President Cyril Ramaphosa’s July 25 address to the nation and the lifting of Covid-19 restrictions from adjusted Alert Level 4, to adjusted Alert Level 3, have been welcomed by Business Unity South Africa (Busa), while the South African Liquor Brandowners Association (Salba) has expressed concern that the domestic alcohol industry still remains vulnerable, despite alcohol sales being partially permitted.
Busa CEO Cas Coovadia says the permitting of off-site and on-site alcohol sales, the moving of the curfew to 22:00 and the opening up of inter-provincial travel for leisure, are particularly welcomed.
However, he says Busa has asked for data and the rationale for the decisions to implement alcohol restrictions, and the fact that this industry has been allowed to only partially reopen. “[Busa] will continue to try and access [such data].”
Futher, Coovadia notes that Busa also welcomes the relief package for businesses and employees affected by the recent anarchy, including extension of Temporary Employer/Employee Relief Scheme to March 2022, deferring excise duties for the alcohol industry and delaying Pay As You Earn tax submissions.
In relation to the looting and civil unrest of mid-July, he says Busa welcomes a clear indication by Ramaphosa that action will be taken against anybody inciting violence, including the “business mafia” that had been intimidating construction sites for some time.
Salba notes that this unrest resulted in the destruction of liquor stores, leaving many small traders and independently-owned liquor stores in “financial ruin”, from which they 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 says in a statement.
“We appreciate the address. We also call upon Ramaphosa to ensure accountability for the weaknesses on our intelligence and security services during the anarchy. We stand ready to support the President in ensuring a fit-for-purpose intelligence and security service to be prepared for any further attempts to destabilise our country,” says Coovadia.
In addition, he says Busa urges Ramaphosa to order the quick identification and arrest of those who planned the unrest.
Salba chairperson Sibani Mngadi, who earlier called for an opening up of liquor trade from July 26, says the partial opening of alcohol sales and the three months deferment in excise tax payments due on alcoholic beverages is a “huge relief”.
Salba CEO Kurt Moore says the deferment of about R2.5-billion worth of excise taxes was applied for by Salba at the beginning of the latest ban.
However, Mngadi says the domestic alcohol production and sales industry are “nowhere near being out of the woods”, especially for the off-site consumption outlets that continue to be restricted to trading from Mondays to Thursdays, with no rationale or evidence provided in relation to this restriction.
He says Salba and other industry associations have, many times, requested government’s rationale in restricting the alcohol industry during various points of lockdown in South Africa.
Mngadi says government’s use of prohibition in response to the Covid-19 pandemic has had “devastating consequences”, with no justification for prohibitions that have been implemented with no warning, no consultation and poor empirical justification.
This, he says, prevented legitimate businesses supporting more than one-million livelihoods across South Africa, from operating. These include businesses in the agriculture, tourism, hospitality and manufacturing sectors, as well as hundreds of thousands of small and medium-sized enterprises.
“Right now, our focus is on economic recovery and the role our industry can play is critical,” Mngadi says.
He stresses that legal businesses need to be allowed to trade without the continual risk of further bans.
Moore says the result of alcohol sales bans has put 248 759 jobs at risk, across the alcohol industry – about 1.59% of the national total of formal and informal employment for 2020.
“The alcohol industry lost 161 days of trading between March 26, 2020, and July 25 [this year] 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 gross domestic product (GDP) an estimated R64.8-billion, or 1.3% of GDP,” he says.
He cautions that the alcohol industry has repeatedly warned and demonstrated through research that the bans have fuelled illegal activity, particularly among criminal 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% of total market volumes in South Africa, worth R20.5-billion in sales value,” says Moore. This has cost the fiscus R11.3-billion in tax revenues, he adds.
Going forward, Moore says it is time that the government sit down and work alongside businesses to define a clear and detailed path to economic recovery.
In a statement, the Western Cape provincial government says it welcomes the move to adjusted Alert Level 3, which will be a lifeline for many businesses in the province.
In particular, it says, the relaxation of the curfew, inter-provincial travel for leisure and the relaxation of alcohol trading restrictions will help many industries rebuild the economy in the Western Cape.
“We also welcome the announcements of additional financial support measures, some of which we have previously called for – which will provide much-needed support to the recovery of the economy and provide relief to the poor and those who are vulnerable,” the Western Cape government says.
The deferrals of payment of excise taxes by the alcohol sector and PAYE will provide businesses with additional cash flow, with an automatic deferral of 35% of PAYE liabilities for employers with revenue below R100-million.
Further, the provincial government says the expansion of the employment tax incentive for a period of four months to include any employee earning below R6 500, with an increase in the incentive amount by up to R750 a month, will ease the burden on businesses as they seek to recover.
In response to business-related restrictions brought about by Covid-19-related lockdowns, independent business community Sakeliga calls for businesses to develop strategies that factor in harmful State interventions.
CEO Piet le Roux says businesses are, and will be, developing plans and strategies that factor in harmful State interventions and State failure, seeking ways to ensure continuity despite a continuously centralising political elite.
“When almost everything a government wants to be responsible for in a country goes wrong, it is time for that government to alter course, not double down.
“One would think that after listing so many aspects of the country’s predicament, a government would announce that it is reconsidering at least the timelines of its interventionist policies and the principles of its lockdown strategy,” he says.
However, Le Roux says Ramaphosa delivered the opposite in his July 25 address.
“From a government perspective, when an economy can no longer bear its interventions, it is time to let that economy recover and let its people earn a living – not embark on an unprecedented, dependency-forming, and unsustainable welfare scheme,” he says.
“Instead of merely deferring one or two taxes for three months, this would have been an excellent time for a government to defer, with immediate effect, several of its key interventionist policies,” says Le Roux.