‘Price of alcohol ban that Dlamini-Zuma, Cele champion is poverty and misery’ – Vegter

Nearly a year ago, when South Africa entered the Covid-19 lockdown, President Ramaphosa announced a ban on the sale of alcohol and tobacco products. Frustrated individuals and industries spoke out against the ludicrous prohibition, but government defended their decision – the rationale behind the alcohol ban being to prevent hospitals and healthcare workers from being overwhelmed. But, says Vegter, ‘it punished millions of decent people who don’t end up in trauma wards when they have a drink after a hard day’s work’. Aside from that, it has also done considerable damage to an already weakened economy and cost many hard-working South Africans their jobs. In this opinion piece, Vegter looks at the alcohol ban from all perspectives – trauma cases, tax revenue, illicit trade – to find an answer as to whether the ban actually works. This article was first published on the Daily Friend. Jarryd Neves

Alcohol ban leads to poverty and misery

By Ivo Vegter*

After springing a surprise alcohol ban on South Africans during what was supposed to be a festive season, minister Nkosazana Dlamini-Zuma said another liquor sales ban was ‘not inconceivable’. The criminal underworld can’t wait.

In the year 2BC (Before Covid or 2018 in the old counting) the then health minister, Nanny Aaron Motsoaledi, told a NEHAWU Nurses’ Summit that the healthcare system was ‘overburdened’ because of foreign nationals.

“Our hospitals are full, we can’t control them,” said the xenophobic jerk. Besides irresponsibly whipping up fear and hatred of foreigners, he was flogging the idea of an NHI, claiming that overcrowding in public hospitals could be eased if only the state was able to requisition private hospital facilities at will.

That statement was classic blame-mongering, trying to shift the responsibility for South Africa’s poor public healthcare system – especially in ANC-run provinces – from the government to vulnerable people who can easily be lynched.

This same “overburdened” public hospital system was, in 2020, struck by a flood of patients requiring Covid-19 testing or treatment.

This time, the scapegoat for the failure of the public healthcare system to cope was not placed on foreign nationals. Nor was it placed on the civil servants who were supposed to use the early lockdown period to prepare for exactly such an influx.

No, this time, the evildoers who clogged up our hospitals were the small minority of people who weren’t able to enjoy alcohol responsibly.

The jackboot-in-chief, Bheki Cele, took to Twitter to explain his opposition to alcohol: ‘I saw my friend shoot his wife because he was drunk. I have seen alcohol strip people of their dignity. I don’t have much that is good to say about alcohol.’

Normal people don’t shoot other people because they’re drunk. Perhaps the minister (of police, nogal!) should choose not to hang out with criminals, instead of blaming alcohol, and bad-mouthing everyone else for the poor company he keeps.

Cele would not be out of place in the temperance movement, unburdening himself of outrageous, prejudicial and nonsensical generalisations such as: “There are no social drinkers in SA, especially those who don’t buy it. They are binge drinkers because they don’t know where their next drink will come from.”

Trauma cases

Egged on by nannies who would gladly take away every little pleasure from long-suffering South Africans – and exploited the pandemic to do exactly that – government duly prohibited the sale and transport of alcohol. It punished millions of decent people who don’t end up in trauma wards when they have a drink after a hard day’s work (or in the case of the first lockdown, after a hard day’s house arrest).

Research suggests that alcohol is correlated with trauma severity and resource utilisation.  What is not known is the extent of the causal relationship, or, in other words, how much lower healthcare resource utilisation would be in the absence of alcohol consumption.

South Africa’s experiment with prohibition has made it no clearer just how much the various alcohol bans really contributed to easing the burden on hospitals.

Cele claimed during the first alcohol ban that 34,000 hospital beds “are currently occupied because of alcohol-related cases”. This claim turned out to be a bald-faced lie.

The person the ministerial spokesperson cited as the source for that number had no idea where it came from. According to AfricaCheck, there were 42,700 trauma admissions per week before lockdown, of which about 17,000 were alcohol-related. During lockdown and the alcohol ban, this dropped to about 15,000 per week of which 6,750 involved alcohol.

Distributed over South Africa’s more than 500 hospitals, this translates to between 10 and 20 fewer alcohol-related trauma cases per hospital per week – or between one and three cases per day. That hardly sounds like an overwhelming number.

It isn’t even clear how many of those would have happened anyway, in the absence of alcohol. Those numbers show that lockdown curbed alcohol-related trauma admissions by about 60%, but it reduced non-alcohol-related trauma admissions by 70%.

