The South African Liquor Brandowners Association (Salba) says the relaxation of lockdown restrictions will help some liquor traders, but warned that the last 15 months of bans have come at a significant financial cost to the economy.
South Africa has faced complete alcohol sales bans on four separate occasions since the end of March 2020 as part of the country’s lockdown restrictions.
Salba chief executive Kurt Moore said that the bans have been harmful to both government and business revenue, and are a serious threat to jobs.
“248,759 jobs are still at risk across the industry – about 1.59% of the national total of formal and informal employment for 2020.
“In addition, the alcohol industry lost 161 days of trading between 26 March 2020 to 25 July 2021 due to the government’s alcohol bans.
“Even before the cost of the looting to the alcohol industry is factored in, the four alcohol bans have already cost the country’s GDP an estimated R64.8 billion or 1.3% of GDP,” said Moore.
He said that the industry has repeatedly warned and demonstrated via research that the bans had fuelled illegal activity, particularly among crime syndicates whose positions were significantly strengthened during prohibition.
It will be difficult to reverse this, as syndicates have become entrenched, Moore said.
“Illicit trade has reached 22% of total market volumes in South Africa—worth R20.5 billion in sales value.
“This has cost the fiscus R11.3 billion in tax revenues at a time when the country can least afford it,” said Moore.
Not of the woods
Under the country’s adjusted level 3 lockdown, which came into effect on Monday (26 July), the sale of alcohol from retail outlets for off-site consumption will be permitted between 10h00 and 18h00 from Monday to Thursday.
Alcohol sales for on-site consumption will be permitted as per licence conditions up to 20h00.
Sibani Mngadi, chairperson of Salba, said the partial opening of sales as well as three months deferment in excise tax payments due on alcoholic beverages is a huge relief.
However, he said that the industry is ‘nowhere near being out of the woods’, especially for off-site consumption outlets that continue to be restricted to trading from Monday to Thursday.
“The government’s use of prohibition in response to the Covid-19 pandemic has had devastating consequences.
“There was no justification for the prohibition—implemented with no warning, no consultation and poor empirical justification—that prevented legitimate businesses supporting more than 1,000,000 livelihoods across South Africa from operating.
“These include businesses in the agriculture, tourism, hospitality and manufacturing sectors, and importantly, hundreds of thousands of SMEs.”
Mngadi stressed that legal businesses needed to be allowed to trade without the continual risk of further bans.
Read: Government’s plan to help businesses recover from looting and Covid-19 impact – including tax breaks