1. Socio-Economic Impact of the Western Cape Liquor Act
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

2. Socio-Economic Impact of the Western Cape Liquor Act
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
Socio-Economic Impact of the Western Cape Liquor Act

3. Socio-Economic Impact of the Western Cape Liquor Act
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
Socio-Economic Impact of the Western Cape Liquor Act

4. +/- 1,500 present in Western Cape
State of Knowledge
SLC 2009 (50 businesses)
SLF 2012 = (465 businesses)
Selling average of 480 cases quarts per week
Full time businesses
+/- 1,500 present in Western Cape
Selling an average of 85 cases quarts per week
+/- 7,000 in Western Cape
Selling less than 25 cases quarts per week
Part time, or ephemeral businesses
+/- 12,000 in Western Cape
Low
Medium
High
Socio-Economic Impact of the Western Cape Liquor Act - Report by Sustainable Livelihood Consultants

5. Socio-Economic Impact of the Western Cape Liquor Act
Results
33% < three years old
Unregulated liquor trader numbers and owner demography
Businesses
High volume
Medium volume
Low volume
Number 12
102 81
Years in operation 15 11 7
Gender
31% F
40% F
62% F
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.
Socio-Economic Impact of the Western Cape Liquor Act

6. Jobs, opportunities and livelihoods
Direct economic impact of closure
Average employees (including owner / family)
High volume
3.75
Medium volume
3.5
Low volume
1.7
2.6 direct jobs per unlicensed liquor retailer
Household livelihoods impact
5.5 household livelihoods per unlicensed liquor retailer
Livelihoods
High Volume
7.4
Medium volume
5.9
Low volume
4.6
Socio-Economic Impact of the Western Cape Liquor Act

7. Economic multipliers for micro-enterprises
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
Socio-Economic Impact of the Western Cape Liquor Act

8. 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.
Socio-Economic Impact of the Western Cape Liquor Act

9. Policing Impact …. Encourages business to become clandestine..
Business Type
License application filed*
Experience of police raiding (12 months)
Number of raids (12 months)
High volume
100%
67%
3.4
Medium volume
82%
55%
4.5
Low volume
35%
37.5%
3.7
All
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..
Socio-Economic Impact of the Western Cape Liquor Act

10. Socio-Economic Impact of the Western Cape Liquor Act
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
Socio-Economic Impact of the Western Cape Liquor Act

11. Community Attitudes Survey
102 randomly selected households in Delft
Total interviews
Gender
Race
Age
Men
Women
Black
Coloured
102 39 63 59
39.7 years
Percentage of households with at least one liquor consumer
Ethnicity
Liquor consumers
Weekly
Occasional
Traditional
Black
58%
42%
47%
23.5%
Coloured
32%
64% 0%
Total
57%
36%
52%
14%
Socio-Economic Impact of the Western Cape Liquor Act

12. Delft Drinking Culture
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.
Household preferred drinking venues:
Ethnicity
Home
Shebeens
At friends
Not specified
Black
18%
26.5%
29%
Coloured
41%
23% 0%
Total
28%
24%
19%
Unregulated liquor traders are part of a broader culture of socialisation and business
Socio-Economic Impact of the Western Cape Liquor Act

13. Delft Drinking Culture cont.
For 62% of respondents, retailer proximity influenced choice of venue.
Beyond drinking.....
Other justifications for visiting unregulated liquor traders;
to meet friends (36%),
watch television (26%), and
play games (13%).
Lack of sufficient quality recreational space....
Socio-Economic Impact of the Western Cape Liquor Act

14. Attitudes towards Regulation
61% of surveyed respondents supported licensing some or all informal liquor retailers in their residential areas.
“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.
Socio-Economic Impact of the Western Cape Liquor Act

15. Socio-Economic Impact of the Western Cape Liquor Act
Conclusions
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
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
Socio-Economic Impact of the Western Cape Liquor Act

16. 3. Most informal liquor traders will not close down
Response
1 x potentially licensable
business stocking 450 litres beer
3 x clandestine
businesses stocking150 litres of beer each
Disproportionate policing
(closures, job losses and downscaling)
Limited policing
Socio-Economic Impact of the Western Cape Liquor Act

17. Socio-Economic Impact of the Western Cape Liquor Act
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
Socio-Economic Impact of the Western Cape Liquor Act

18. Possible Unintended Consequences
Criminalization of small business
Growth in ales / concoctions,
Police corruption,
Social conflict and racilization.
“Champagne breakfast”
Socio-Economic Impact of the Western Cape Liquor Act

19. Recommendations
Develop economic strategy for alternative business activities for whose livelihoods are likely to be impacted.
Resolve pending license applications.
3. Investigate how feasible opportunities for small black businesses can be enhanced within the liquor sector.
Socio-Economic Impact of the Western Cape Liquor Act - Report by Sustainable Livelihood Consultants

20. Socio-Economic Impact of the Western Cape Liquor Act
Recommendations
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
Socio-Economic Impact of the Western Cape Liquor Act