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Alcohol, tobacco, hospitality industries look to Mboweni to ease struggles

The alcohol industry recently reported that it lost R36.3 billion in sales revenue as a result of the three lockdown-related bans.

FILE: Finance Minister Tito Mboweni delivers his Medium-Term Budget Policy Speech in Parliament on 28 October 2020 in Cape Town. Picture: GCIS

CAPE TOWN – South Africa's alcohol and tobacco industries are hoping that Finance Minister Tito Mboweni will not increase excise taxes in the coming Budget speech, following huge losses as a result of the COVID-19 lockdowns.

Industries and companies will be looking to the minister on Wednesday afternoon, hoping for further government interventions to help them turn things around.

The alcohol industry recently reported that it lost R36.3 billion in sales revenue as a result of the three lockdown-related bans.

The tobacco industry also lost millions following a five-month long ban on the sale of cigarettes and tobacco products last year.

The sale of cigarettes and alcohol were both banned at various times throughout the lockdown periods from last year until this year.

READ: South African brewers adapt to survive alcohol ban

And many in those industries will be looking to Mboweni for some kind of comfort and reassurance.

VinPro's Rico Basson said that given the dire financial state of the industry, they were hoping that the Finance minister would speak to stability and policy certainty.

“We’ve asked that excise taxation is not increased by more than 50% of CPIX. We’ve also made a number of submissions for financial assistance.”

Basson is also hoping to see the agricultural master plan being fast-tracked so investment in dam and irrigation infrastructure would be rapidly addressed.

The South Africa Tobacco Transformation Alliance said that the sector was also struggling.

Spokesperson Zachariah Motsumi said that they would be keeping an eye out for news on excise taxes.

“A 0% increase will definitely help us to recover throughout these difficult times that we’ve been going though. But some of our farmers are out of business, even the manufacturers are struggling.”

READ: SAB heads to court in ‘last resort to protect livelihoods’ over alcohol ban

And now almost a year into the COVID-19 pandemic, the true economic devastation brought on by global slowdowns and local lockdowns is becoming ever more apparent.

SA's restaurant and tourism sectors took a huge knock during the pandemic as they were unable to operate as per normal.

Restaurants Association of South Africa CEO Wendy Alberts said that the pandemic had a huge financial impact on the sector.

Alberts said it was critical that provision be made to rebuild the industry and hoped that there would be some positive news in the Finance minister's Budget.

“Hence [we’re asking for] the banks to relax their lending criteria to be able to bring some cash flow into businesses and the beneficial interest rate. So, we’re not in a position to pay the high leverage interest rate and we certainly hope they’ll look at all these elements.”

Tourism has also been hard hit, with borders closed for large chunks of last year and the new variant setting back hopes of a quick rebound.

South African Tourism CEO, Sisa Ntshona, said that the crucial thing to get right at this stage was the vaccine programme.

He said this would give confidence to tourists and to get more people to travel, which would help with payments and creating jobs.

“The sector itself has not had a direct income and that’s got a direct consequence on jobs. Hotels are not opening up and hotels are closing. An effective vaccine rollout programme just spells confidence in the destination that is South Africa.”

Tourism contributes 8% to the country's GDP and supports 1.5 million jobs.

Mboweni will deliver this year's budget in Parliament on Wednesday afternoon.

WATCH: Lockdown adjusted: Church gatherings permitted; alcohol sales ban lifted

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