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Adjusted lockdown: Tourism sector still in ‘dangerous zone’

Industry welcomes the lifting of the alcohol ban and opening of interprovincial travel, but says it is still in critical condition.
Image: Shutterstock

The Tourism Business Council of South Africa (TBCSA) says although it welcomes the lifting of the liquor ban and the opening of Gauteng interprovincial travel, it believes there is still a long way to go before the sector is out of the ‘danger zone’.

“The fact that the bans are lifted does not mean we are going back to work as normal. We still know that we have some restrictions, we are still in a pandemic and the international markets are still not open to coming to South Africa. So there’s still an uphill battle,” says TBCSA CEO Tshifhiwa Tshivhengwa.

He adds that the same applies to big resorts such as the Sun City, Airbnbs and the broader tourism industry as it will take some time to have enough people to sustain operations.

“The fact that we are open doesn’t mean that we are going to have an immediate uptake. The airlines will still have to wait for some time before they can build up to a capacity where they can start flying again so it’s going to take time.”

Tshivhengwa says the sector has tried to maintain jobs although many employees are not back to 100% of their salaries, and many are still working on weekends only.

“Until government travel, corporate travel and events come back, jobs are going to continue to be lost. The situation is fluid in terms of knowing exactly what’s going to happen, but we do hope that it improves so that we can get more people back at work. But we are still in a dangerous zone as far as this is concerned.”

Tshivhengwa says TBCSA still welcomes the adjustments, as it has been calling on government to provide some sort of relief to industries affected by lockdown restrictions.

“The new regulations that were announced by the president and subsequently being gazetted will definitely help in the recovery of domestic tourism. We have been calling as TBCSA for the removal of the ban on Gauteng interprovincial travel as well as the lifting of the ban on liquor. Those two things are offered, and we do believe that they will go a long way in ensuring that we return to some level of service.”

Alcohol sector

The South African Liquor Brandowners Association (Salba) says it appreciates the partial lifting of the alcohol ban, including the three months deferment of about R2.5 billion worth of excise taxes payment it had applied for at the beginning of the latest ban.

Salba chair Sibani Mngadi: “The partial opening of sales as well as three months deferment in excise tax payments due on alcoholic beverages is a huge relief, but we are nowhere near being out of the woods, especially for the off-site consumption outlets that continue to be restricted to trading Monday to Thursday with no rationale or evidence provided for this decision, in spite of our many requests to secure this from government.

“Right now, our focus is on economic recovery, and the role our industry can play is critical,” says Mngadi.

Salba says the government’s prohibition measures in response to the Covid-19 pandemic have had devastating consequences. It lists a lack of justification for the prohibition, restrictions implemented with no warning and no consultation and poor empirical justification as having prevented legitimate businesses, supporting more than a million livelihoods across South Africa, from operating.

“These include businesses in the agriculture, tourism, hospitality and manufacturing sectors, and importantly, hundreds of thousands of SMEs,” Salba said in a statement.

Salba CEO Kurt Moore says the bans are harmful to both government and business revenue as 248 759 jobs are still at risk across the industry, equivalent to about 1.59% of the national total of formal and informal employment for 2020.

The alcohol industry lost 161 days of trading between March 26 last year and July 25 this year due to the alcohol bans.

“Even before the cost of the looting to the alcohol industry is factored in, the four alcohol bans have already cost the country’s GDP an estimated R64.8 billion or 1.3% of GDP,” says Moore.

Salba says the industry repeatedly warned and demonstrated via research that the bans had fuelled illegal activity, particularly among crime syndicates whose positions were significantly strengthened during prohibition. It says it will be difficult to reverse this as syndicates have become entrenched.

Illicit trade

“Illicit trade has reached 22% (nearly a quarter) of total market volumes in South Africa – worth R20.5 billion in sales value. This has cost the fiscus R11.3 billion in tax revenues at a time when the country can least afford it,” says Moore.

According to Salba’s statement, the alcohol industry says it is “now time for the government to sit down and work alongside businesses to define a clear and detailed path to economic recovery.”

The liquor industry has called for the government to “implement practical steps to get the economy into recovery mode and work with the alcohol industry and help SA get back to business.”

Restaurant sector

The restaurant industry echoes these views, saying the curfew (22:00 to 04:00) and the time restrictions which require that they close by 21:00 will not promote the wellness of businesses.

It therefore calls on government to reconsider its decision in order to boost the sector.

“The recent announcement of President Ramaphosa’s lifting of the liquor ban certainly has been the final nail on the coffin of the dinner time trade within the restaurant sector. We simply cannot trade our dinner time effectively without the curfew being lifted,” says Wendy Alberts, CEO of the Restaurant Association of South Africa (Rasa).

“We were very clear in our communications with [the Department of Cooperative Governance and Traditional Affairs] Cogta of what the industry needed financially to bring viability in order for us to be able to plan effectively and to be able to start spring boarding ourselves into some type of recovery.

“We are gravely disappointed that the needs of the industry have not [been] heard,” says Alberts.

“We certainly are calling on government to open up lines of communication and consult with us urgently in order for us to be able to bring reprieve to the restaurants where we can trade effectively,” she added.

MEC of Finance and Economic Opportunities in the Western Cape Provincial Government, David Maynier, welcomed the move to adjusted alert Level 3, saying the easing of economic restrictions will be a lifeline for many businesses in the province. He also welcomed the announcement of additional financial support measures.

Maynier says the provincial government believes the deferral of payment of excise taxes by the alcohol sector and “the deferral of payment of PAYE taxes for a period of three months will provide businesses with additional cash flow, with an automatic deferral of 35% of PAYE liabilities for employers with revenue below R100 million”.

“Further, the expansion of the Employment Tax Incentive for a period of four months to include any employee earning below R6 500, with an increase in the incentive amount by up to R750 per month, will ease the burden on businesses as they seek to recover.”

Palesa Mofokeng is a Moneyweb intern.

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