearing material, and rough diamonds. This Econometrix illicit economy report SA underscores the profound challenges facing the nation's economic stability.

The pervasive nature of illicit trade extends far beyond specific industries, inflicting widespread damage across the entire South African economy. The Econometrix and Consumer Goods Council report indicates that the country's regulated economy is R126 billion smaller than it would otherwise be, while compliant businesses forfeit an alarming R193 billion in formal production. This widespread illicit activity crushes legal enterprises, erodes tax revenue, displaces jobs, exposes consumers to potentially unsafe products, and actively fuels organised crime.

A direct consequence of this illicit trade is the displacement of over 87,000 direct jobs, representing formal employment opportunities that fail to materialise. This exacerbates South Africa's already critical unemployment crisis, which reached 33.6% in the second quarter of 2026—the highest level recorded since the second quarter of 2022. A stark illustration of this impact is the impending closure of the British American Tobacco (BAT) factory in Heidelberg by the end of the year. Following this shutdown, BAT will cease manufacturing cigarettes in South Africa, opting instead to import products to meet domestic demand. Ilse Fieldgate, head of economic consulting at Econometrix, emphasized that by diverting demand from legitimate firms, illicit trade suppresses formal production, wholesale activity, logistics, retail, distribution, and related business services, thereby constraining job creation and limiting opportunities for skills development.

The financial drain from illicit trade has severe implications for public services and national development. South Africa loses at least R68 billion annually in tax revenue, a figure comparable to other estimates of tax losses, encompassing value-added tax, excise tax, fuel levies, and customs tax. This substantial illicit trade tax revenue loss South Africa directly impedes the government's capacity to fund essential public services such as infrastructure, healthcare, education, policing, housing, social protection, and industrial development.

The report highlights that this forfeited revenue places increased pressure on government borrowing and debt-service costs. Theoretically, if this lost revenue were recovered, it could enable the onboarding of nearly 145,000 teachers, over 122,000 healthcare workers, or 171,000 police officers into the public sector. The findings of this critical Econometrix and Consumer Goods Council report paint a grim picture of the nation's future, with its economic growth struggling to consistently exceed the 1% annual mark, hindering its ability to create meaningful employment and improve citizens' lives.

The report's findings on the escalating scale of illicit trade, particularly illegal mining, signal increased compliance risks and potential enforcement actions for businesses in affected sectors. Lawyers and compliance officers should advise clients on strengthening supply chain integrity, conducting enhanced due diligence, and preparing for potential regulatory crackdowns or increased tax audits as authorities seek to recover lost revenue and combat organised crime.

Source: Original reporting via Econometrix and Consumer Goods Council