Alcohol producers lost P880m due to bans, govt confirms
Mbongeni Mguni | Friday March 12, 2021 15:40
Assistant Investment, Trade and Industry minister, Molebatsi Molebatsi, told Parliament this morning that the three producers, Kgalagadi Breweries Limited, Okavango Craft Brewery and Big Sip, had shed 190 jobs over the same period as a result of declining revenues.
The assistant minister was responding to questions asked by Selebi Phikwe legislator, Dithapelo Keorapetse, who wanted to know the impact of the series of alcohol sale suspensions, as well as what government was doing to help companies and employees affected. Keorapetse also wanted to know how much has been collected in the alcohol levy and whether government has assisted affected businesses from the levy. The legislator also asked the Ministry whether retailers who had bought stock and paid tax, then subsequently watched the stock expire due to trade bans, would be refunded their tax.
In response, Molebatsi described the alcohol industry as “the worst affected” by COVID-19, revealing that 650 outlets out of 4,893 liquor outlets had closed shop as a result of the frequent closures. One of the three producers, Big Sip, also closed down and is currently in liquidation.
Alcohol sales were banned for a total of 103 days in 2020 and another 56 days in 2021, affecting not only the sector directly, but indirectly other downstream industries such as logistics, utilities, travel and tourism as well as advertising.
“The alcohol industry was among the first to close when COVID-19 arrived,” Molebatsi told legislators.
“We had to start with the alcohol industry because of its high risk to COVID-19. Evidence shows that the virus spreads where people congregate and the alcohol industry is a major contributor to that.
“As a ministry we work together with the Health Ministry and the Presidential Task Team. We came together, they showed us the numbers and we agreed that we cannot continue to sell.”
The assistant minister said incidents of non-compliance had been noted in the alcohol industry, with 103 offences recorded since March 2020. These include outlets operating beyond hours, outlets and patrons failing to adhere to COVID-19 protocols and others.
However, Molebatsi was challenged by Sefhare/Ramokgonami MP, Dr Kesitegile Gobotswang, who said there had been no empirical research to show that alcohol was the main driver of COVID-19 cases in the country. The legislator also accused government of unfairly blaming the entire industry for the offences of a few.
“When a bus driver commits offences somewhere, you don’t suspend the entire industry,” he said.
Molebatsi said there had been limited time to conduct research on the links between alcohol and COVID-19, but observations had shown that consumers were congregating in large numbers without observing the protocols. He further said the liquor trade ban that occurred from January 4 to February 28 had been because of the behaviour of patrons seen over the festive period.
“It was clear that people were all over meeting in large numbers and there was no time to say let’s do research, which can take six months.
“We acted on what we saw. We had to take that decision to save people’s lives and the economy.
“We took advice from the health officials and the police and they did say that people’s behaviour with alcohol becomes difficult, which you cannot compare to the behaviours at school.”
Molebatsi said the Ministry was still considering what to do about a tax refund for expired stock, saying the exact amount of litres involved was still being calculated. He said his ministry did not manage the alcohol levy to be able to divert it to helping businesses, but added that the recommendation would be shared with the Health Ministry.
Molebatsi also revealed that the alcohol industry benefited P22 million from the three month wage subsidy provided by government to distressed businesses last year. He said CEDA also loaned out P82 million to the industry, creating 142 jobs and sustaining others.