Regulators target social cost of alcohol

The liquor industry is huge, contributing about R93-million to the economy each year. Those in favour of changes to liqour regulations are up against deeply entrenched trade. (David Harrison, M&G)

The liquor industry is huge, contributing about R93-million to the economy each year. Those in favour of changes to liqour regulations are up against deeply entrenched trade. (David Harrison, M&G)

The department of trade and industry and the medical community face an uphill battle over proposed changes to the regulation of the money-spinning liquor industry, which contributes about R93-billion to the economy each year.

Speaking at a departmental seminar on reviewing national liquor policy this week, deputy director general Zodwa Ntuli said the liquor business had thrived under the current policy, but its socioeconomic effect had not been adequately addressed.

Thezi Mabuza, the deputy commissioner of the National Consumer Commission, said the objective of Liquor Act should be to reduce socioeconomic and other costs of alcohol abuse and to develop a responsible and sustainable liquor industry.

A 2011 baseline study on the outlook of the industry, commissioned by the department, estimated that the manufacturing and retailing of liquor contributed R93.2-billion to the economy in 2009-2010, or 3.9% of that year’s gross domestic product (GDP) – and that was without including the multiplier effect in the selling of alcohol. South African Breweries alone claimed its contribution to GDP in 2009 was R66.2-billion or 3.1% of GDP.

The department, in the policy review document, argues that alcohol abuse has a serious economic cost. It cites World Health Organisation (WHO) figures from 2004, which estimate the cost of alcohol abuse in South Africa to be $1.7-billion (R19-billion), or 2% of GDP in that year.

Cost to the fiscus
According to a 2012 edition of the South African Medical Journal, the cost to the fiscus from absenteeism, poor productivity, high job turnover, interpersonal conflict and injuries, and damage to property is about R9-billion a year, equivalent to 1% of GDP.

It noted there was also a high social cost resulting from the behaviour that attends drunkenness, such as crime, violence and reckless driving.

But the Medical Research Council estimated the tangible and intangible costs to the country amounted to about R300-billion in 2009.

“The liquor industry will be saying to us, ‘yes, we are contributing to the GDP of the country’. [But] that is what every responsible citizen should be doing – paying taxes diligently,” Mabuza said.

“But, if 50% goes back into mopping [up] the harm [that] has been caused, how are we going to deal with it?”

Proposed changes
In the discussion document, open for input until mid-August, the department outlines proposed changes to current liquor legislation.

The most controversial of these include banning sponsorships associated with alcoholic branding, raising the legal drinking age to 21 and making traders liable for any harm caused if they serve liquor to already drunk customers.

The document also suggests liquor outlets should be at least 500m from schools, places of worship, recreation facilities, rehabilitation or treatment centres, residential areas and public institutions.

Furthermore, no liquor licence should be issued to fuel service stations and premises attached to them, premises near public transport, and in areas not classified for entertainment or zoned by municipalities for trading liquor.

It says, if a licence has already been issued for places like these, it should be terminated within two years.

Unlicensed and unregulated
Andrew Charman, the director of Sustainable Livelihoods Foundation which counts SABMiller and Distell among its 11 listed funders, said most of the liquor trade in the townships was unlicensed and unregulated. Zoned land was particularly hard to come by in historically black areas – a cunning piece of apartheid legislation, Charman said. And it still remained very difficult to get licences and perpetuated inequality, he said.

“The legislation will have no impact on eradicating shebeens. The process has been attempted for 100 years, and the apartheid state was unable to do so, despite being a more sophisticated system,” he said.

Research showed that police raids did have an effect on the sector – people went underground and didn’t stop trading, Charman said. “Corrupt police are the biggest beneficiaries of stringent liquor policy; it just plays into their hands.”

The executive director of the Free Market Foundation, Leon Louw, said the policy review document was ludicrous. “And I don’t say that lightly … Nobody could have used a second synapse [in drafting the document].”

He said the zoning requirements would be severely detrimental to small business in historically black areas, and would also affect casinos, which were built in the former “homelands”.

Zoning proposal
In its submission to the department, the Casino Association of South Africa described the 500m zoning proposal as unduly wide and unlikely to be workable.

It added that withdrawing the licences of outlets in the listed areas “will have the effect of disturbing rights which have become vested in the holders of such licences and will accordingly be open to constitutional challenge”.

The department’s seminar, which took place in Pretoria this week, was titled Access to Alcohol: How Old Is Old Enough?

Referring to the proposal that the legal age be raised to 21, Ria Nonyana-Mokabane, the department’s chief director of legislative drafting, said the human brain continued to develop after 18, and that drinking from an early age impaired its development.

But Mphonyane Mofokeng, speaking on behalf of the Southern African Alcohol Policy Alliance, said 21 might not be high enough and cited research that suggested the full development of the brain was likely to be complete only at the age of 24.

Legal purchasing age
Taskeen Khan, a WHO representative, said the organisation acknowledged that raising the legal purchasing age was one of the most effective measures. “The evidence for this is available and is undeniable.”

She said it could postpone addiction and reduce risky sexual behaviour that could lead to HIV exposure.

But Charman said: “You cannot stop people from being inebriated at all, but you can influence the kind of substances people take and the contexts in which they can take it.”

Louw said the answer was not to treat people like juveniles. “You treat them with respect and dignity … and you use education instead of regulation.”

He said South Africa’s HIV education campaign was hailed as a great success and served as an example of how education could be used to change behaviour.

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn


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