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Alcohol ban has a detrimental impact on the economy, says liquor traders’ organisations

The COVID-19 four lockdown restrictions, which resulted in the prohibition of alcohol sales, have led to an estimated loss of R64.8 billion in Gross Domestic Product (GDP), which is 1.3 per cent of the country’s GDP, says sector organisations.

In a joint statement, the liquor trader’s organisation has urged the government to lift the COVID-19 lockdown restrictions, so that they can resume business on July 26, to restore the already bleeding sector.

According to the Liquor traders’ organisations, an estimated R45.1 billion in retail sales revenue has been lost, accounting for approximately 15.6% of projected sales for 2020 and 2021.

The [organisations] estimate it will lose R 20.4 billion on capital goods acquisitions, including transportation, assets, and electricity, corresponding to 0.2% of the total capital formation in 2020.

The sector also lost an estimated 1,59% of formal and informal jobs in 2020.

According to the organisations, nearly 200 alcohol establishments have been damaged during the looting and burned, leaving owners without hope to reopen witch could lead to further job losses.

There is a large quantity of stolen liquor stock worth R500 million currently in the public domain and being sold in the black market.

The four alcohol bans have resulted in a loss of R34.2 billion in tax revenue (excluding excise) and R10.2 billion in lost excise income for the government, putting the country further into deficit.

In the wake of the Coronavirus epidemic, traders say the government’s alcohol ban will cost the alcohol industry 23 weeks of doing business.

“As South Africa assesses the cost of the looting, the alcohol industry calls on the government to repeal the ban on alcohol and work with businesses to provide a clear roadmap to economic recovery,” it said.

The South African Liquor Brandowners Association (SALBA), the Beer Association of South Africa (BASA), Vinpro, National Liquor Traders (NLT), the Liquor Traders Association of South Africa (LTASA), and the Consumer Goods Association of South Africa (CGCSA) have all called for the liquor trade to be opened up as of July 26 for all to operate under license conditions.

“The alcohol industry lost at least 23 weeks (161 days) of the trade from March 26, 2020, to July 25, 2021, due to the government implementing alcohol bans in response to the Coronavirus pandemic.”

“These costs will eventually affect every South African. This is happening at a time when illicit trade flourishes and the government is unable to effectively combat this criminal element, “said SALBA chairperson Sibani Mngadi.

He said the lack of honesty regarding the scientific evidence for repeated alcohol restrictions under the Disaster Management Act increases ambiguity.

“Due to the lack of government advice on what criteria it uses to decide whether to implement, review, or lift a ban, businesses are struggling to plan production, distribution, and future investment. We are at the mercy of politicians whose decisions, under the Disaster Management Act, can affect hundreds of thousands of jobs with little oversight or remedy, “Mngadi said.

According to Mngadi, the industry questions whether banning alcohol sales would decrease trauma admissions, and those lockdowns and curfews could also limit mobility.

The National Liquor Traders Council spokesperson, Lucky Ntimane, said the government hasn’t helped their members get their businesses back on track.

The prolonged ban on the sale of alcohol worsens the dire economic situation of thousands of businesses, many of which are small and black-owned, with no scientific basis for preventing the spread of the Coronavirus, Ntimane said.

Four “booze bans” and recent looting have led to financial ruin for the licensed liquor store channel. What a heartbreaking and terrible thing to experience. If the government doesn’t lift the liquor ban by Monday, July 26, many of our members will lose their businesses and never reopen them, “LTASA Chairman Sean Robinson said.

As BASA CEO Patricia Pillay notes, the recent looting and burning of alcohol outlets and distributors in KwaZulu Natal and Gauteng have not only put a strain on our sector, they have strengthened the illicit market, with stolen alcohol readily available in these communities.

“This only makes the current restrictions more absurd. In such hard economic times, lawful enterprises must be allowed to trade, “Pillay said.

According to Rico Bassoon, the Managing Director of Vinpro, South Africa’s wine and tourism industries are facing a collapse, resulting in mass layoffs.

“We felt compelled to challenge the national alcohol ban in court on an urgent basis to demand provincial deviations to allow off-and-on-site consumption of liquor,” Basson said.

In response to the turmoil and trading restrictions placed by the Disaster Management Regulations, the CGCSA declares that the supply chain to the liquor industry must be opened to facilitate recovery and avoid job losses.

The CCGSA said that its members have been providing food relief and security to areas affected by recent unrest, but that alcohol restrictions make it economically difficult to continue relief efforts since the liquor business heavily subsidises grocery stores.

“The restriction on the sale of liquor products creates a serious financial issue for independent small and medium-sized enterprises, a significant portion of which are black-owned companies,” added CGCSA.

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