The government is having to spend an increasing amount of time in court defending its regulations to control the spread of the pandemic, notes Business Leadership South Africa chief executive officer, Busisiwe Mavuso.
South African Breweries has gone to court to challenge the current alcohol ban and now the restaurant industry is doing the same, Mavuso said in a weekly newsletter.
“The alcohol industry lost 165,000 jobs as a result of the first two lockdown bans, with this third one expected to add to the tally. Last week, SAB announced it had axed R2.5 billion of planned investment in 2021 as a result of the sales ban.
“Similarly, the wine industry has run out of storage space for the wine it has produced but been unable to sell over the last several months. It is now harvest time when it must pick the next grape crop.
“Unless it can move stock from cellars and tanks, it will have nowhere to put this year’s produce. It may be forced to leave the grapes to rot on the vines at a cost of billions,” the chief executive said.
These devastating economic consequences are avoidable, said Mavuso.
“We don’t need to take a view on whether the alcohol ban was necessary to be able to agree that it was handled badly. As regulations stand, alcohol producers have no idea how long they are going to be required to shut down.
“That uncertainty is the real problem. As a businessperson, it puts you in an impossible situation. You can ride out a period of closure if you know you can plan around it.”
BLSA said that when you are requested to shut down indefinitely, “with an unpredictable and opaque process to determine when you can resume”, businesses are put in an impossible situation.
“You must assume the worst, cut jobs you otherwise might have protected, and go into a cash conservation mode in the hope you can last however long you might have to,” said Mavuso.
She pointed out that the government has leaned on business often during this pandemic, most recently to help access supplies of vaccine. “Government has needed business in the ring with it to fight against this pandemic.”
“But at the same time, it has regularly tied our hands behind our backs, leaving us unable to play the supportive role we would be able to play.”
BLSA said that the alcohol industry’s challenges could have been lessened if a clear end date was put on the ban, or at least clear conditions under which it will be lifted.
Mavuso said that the government could have worked with the industry to make it easier to export stock that cannot now be consumed locally. “Instead, the industry has been forced to turn to the courts,” she said.
“Capricious changes to rules are made without understanding the economic impact they have and the causal connection to government’s own longer-term objectives.
“Government seems not to recognise that its plans to undo the jobs impact of the crisis are so much harder to deliver if it fails to protect as many jobs as possible now.”
Mavuso said that short-termism is why the country hadn’t planned a vaccine procurement strategy until only two weeks ago and why it took so long to develop an economic recovery plan.
“We have been better on short-term interventions like social grants and the TERS scheme, but don’t follow up with the longer-term thinking that will enable us to withdraw those and spur the economy back onto a growth path.”