SALBA welcomes partial lifting of alcohol ban

Media Release

• Three months deferment of excise tax payment provides much-needed reprieve for the sector
• Alcohol industry plays a critical role in economic recovery
• Government urged to work with business to define a clear and detailed path to economic recovery
• Sector calls for transparency on the scientific basis for decision making, especially in limiting off-consumption trade to Monday to Thursday

The South African Liquor Brandowners Association (SALBA) has noted the government’s partial relaxation of the alcohol ban. Late last week SALBA had called for an opening up of liquor trade from Monday, 26 July.
Sibani Mngadi, Chairperson of SALBA, said, “The partial opening of sales as well as three months deferment in excise tax payments due on alcoholc beverages is a huge relief, but we are nowhere near being out of the woods, especially for the off-site consumption outlets that continue to be restricted to trading Monday to Thursday with no rationale or evidence provided for this decision, in spite of our many requests to secure this from government.”
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.”

“Right now, our focus is on economic recovery, and the role our industry can play is critical,” said Mngadi.
Mngadi stressed that legal businesses needed to be allowed to trade without the continual risk of further bans. The irrational and arbitrary bans have threatened the lives and livelihoods of tens of thousands of people. In addition, the recent looting and destruction of liquor stores have left many small traders and independently owned liquor stores in financial ruin, some of which may never recover. The combined impact of the alcohol bans and recent looting has also caused irreparable reputational damage to South Africa from an investor confidence and international tourism perspective.

SALBA CEO, Kurt Moore welcomed the three months deferment of about R2,5 billion worth of excise taxes that SALBA had applied for at the beginning of the latest ban.
“These bans are harmful to both government and business revenue and they are 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 R64.8bn or 1.3% of GDP,” said Moore.

The industry 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. “Illicit trade has reached 22% (nearly a quarter) 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.

The alcohol industry said it was now time for the government to sit down and work alongside businesses to define a clear and detailed path to economic recovery. It called for the government to implement practical steps to get the economy into recovery mode and work with the alcohol industry and help SA get back to business.
The alcohol sector welcomed the news that according to the National Centre for Communicable Diseases, the number of COVID-19 cases was dropping or stabilising in most provinces. In addition, it commended the government’s ongoing rollout of the vaccination programme, the most effective way to reduce the spread of infections.

Issued by FTI Consulting on behalf of the South African Liquor Brandowners Association (SALBA).
For interviews, or further information, please contact:

salba@fticonsulting.com