TORs

1. Revisiting the potential socio-economic impact of the Western Cape Liquor Act on unregulated liquor retailersResearch Commissioned by the Department of Economic Development and Tourism by Sustainable Livelihood Consultants23 April 2012 Socio-Economic Impact of the Western Cape Liquor Act

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

5. Results 33% < three years old Unregulated liquor trader numbers and owner demography 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 2.6 direct jobs per unlicensed liquor retailer Household livelihoods impact 5.5 household livelihoods per unlicensed liquor retailer Socio-Economic Impact of the Western Cape Liquor Act

7. Economic multipliers for micro-enterprises Bottle collectors 17% Butcher shops 3% Other shebeens 4% 3.5 related jobs per business Juke Box 17% Entertainers / DJs 9% Informal liquor retailers Spaza shop 16% Security guards 3% Leaflet producers 2% Street braaiers 29% 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 2/3 of low volume did not apply, and 2/3 were not policed *(average spend on licensing R41,700) …. Encourages business to become clandestine.. Socio-Economic Impact of the Western Cape Liquor Act

10. Supply chain impacts Other… • Anger towards foreign nationals operating businesses in the township sector Ad hoc clandestine transporting of illicit liquor Increasing smaller business numbers Growth in ales and concoctions Off-site / hidden liquor storage (friends, neighbors, wholesalers) Socio-Economic Impact of the Western Cape Liquor Act

11. Community Attitudes Survey 102 randomly selected households in Delft Percentage of households with at least oneliquor consumer 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: 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. 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 1 x potentially licensable business stocking 450 litres beer Disproportionate policing Response (closures, job losses and downscaling) 3 x clandestine businesses stocking150 litres of beer each Limited policing Socio-Economic Impact of the Western Cape Liquor Act

17. 4. The operation of informal liquor retailers in residential areas is determined by economic forces.Tradersare 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. 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