Groups representing players in SA R140bn liquor industry are pleading with President Cyril Ramaphosa to lift the ban on alcohol sales arguing that its contribution to the economy far outweighs the harm it causes due to the irresponsible drinking.
The liquor industry, which contributes 3% to SA’s GDP and is responsible for more than 1-million jobs, was dealt a heavy blow earlier in July when the government again banned alcohol sales, arguing that the move would reduce the alcohol-related trauma load on hospitals and free up desperately needed resources for Covid-19 patients.
This was the second ban. The first prohibition, which came into force when SA entered the strict lockdown at the end of March, lasted about 10 weeks, costing the industry R18bn in lost revenue and 100,000 jobs. The industry is worth about R140bn.
In a joint letter to Ramaphosa dated July 21, industry representatives including the National Liquor Traders Council, Liquor Traders Association of SA, Restaurant Association of SA and Business Leadership SA said the government was losing an estimated R4.2bn in excise duty and VAT because of the ban. This is at a time when government finances are under enormous strain due to the health crisis.
“The previous 10-week suspension has potentially cost over R10bn in lost revenue. It is worth comparing this lost monthly revenue to the total amount donated to the Solidarity Fund of R2.86bn since its inception four-and-a-half months ago [to help support SA’s health and welfare response to the Covid-19 crisis],” the industry representatives said in the letter.
They said the legal alcohol industry, which complies with regulations and contributes to excise duty, is being replaced by an illicit alcohol trade that doesn’t contribute to the fiscus and increases criminality.
“The lost opportunity of this enormous potential income is devastating. Imagine the number of small businesses that could be supported, the hospital beds that could be funded or indeed the number of people that could be fed as hunger grips our nation,” the letter said.
The industry representatives also highlighted the devastating effect the ban is having on employees, workers and their families.
There are “nearly 1-million South Africans who rely on the alcohol industry for their income and hence their survival, many of whom now face an uncertain future with job losses inevitable.
“We urgently seek consultation and collaboration with you, Mr President ... We acknowledge that the irresponsible or excessive consumption of alcohol can have a negative impact on people’s lives. Our pledge to you and your leadership is that leaders in our industry want to work with leaders in government to find solutions to minimise the harmful effects of over-consumption.”
The industry requested a meeting with Ramaphosa to obtain clarity on how long the alcohol suspension will remain in place and on the conditions under which the lifting of the alcohol suspension will occur.
Modelling by the Medical Research Council, presented to the government in July, estimated that an eight-week ban on alcohol sales would result in 50,000 fewer trauma cases presenting at hospitals. This could result in R1.3bn in savings, freeing up enough resources to treat 17,755 Covid-19 patients in general wards, or 12,947 in ICU wards.
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