This very strongly suggests that the reduction in trauma cases had nothing at all to do with prohibiting alcohol, and everything to do with other lockdown measures, such as confining people to their homes or subjecting them to a curfew.

At what cost?

Let’s, for the sake of argument, accept that the alcohol bans during the first and second waves made a small difference to the number of trauma admissions. At what cost was this benefit purchased?

Hundreds of small liquor producers and thousands of independent retailers have already gone out of business.

A report by FTI Consulting estimated that the alcohol industry in South Africa lost a total of R36.3bn in retail sales, according to Fin24. Some 200,000 people in the liquor value chain lost their jobs, which accounts for almost half of the 415,000 people employed by the industry. With South Africa’s high unemployment rate, each job typically supports up to ten people, leaving perhaps as many as two million people hungry at night as a direct consequence of the booze bans.

This alone is a staggering cost to pay for keeping a few hospital beds unoccupied.

More than 100 days of prohibition has brought the tavern industry to its knees. Organisations representing 40 000 taverns and liquor traders, employing some 282 000 workers, say the sector is at risk of collapsing. In a letter to the president, they describe many of their members as ‘being that of a hand-to-mouth type of enterprise and largely run by a breadwinner that supports all the key needs of a household including education for the children.’

As this year’s grape harvest gets underway, the wine industry is stuck with 250 million litres of unsold wine in its vats.

“We know we have no space in our cellars to make way for the 2021 harvest,” wrote Mike Ratcliffe, chairperson of Stellenbosch Wine Routes, in a recent op-ed, “and grow anxious at the livelihoods that now hang in the balance, not only those of the workers who are directly involved in wine production, but the workers whose industries are supported by it.”

VinPro, which represents wine producers, cellars and other industry stakeholders, has said more than 80 wineries and 350 wine-grape producers went out of business. Similar knock-on effects will be seen in the sorghum, barley, maize, and potato industries, all of which supply the liquor industry.

“At some point, people will become too poor to work,” Erica Taylor, who runs the #saveSAwine campaign, told Wine Enthusiast magazine. “When you can’t afford a childminder, you must stay home. Can’t afford petrol or car maintenance, you must stay home. You can’t afford your children’s uniforms, they can’t go to school, and you must stay home. This is what is happening to the farm workers.”

The price of the alcohol ban that authoritarians like ministers Nkosazana Dlamini-Zuma and Bheki Cele champion is widespread poverty and misery.

Tax and investment

The first booze ban alone cost the government an estimated R15.4bn in lost excise taxes, according to liquor producer Distell. Kurt Moore, CEO of the South African Liquor Brand Owners Association, told Cape Talk: “That could have been used to fund the Covid vaccine drive.”

The festive season usually being the high point of the year for alcohol revenue, the ban over this crucial period will surely have cost the fiscus many more billions. And this while the government struggles to come up with even small amounts of cash for essential purposes such as ordering vaccines from the Covax programme.

The extended and repeated alcohol prohibitions have also hit investment hard. In January, South African Breweries announced that it would cancel a further R2.5bn in capital investment, to bring the total of cancelled investments up to R5bn. The money would have been spent on upgrades to operating facilities, product innovation, operating systems as well as the installation of new equipment at brewing plants.

This obviously has a massive impact on industries and jobs that service the alcohol industry, from construction firms to plant and machinery, from IT firms to consultancies.

Last August, Heineken South Africa shelved plans to build a new R6 billion brewery in Kwazulu-Natal, and last month it said it will be cutting jobs and putting further new investments on hold. Globally, the firm has warned of as many as 8,000 job cuts.

Consol Glass, which depends for 85% of its glass packaging revenue on the alcohol industry, has put the kibosh on a new R1.5bn manufacturing plant in Nigel.

This new plant alone would have provided 120 direct jobs and an estimated 2,600 jobs in related services, from waste pickers to truck drivers, machine operators, glass machine operators, fitters and electricians. Failure to build it will also have a knock-on effect on producers of silica, lime, feldspar and recycled glass.

As a direct result of the Consol decision, mould-maker Ross Moulds halted a capacity expansion programme which would have boosted its workforce by 25%.

Consol has also put on hold R800m approved to rebuild and maintain its current furnace capacity and footprint in the country, according to Engineering News.

