South Africa’s R280 Billion Illicit Economy: Illegal Mining and Gambling Drain Public Revenue

JOHANNESBURG, Gauteng — South Africa’s illicit economy is now estimated at R280 billion, with illegal mining standing as the country’s largest illicit market at around R60 billion. According to Dr. Azar Jammine, Director and Chief Economist at Econometrix, this sprawling underground market is severely draining public revenue, stifling job creation, and undermining essential service delivery across the nation.

While illegal mining represents the most significant share of illicit activity and causes substantial job losses, Dr. Jammine noted that its relative loss of tax revenue is actually smaller compared to illicit tobacco and gambling. These latter sectors exert a far greater negative impact on the national fiscus, despite not holding the largest share of the overall illicit market.

The current R280 billion estimate is derived from an analysis of 12 different economic sectors. Dr. Jammine emphasized that this figure likely underrepresents the true scale of the problem, as other critical areas—most notably the financial sector—have not yet been analyzed and would almost certainly add to the total size of the illicit economy.

The proliferation of illicit alcohol and gambling has also surged dramatically. Gambling market penetration has now exceeded 60%, driven by a rapid and phenomenal shift from traditional brick-and-mortar casinos to online gambling platforms. This digital transition has become one of the most significant drivers of recent job losses in the country.

On the surface, the direct impact of these activities on Gross Domestic Product (GDP) appears to be around R90 billion, or roughly 3% to 4% of total GDP. However, Dr. Jammine cautioned that indirect impacts are vast, complex, and difficult to quantify. More critically, the estimated loss in tax revenue—such as VAT and other levies—stands at approximately R68 billion.

Highlighting the severe opportunity cost of this lost revenue, Dr. Jammine outlined what the government could have afforded if that R68 billion had been retained. The funds could have been used to employ an additional 140,000 teachers, 125,000 nurses, or 170,000 police officers. Alternatively, it could have provided old-age pensions to an extra 2.6 million vulnerable South Africans.

Addressing the capacity of the state to tackle this growing crisis, Dr. Jammine stressed that success requires a nationwide, consolidated collaborative effort. Rooting out illicit markets and the criminal syndicates that fuel them demands active cooperation between the government, law enforcement agencies, and the negatively impacted private sector.

Without such unified action, the formal sector cannot generate the gains needed to grow the economy and create sustainable employment. Dr. Jammine expressed deep concern that the government may not yet fully grasp the depth of how this explosion in illicit activity impinges on revenue generation, displaces formal production, compromises consumer safety, and deters crucial business investment. Ultimately, this underground economy comes at the direct expense of the significantly higher economic growth that South Africa urgently needs.