Tuesday, September 22, 2020

70% levy on alcohol scares SECHABA shareholders

While Government has suspended the recently announced levy on all alcohol beverages, the BSE listed SECHABA Breweries Holdings limited remain uncertain as shareholders express apprehension at the visible effects of the reduction of business operating hours on the industry.

SECHABA Holdings Ltd Managing Director, Letlhogonolo Matsela, stated that “sectors of retail trade have been affected differently by the reduction of operating hours,” and that there is every indication that things could get worse if the impending levy on liquor were to see the light.

On-premise consumption, he says, was more severely hit compared to off premise consumption, though they tended to balance.

According to Matsela, the severity of the pain resulting from the imposition of 70% levy on liquor will be felt in terms of job losses within the industry as a whole, adding that supplies are also bound to suffer. He said that SECHABA Holdings Ltd subsidiaries, namely KBL and BBL both employ a large number of people across the country.
In addition to retailers being affected adversely, he says that “our partners, such as outsourced operators and owner drivers, are sure to take a knock.” And some of these people are running their own businesses and those businesses for certain will be assured of a very bad fall should the present considerations to introduce the levy translate into reality.

Furthermore, it emerged during the AGM deliberations that the development also carries the potential to heighten the effects of inflation from the current 15%, by an estimated 5.7%, which, in the view of SECHABA MD, would spur people into dangerous options, including resorting to the use of illicit drugs and home brewed concoctions of unknown quality with the potential to destroy a sizable part of society.

The notion that the problem of alcohol abuse could be tackled by raising the prices alone, it was said, has neither historical parallel nor has it happened in any part of the civilized world.
Against this background the Management assured shareholders that, basing on their research findings and experience, they are still optimistic that by reasoning with the authorities, and suggesting alternative intervention strategies, a common ground can be established and, therefore, adoption of a realistic approach in addressing the challenges resulting from alcohol abuse.

Examples are cited of countries where the rate of alcohol consumption is relatively higher than in Botswana, but the strategies they adopted to deal with the problem worked quite well because they were target specific. For instance, as a rule, it became mandatory that all drinking places require proof of age for young adults, monitoring of public decency and stiffer penalties for drunken drivers which include confiscation of their licenses in the extreme of cases.
“Otherwise, I am afraid a generalized and one size fits all approach might not be helpful.

There is a general feeling that the Levy, which is meant to curb excessive alcohol intake and consequent behaviours, especially by young people, was supposed to take effect mid July this year, but had to be postponed because it faced resistance particularly from businesses who viewed it as a direct way of removing them from operation.

It also emerged at the AGM that one of the Company’s plants faces possible clossure should the Levy be allowed to stay.

Whilst SECHABA Breweries Holdings Ltd and Stakeholders succeeded, with the support of BOCCIM, to halt the implementation of the levy, it remains uncertain what lies ahead for alcohol consumers and businesses,
Only time will tell.

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The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.