Booze bans cost SA’s GDP an estimated R64.8bn, says liquor industry

The four bans placed on liquor sales during the Covid-19 pandemic have cost the country’s GDP an estimated R64.8bn.

This is according to the SA Liquor Brand owners Association (Salba), who said the bans came at a significant financial cost.

The first ban was enforced in March 2020, followed by a second in July and the third in December. The fourth ban was placed on June 28 2021 and was lifted on Sunday after 28 days.

Salba chairperson Sibani Mngadi said the R64.8bn excluded the cost of recent looting in KwaZulu-Natal and Gauteng. He said more than R500m liquor stock was looted during the violence and destruction in the provinces.

“This is a cost every South African has to bear in the future,” said Mngadi

He said the four bans on alcohol sales resulted in a total loss in retail sales revenue of R45.1bn, or equivalent to 15.8% of the sector’s projected sales for 2020 and 2021.

Excluding the impact of the recent looting, he said 248,759 jobs were at risk across the industry.

The four bans are also said to have led to tax revenue losses, excluding excise, of R34.2bn and R10.2bn in lost excise revenue for the government over the period, pushing the country further into the red.

The potential total capital formation lost as a result of the latest four-week ban alone is estimated to be R20.4bn.

“The combined impact of the alcohol bans together with the recent looting has caused irreparable reputational damage to SA from an investor confidence and international tourism perspective,” said Mngadi.

He said Sunday's announcement to lift the ban was a huge relief but the industry was not yet “out of the woods”.

“The partial opening of sales, and three-month deferment in excise tax payments due to alcoholic beverages, is a huge relief — but we are nowhere near being out of the woods, especially for 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,” said Mngadi.

Salba CEO Kurt Moore also welcomed the three-month deferment of about R2.5bn worth of excise taxes, which Salba had applied for at the beginning of the most recent ban.

In his address on Sunday night, President Cyril Ramaphosa said there would be a deferral of pay-as-you-earn (PAYE) taxes for three months, with an automatic deferral of 35% of PAYE liabilities for employers with revenue below R100m.

“These bans are harmful to both government and business revenue and they are a serious threat to jobs. Around 248,759 jobs are at risk across the industry — about 1.59% of the national total of formal and informal employment for 2020,” said Moore.

“In addition, the alcohol industry lost 161 days of trading between March 2020 to July 2021 due to government’s alcohol bans. Even before the cost of the looting to the alcohol industry is factored in, the four alcohol bans have cost the country’s GDP an estimated R64.8bn, or 1.3% of GDP.”