Last week the SA wine industry groaned over the potential loss of an estimated R1.5bn in stock in the next few weeks as it ran out of space to store excess wine. The new grape harvest is due to start and there is no word about when the ban on alcohol sales will be lifted. 

It is not the only industry preparing to tally up losses destroyed by the third alcohol prohibition as there are a host of other subsectors from farming to packaging to retail and transport that rely on the industry for survival. In fact, glass maker Consol, which canned a R1.5bn investment programme in 2020, warned of a long-term stagnation in the industry that will inevitably lead to job losses.  

Put together these industries sustain the livelihoods of hundreds of thousands of people, many of whom have already lost their jobs due to the previous two bans.   

To be fair, it makes sense to introduce restrictions on alcohol sales especially considering that the second wave of the pandemic came back with such a vengeance, with new daily infections and deaths surpassing records set during the first wave, which peaked in July.

And the president has something to show for the decision taken towards the end of December. Chris Hani Baragwanath Hospital did not admit a single patient at its trauma unit on New Year’s Eve for the first time in its 79-year history, freeing up health workers to take care of an increasing number of Covid-19 patients. That was a good thing. 

But the destruction of livelihoods in a country where millions are out of jobs and struggle to make ends meet is also a matter of huge concern.

In the previous severe lockdowns, the government provided a soft landing for workers ordered to stay home and businesses cut off from their consumers. The Unemployment Insurance Fund came to the party with insurance payments and doled out billions of rand that helped people put food on the table and allowed businesses to retain talent.  

Furthermore, the Reserve Bank came up with a range of measures to help keep credit flowing in the banking industry, including giving banks a temporary pass into their regulatory capital buffers — a move that allowed lenders to introduce payment holidays for millions of consumers.  

While the same scale of support is not possible now, “We do not have the money, that is the simple truth,”  President Cyril Ramaphosa told Radio 702 in an interview on Friday, additional support is both necessary and desirable. 

The UIF still has about R110bn worth of assets of which R60bn are liquid. Business and labour estimate that more support would cost in the region of R3bn a month compared with about R12bn a month during the most severe periods of the 2020 lockdown. This should be given the strongest consideration, while being mindful of the very constrained national fiscus to directly support industry itself. 

In this context the government also needs to be mindful of the disinvestment effect and the impact of sustainability of the industry and the value chain.

On Friday, AB InBev’s local division pulled R2.5bn capital spending on infrastructure and new equipment to cover the losses destroyed by the ban, bringing the amount of money it has withdrawn since 2020 to R5bn.

The company’s decision is not only a blow to Ramaphosa’s economic revival plan, the cornerstone of which is to attract private-sector spending, but it also means jobs in the industry that shed more than 165,000 jobs are possibly on the line.  

In this light the government must consider whether it is possible to attain the twin goals of freeing up beds from alcohol-fuelled trauma and saving jobs and investment at the same time. Our suggestion is that liquor outlets for sales for consumption at home be reopened. This would be a reasonable compromise especially when there’s a curfew in place and limits on gatherings.

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.