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South Africa: Bargaining power of cannabis outshines rand's record
Business Day, SA
Monday 14 Apr 2003 THROUGHOUT last year, as the prices of imported goods skyrocketed in the wake of the rand's collapse, something strange happened in SA's hard drugs market. Strange, rather, is what did not happen: the street value of crack cocaine, heroin and ecstasy remained stable. It appeared that SA's drug market was immune to currency fluctuations. Even before the rand's crash in late 2001, analysts had noticed something odd. Ever since SA markets for crack and ecstasy began expanding in the mid-90s, the local prices of these drugs were so low it was possible to reexport them at a healthy profit. Some speculated that large syndicates were growing SA's infant drug market by subsidising it. Others said that the quality of drugs sold on SA's streets was poor and declining. There is a far more plausible explanation, offered by crime analyst Ted Leggett: hard drug importers are not paying for their merchandise in rands, but are bartering it for SA cannabis. "If this is in fact the case," Leggett writes in his book Rainbow Vice, "cannabis is more than a harmless local herb. Without dagga, we would have to be paying for our hard drugs with the weak rand, which might price them beyond the reach of any but the most fanatical and criminally inclined addicts." Anecdotal evidence that this is indeed the case is weighty. In the 1980s, SA's cannabis export market was tiny. "Dagga was exported as a part-time occupation by a few white businessmen," a detective in the Organised Crime Unit told me recently. "They'd use their profits to upgrade their boats at their houses on the Vaal." By 1999, the British Home Office had reported that SA had become the largest supplier of cannabis imported into the UK. Something monumental had happened in the interim. What happened is not difficult to discern. In the early 1990s, small communities of west Africans settled in Swaziland and Lesotho, some because they provided easy access to SA, others because Swaziland in particular served as a useful transit zone for goods smuggled from Maputo to Johannesburg. These communities found themselves within spitting distance of the finest cannabis fields on the subcontinent. Grown by peasant and subsistence producers, Lesotho and Swazi cannabis is dirtcheap. Yet on the streets of London and Glasgow, it wholesales for as much as £1000 a kilogram. Indeed, the primary export cost is the avoidance of detection; bulky, 1kg bricks of cannabis (compressed with hydraulic jacks) must be transported to port cities, safely warehoused and then disguised as legitimate exports. (Rooibos tea was a common cover used in the late 1990s.) In a barter economy, SA cannabis is gold. For those capable of moving large volumes of dagga, the US dollar cost of buying crack or heroin is laughable. I am not saying that the bartering of cannabis for hard drugs was dreamt up by some underground trade fundi who worked out that trading in the weak rand could be avoided, nor that SA traders had to wander the globe asking cocaine and heroin producers whether they had any use for cannabis. Commodity exchange has always had a pivotal place in the illicit economy. What is new is SA's integration into underground trade markets. As Leggett writes, "We don't have to trade dagga directly with Afghanistan or Burma in order to get heroin back, because international brokers service a network of supplies and demands at once. Cash is taken from countries with hard currency, and commodities are shuffled between all the rest." Indeed, few successful SA-based illicit traders specialise in trading specific commodities; their success lies in their access to smuggling routes along which a host of commodities is exchanged drugs, vehicles, credit cards, cellphones, precious stones, small arms, counterfeit clothes and cigarettes. The key to making a great deal of money is to monopolise the export of low-cost commodities that trade for high values on illicit commodity exchanges. The availability of drugs at dirtcheap prices on Johannesburg's streets is just one manifestation of SA's integration into underground markets. There is a host of others, but they remain woefully underresearched. One place to look is the export of SA abalone; it is taken out of the sea for next to nothing and sells at astronomical prices in the east. What is SA getting in return? More ominously, another area of investigation is trade in stolen cars and cellphones; it is possible that international trade is expanding the market for goods acquired through violent crime. Steinberg is a freelance writer.
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