At a two-day high-level meeting hosted by the National Employers' Confederation of Senegal (CNES) in Dakar which recorded strong recommendations and high level of engagements on the above topic, Mr. Alessandro Poggiali, vice president, corporate affairs, Middle East, Africa and PMI Duty Free, who was one of the panelists speaks to CHIMA AKWAJA on the policies of Philip Morris International on the critical issue of illicit trade.
What is the overall situation of illicit trade worldwide and particularly in countries in sub-Saharan Africa?
We have given two quality days to discussing this critical issue, which, to me is a common issue of different factors. I would say illicit trade of goods in general is pretty important all over the world. The more there is a demand of the product, the more the smugglers are interested in supplying it. So, you will find illicit trade in different domains, from electronics, to medicine, toys, tobacco or whatever and just to give you a few figures, the size of illicit trade of tobacco is one thousand billion of US dollars.
If we situate it in the context of the financial volume and the missed fiscal revenue generated from it that can be accounted to $50 billion. You can imagine things you can do with $50 billion. I am sure if those $50 billion were available in any country in the world, the government would be able to do many things with it. Illicit trade is a complex issue as we said because it includes a number of interests which are being touched. It includes the consumer interest being damaged because they have access and purchase products which are not legally compliant with the specific regulations of a market.
Some anti-tobacco organizations, particularly in Senegal, claim that the tobacco industry is involved in the organization of the illicit trade. What can you say about that allegation?
I can say that it is an allegation! Our company, Philip Morris International, is doing really their best to fight illicit trade. I can give you few examples. Firstly, we have established a department which is fully dedicated to illicit trade, with expertise coming from different countries in the world and with different type of expertise dedicated just to fight that phenomenon. Secondly, we are entering into corporation agreement with multiple countries throughout the world to fight this phenomenon.
Specifically, we have signed around 50 memorandum of understanding all over the world and the signers of those memorandum of understanding have identified and helped shut down almost 50 illicit factories last year. Thirdly, we are putting a significant amount of resources in a fund which is called PMI IMPACT managed by a group of independent experts, we just provide the funds, we don't interfere with how it will be used, and we have put in this fund a total of $100 million and it will be accessible to public and private institutions with projects to fight criminality and illicit trade. I think illicit trade is a complex issue which needs to be fought collectively. We can do our part and we are ready to do our part but we also need to have clear views from regulators on what is a legal operator, what is not a legal operator and we need a system of sanctions.
There is a lot of talk about the security aspects of illegal trade, is there really a link between illicit trade of tobacco products and terrorism for instance?
This was what came out very strongly during these two days at the conference, that illegal trade is not only an issue when it comes to tobacco because the profit of those illegal trades tends to go to organized crime, with a likelihood of financing terrorism and moreover the routes that those products go through are very much similar to the routes for other illegal products. For instance, weapons, drugs, etc., so it's definitely a risk we would say.
What are the solutions to be put in place and what is Philip Morris committed to doing to fight against illicit trade?
I think illegal trade can only be fought if we are all together, because of its magnitude being very big, we need to fight it collectively. So definitely, public-private partnership is an approach which we support and we believe we can contribute to the solution this way. Being part of the solution, we can share with the authorities' intelligence, experience, and also facilitate access to technology. This is part of why as I said before, we are entering into multiple memoranda of understanding in many countries to address that specific need.
We are doing all we can. And, why are we? We are doing all we can because first of all, it is the right thing to do. Secondly, because it is the right thing for our business. It is unfair to compete with a player that doesn't pay taxes. This also applies to every other legal player, and then it is seriously undermining the governmental objectives on taxes, revenues, control and developmental efforts. We are making resources available through PMI IMPACT, we are sharing the best practices coming from all over the world and we are facilitating access to technologies. We are also suggesting that there should be regulatory and fiscal solutions which can definitely contain if not eradicate illicit trade and the basic principle is that everybody should pay the same taxes.
What is your company's ambition for the future?
I will share with you a recent journey my company has embarked on. It has not a lot to do with illicit trade but has a lot to do with our role as a corporate citizen. We have embarked on a journey which aims to transform the tobacco industry. This might be found ambitious for the leading tobacco firm but we feel that this is actually the right thing to do. We have invested billions of dollars in developing products which are a better choice for consumers.
We have launched these products which are not combustible in multiple countries in the world to make them accessible to the millions of men and women who choose to continue to smoke. We have developed a research and development process by which we assess those products and their potential effects on health. All the data we are collecting including recent independent third party data, are pointing in the same direction that this product is potentially a better choice for smokers