tors

Revisiting the potential socio-economic impact of the Western Cape Liquor Act on unregulated liquor retailers

Research Commissioned by the Department of Economic Development and Tourism

by

Sustainable Livelihood Consultants

23 April 2012

Socio-Economic Impact of the Western Cape Liquor Act 1

TORs

• Identify scope and scale of informal employment and livelihoods dependence on informal liquor selling.

• Assess direct employment loss, and livelihoods impacts through enterprise closure.

• Assess the economic multipliers of informal liquor traders (shebeens) on other micro-enterprises.

• Report on intended and unintended consequences of the Act.


Shebeen – Atlantis

Methodology

• In-depth interviews with 211 informal and licensed liquor traders in George, Atlantis and Delft,

• Three separate workshop forums with 172 liquor traders,

• Random household survey of community attitudes towards the regulation of informal traders,

• Key person interviews.


Workshop - Lawaaikamp

Selling average of 480 cases quarts per weekFull time businesses

+/- 1,500 present in Western Cape

Selling an average of 85 cases quarts per weekFull time businesses

+/- 7,000 in Western Cape

Selling less than 25 cases quarts per weekPart time, or ephemeral businesses

+/- 12,000 in Western CapeLow

Medium

High

SLC 2009 (50 businesses) SLF 2012 = (465 businesses)

0

50

100

150

200

250

300

350

400

State of Knowledge

Socio-Economic Impact of the Western Cape Liquor Act - Report by Sustainable Livelihood Consultants 4

33% < three years old

Based on the sample of 211 businesses and other research, the total number of unregulated liquor traders in WC can be estimated at +/- 25,000.

Businesses High volume Medium volume Low volume

Number 12 102 81Years in operation 15 11 7Gender 31% F 40% F 62% F

Unregulated liquor trader numbers and owner demography

Results


Direct economic impact of closure

Household livelihoods impact

Average employees (including owner / family)

High volume 3.75Medium volume 3.5Low volume 1.7

2.6 direct jobs per unlicensed liquor retailer

Livelihoods

High Volume 7.4Medium volume 5.9Low volume 4.6

5.5 household livelihoods per

unlicensed liquor retailer

Jobs, opportunities and livelihoods


Informal liquor retailers

Spaza shop 16%

Leaflet producers

2%

Other shebeens 4%

Bottle collectors

17%Butcher shops 3%

Entertainers / DJs 9%

Juke Box 17%

Street braaiers

29%

Security guards 3%

3.5 related jobs per business

Economic multipliers for micro-enterprises


Summary – Jobs and Livelihoods

• Informal liquor trading provides significant employment and economic opportunities in the townships:

• 25 micro-enterprises• Direct jobs = 65,000• Indirect jobs = 87,500• Total employment = 152,500• Livelihood support = 137,500 • Population deriving benefit = 212,500 persons.


Business Type License application filed*

Experience of police raiding (12 months)

Number of raids (12 months)

High volume 100% 67% 3.4Medium volume 82% 55% 4.5

Low volume 35% 37.5% 3.7All 47% 4.2

*(average spend on licensing R41,700)2/3 of low

volume did not apply, and 2/3

were not policed…. Encourages business to become clandestine..

Policing Impact


Supply chain impacts

• Ad hoc clandestine transporting of illicit liquor

• Increasing smaller business numbers• Growth in ales and concoctions • Off-site / hidden liquor storage

(friends, neighbors, wholesalers)


Other…

• Anger towards foreign nationals operating businesses in the township sector

Total interviews Gender Race AgeMen Women Black Coloured

102 39 63 59 39 39.7 years

102 randomly selected households in Delft

Ethnicity Liquor consumers Weekly Occasional Traditional

Black 58% 42% 47% 23.5%Coloured 58% 32% 64% 0%Total 57% 36% 52% 14%

Percentage of households with at least one liquor consumer

Community Attitudes Survey


88% of Coloured and 72% of Black respondents did not store liquor at home. All purchases are on an as-required basis for personal consumption.

Ethnicity Home Shebeens At friends Not specifiedBlack 18% 26.5% 26.5% 29%Coloured 41% 23% 41% 0%Total 28% 24% 29% 19%

Household preferred drinking venues:

Unregulated liquor traders are part of a broader culture of socialisation and business

Delft Drinking Culture


For 62% of respondents, retailer proximity influenced choice of venue.

Beyond drinking.....Other justifications for visiting unregulated liquor traders;

i) to meet friends (36%), ii) watch television (26%), and iii) play games (13%).

Lack of sufficient quality recreational space....

Delft Drinking Culture cont.


“It is safer if they have licenses, they know the rules. If they don’t have licenses they don’t know what to do.”

“Some shebeens should be allowed, but not the small ones selling a couple of cans, only the bigger businesses. The small ones operate haphazardly and sell to any one and at any time.”

55% of non-drinkers supported licensing of some or all unregulated liquor retailers.

61% of surveyed respondents supported licensing some or all informal liquor retailers in their residential areas.

Attitudes towards Regulation


Conclusions

1. Unregulated liquor traders are important black businesses, providing jobs and supporting livelihoods.

• At least 25,000 shebeens in the Province. • These businesses support 212,500 jobs and livelihoods

2. Many of these enterprises desire to fall within the regulatory framework

• Up to 8500 informal liquor traders are sufficient large to be brought within the regulatory framework.

• The new Act could create black business dis-empowerment


3. Most informal liquor traders will not close down

Response

1 x potentially licensablebusiness stocking 450 litres beer

3 x clandestinebusinesses stocking150 litres of beer each

Disproportionate policing

Limited policing

(closures, job losses and downscaling)


4. The operation of informal liquor retailers in residential areas is determined by economic forces.Traders are unlikely to relocate to high streets or economic nodes away from their customer base.

5. Township residents generally favour licensing of liquor traders

6. Political inconsistency: moral concerns not projected towards liquor harm in the middle class who have greater access to more licensed outlets per capita than the poor, trading hours are more flexible and liquor retail is seen as a positive contributor to the economy


Possible Unintended Consequences

• Criminalization of small business

• Growth in ales / concoctions,

• Police corruption,• Social conflict and

racilization.


“Champagne breakfast”

Recommendations

Socio-Economic Impact of the Western Cape Liquor Act - Report by Sustainable Livelihood Consultants 19

1. Develop economic strategy for alternative business activities for whose livelihoods are likely to be impacted.

2. Resolve pending license applications.

3. Investigate how feasible opportunities for small black businesses can be enhanced within the liquor sector.

4. Land use zoning in township communities must be resolved to provide more commercial opportunities for small business in residential areas.

5. The Department needs to better comprehend contemporary township business dynamics – foreign traders

6. Reduce reliance on liquor traders as the few social outlets. In collaboration with other stakeholders, pilot and provide enhanced recreational and social opportunities for residents in the township environment

Recommendations


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Documents

western cape liquor

licensed liquor traders

unlicensed liquor retailerjobs

western capeselling

western capelowmediumhighslc

regulation of informal

scale of informal employment

livelihoods impacts