Illicit trade

Some of my friends have become black-market producers of beer or spirits. Not that I would dream of doing so, but it certainly would not have been difficult to obtain booze on the lowdown during the prohibition.

Some small-scale producers or retailers kept the wolf from the front door by selling alcohol out the back door to trusted customers. Some of those customers established trade networks via messaging apps to supply friends of lesser standing.

The rise of the black market in alcohol is not limited to anecdotes, however.

A report by the Transnational Alliance to Combat Illicit Trade (TRACIT) demonstrates that wherever alcohol sales were prohibited, the illegal market took over.

The report singles out South Africa for having among the strictest lockdown measures in the world. Only India and Panama also enacted long-lasting national alcohol prohibitions.

It cited the Institute for Security Studies, which reported an increase in criminal activity related to alcohol in South Africa and that criminal networks active during the pandemic had added illicit alcohol to other illegal products they offer clandestine customers, such as narcotics.

Industry groups in South Africa reported unprecedented levels of illicit trade in alcohol during the pandemic, according to the TRACIT report, with losses from illicit trade expected to rise considerably over the R12,9 billion a year that the South African alcohol sector was already losing prior to Covid-19.’

Increased seizures of illicit alcohol or related supplies by South African police, as well as an increase in smuggling from neighbouring countries, offered further evidence of the rise of illicit trade.

Citing SARS commissioner Edward Kieswetter, the report found that the alcohol ban gave a massive boost to organised crime. According to Kieswetter, these operators have now “marketed themselves to previously honest […] drinkers, embedded [themselves] in the supply chain and it will take us years to reverse the impact.”

He also said that in addition to the tax losses already realised, the establishment of a robust illicit alcohol sector could preclude tax collections in the future.

Lessons and recommendations

The TRACIT report lists four lessons learned from lockdown:

  1. Supply restrictions incentivise illicit markets and criminal activity. Evidence from all regions and countries that implemented alcohol sale restrictions, including South Africa, supports this conclusion.
  2. One of the most alarming consequences of alcohol prohibition measures is the exposure of consumers to health risks associated with illicit alternatives, which are produced without meeting sanitary, quality or safety regulations, and some of which are outright toxic.
  3. Prohibition reduces tax collections and constrains budgets, not only for the duration of the prohibition, but as long as the revitalised illicit industry survives. Ironically, this reduces the very revenue needed to police and combat criminal activity.
  4. Prohibition sidelines legitimate businesses and depresses formal job opportunities. The more than 200 000 lost jobs in South Africa are particularly grim, given the horrendous levels of existing unemployment.

In the aftermath of prohibition, there will be a temptation to levy extra sin taxes on alcohol to cover previous tax shortfalls and additional pandemic-related expenditures.

The TRACIT report recommends that governments resist this urge, since this will make it even harder for the industry to recover and perhaps recreate some of the jobs that were lost.

In addition, it recommends avoiding prohibition laws as emergency response measures to protect people from the spread of virus, since the benefits are conjectural, while the negative consequences are many and counterproductive to interdependent health, employment and economic objectives.

It says availability and access to legitimate products can be ensured in ways that conform with social-distancing objectives without inducing demand for illicit substitutes.

Finally, it recommends that enforcement measures are ramped up to ensure that illicit trade activities caused by alcohol prohibitions do not become permanent features of the post-pandemic economy.

Bans don’t work

On balance, therefore, the question, ‘At what cost was this benefit purchased?’ can have only one answer. Too much. Far, far too much.

It isn’t even clear that there was a detectable benefit, since non-alcohol-related trauma cases declined by even more during lockdown than alcohol-related trauma cases did. That alone would make any price too high.

Alcohol prohibitions have had a devastating impact on the industry, with hundreds or thousands of small businesses closing, hundreds of thousands of jobs lost, and incalculable knock-on effects on related industries from mining to farming to trades and services.

This tremendous cost would require an extraordinary public health benefit to justify it, and even then, it would very likely have been less costly – and a lot more fair – to achieve the same benefit by different means, such as direct investment in hospital capacity.

So, when Dr Zol says another liquor sales ban is ‘not inconceivable’, she demonstrates a callous disregard for the livelihoods of millions of South Africans, for the pleasure of many millions more, and for basic cost-benefit analysis of her diktats.

These are the actions of an out-of-touch despot, not a benevolent dictator who only means to save lives.

  • Ivo Vegter is a freelance journalist, columnist and independent researcher. This article was originally published on the Daily Friend. The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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