When bartenders make the call for the ‘final round” next week Sunday night, it may be a signal for all hell to break loose.
The new era of 70% levy on alcoholic drinks kicks into gear on Monday August 18th and indications are that the fall out is going to be messy. From the outside, it looks like a godsend: Residents will not have to deal with rowdy revellers fuelled by cheap drink and police would not have to be overstretched trying to make arrests ranging from drink driving, to “drunk and disorderly” behaviour and breaching the peace. Police reports suggest that Botswana streets are slick with blood and vomit, that at least 40 percent of violent crime is alcohol-related.
At 70% reduction in production volumes, the KBL clear beer volumes will be reduced by 160, 000 HL at which point the cost of production would outstrip profitability. The KBL plant would have to be shut down; in addition, the Maun, Palapye and Kanye distribution points will be closed.
Kgalagadi Breweries, however, did an analysis of the proposed social levy on alcohol and from where there are sitting, the whole thing spells disaster. About 7, 000 workers in the alcohol value chain are expected to lose their jobs and 42,000 lives will be turned on their heads. The social levy will make imported booze 17% cheaper than locally produced alcoholic beverages. Local producers, local suppliers and their employees are clearly disadvantaged as compared to importers, states the KBL report.
“The fortunes of ordinary Batswana and local pension and provident funds will irretrievably suffer an estimated loss of P575 million from where they are today. In the worst case scenario of an anticipated 40% drop in profitability, at least P 1 billion will be lost. This is a loss in the market capitalisation of the Botswana Stock Exchange as well as the value of investments in shares of the estimated P1 billion value destruction of the stock exchange.
The new tax comes two years after government introduced trading curfews for bars, bottle stores and night clubs.
President Ian Khama delivered the latest blow after a series of public meetings around the country where he added that if the 70 percent levy did not prove fruitful, a 100 per cent increase will be considered.
Botswana has one of Africa’s highest HIV prevalence rates, with surging alcohol consumption blamed in part.
The Assistant Minister of Trade and Industry, Duke Lefhoko, said the levy is aimed at curbing the “abuse of alcohol that is so prevalent in Botswana.” He said the rationale for the 70 percent increase was that anything lower was considered insufficient as a deterrent to alcohol abuse. He reminded parliamentarians that the Minister of Trade and Industry, Neo Moroka, undertook extensive consultations on the liquor regulations during 2007, and that they included all relevant stakeholders, among whom were liquor trade representatives.
“During the course of these consultations, a strong consensus of opinion emerged in favour of, among other things, significantly increasing liquor prices,” he said, adding that the government had considered the extent to which the business community might be affected by the levy, and possible loss of jobs.
However, he said the “government is of the view that the social and economic benefits of reducing alcohol abuse will outweigh any negative consequences of the measures to be undertaken.” He explained that subject to the behaviour of Batswana, a further increase may be effected, and that the magnitude of any possible increase would be determined at the appropriate time.
Lefhoko said the statutory instrument used has not been published yet, but said the authority to impose the levy was derived from Section 3 (2) (d) of the Control of Goods, Prices and Other Charges Act. The MP for Gaborone Central, Dumelang Saleshando, had asked the minister to confirm whether the government has resolved to increase the tax on alcoholic beverages with effect from 1st of August 2008.
The KBL, however, found that Botswana’s beer per capita consumption is in line with (mostly below) other GDP per capita peer group nations or below. Among local supliers who will be affected are General Packaging industries, Zeenat Industries, Morupule coal, Water Utilities Corporation, BP, Bokomo and the smaller service industries that provide mechanical, electrical and service contracts on machines.