Opinionista Michael Fridjhon 23 February 2018

The liquor industry offers massive empowerment possibilities

President Ramaphosa could do everyone a favour and put a stop to the forced expropriation of established liquor businesses by the Department of Trade and Industry.

Now that he’s grasped the chalice contaminated by the flaws in Mbeki’s presidency and poisoned with the wholesale evil of the Zuma era, Cyril Ramaphosa will have to deal with a long wish-list from the citizens of South Africa. Being the prescient type, he will no doubt have reflected on what needs to be done to reverse the damage so we can all make the most of this #secondchance.

The country has to earn more money in order for the fiscus to collect more money so that it can start buying us out of the debt run up by the profligacy, dirigisme and corruption of his predecessors – their cabinets, camp followers and partners in crime.

It needs to spend that money more thoughtfully, more parsimoniously and more creatively. We must ensure that the conversion of work to income proceeds more efficiently – which means we need to be more productive, not only in how we produce widgets, but in how we invest our time.

If he gets this right, many of the inefficiencies which define how we operate will evaporate, and we will have the money to address the social and political shortcomings which define post-apartheid South Africa:

  • Policing failures (despite the money spent on the police);
  • Injustices in the application of the law (despite money spent on the justice department);
  • A collapsed education system (despite the money spent on basic education) and
  • A public health structure unfit for human patients (despite vast sums spent on this ministry).

He will of course have to walk the tightrope of the expectations of his alliance partners (now that he’s building bridges to replace the ones destroyed by his predecessor). If we are to become efficient, we have to eliminate the inefficient; if we are to improve education, we need to ditch the lazy and incompetent teachers; if we are to arrest spiralling crime, we need higher conviction rates, better police detection work, fewer “lost” files.

If business is to operate at peak efficiency, it needs to make productivity a condition of continued employment. You can bet that not everyone on his side of the floor will be happy about this.

We understand why textiles from the east arrive here at prices far less than local manufacturers can hope to match.

What we have yet to grasp is that enhanced productivity is the commercial antidote to low wages.

The solution to many of these problems is not in the direct power of the president, though he can set in motion the changes of culture which will transform the climate.

However, one thing he can drive is the elimination of the impediments which have allowed these inefficiencies to prosper. Twenty-four years into post-apartheid South Africa the continued existence of BEE quotas either stands as a monument to the failures of successive ANC administrations to educate all the citizens of South Africa or serves to insult people who occupy senior positions by virtue of their skill and competence, rather than the colour of their skins.

What is certain is that the suspension of meritocratic criteria undermines the efficiencies we so desperately need if we are to function competitively. By all means create incentives to favour small businesses (which will generally be black-owned), but give up on the idea of quotas for everything, from shareholdings to the racial profile of employees. The best people for the job will do the job best.

Even before he grasps at the viper of BEE quotas, President Ramaphosa could do everyone a favour and put a stop to the forced expropriation of established liquor businesses by the Department of Trade and Industry.

In an apparent endeavour to change the racial composition of the trade, the DTI is demanding a significant black shareholding as a pre-condition to the renewal of existing liquor licences. However, the same legislation, contaminated by the prohibitionism which is endemic to the ANC, makes it impossible for new licence applicants, including and especially the tens of thousands of black traders who have flourishing business (most of which trade illegally), to regularise their operations and become part of the formal economy.

The retail liquor industry has been predominantly black for many years. The problem – for black participants – has been one of licensing. Instead of dealing with this – something which can pretty much be managed by ministerial edict, and which will address the apparent racial inequalities in the formal sector – the Rob Davies solution is the partial expropriation of white-owned businesses.

The idea is so ludicrous that mostly people think this is a Zuma-era joke. The same ministry would never consider outlawing minicab taxis and then addressing ownership problems in the transport sector by insisting that anyone applying for the renewal of a transport licence (from Comair to Greyhound) must take on a 25% black shareholder block.

The liquor industry offers massive empowerment possibilities – retail is obvious, but there’s also distribution and brand ownership. However, the moment the word “liquor” appears, the prohibitionists come out of the woodwork.

We are told it’s a dangerous substance, easily subject to abuse, implicated in workplace issues, productivity shortcomings, vehicle accidents and domestic abuse – all of which is undoubtedly true. We are then presented with any number of thumb-suck estimates of what it costs the economy. (In the prohibitionists’ utopia the country would be between R40-billion and R80-billion better off each year, an assumption as naïve as it is inaccurate.)

The problem is not one of licensing but of policing: the laws are there – as they are for motor vehicles, and other potentially dangerous but desirable features of modern life. However, the policing issue – which extends to applying the law to prevent the supply of alcohol to minors, and to arresting motorists who are over the limit – also requires a changed mindset.

Until now it seems that these regulations, which in corruption-free regimes play an important role in minimising the negative issues associated with alcohol, have been interpreted by the more entrepreneurial-minded functionaries and officers of the law as an opportunity to enhance their income. Who can blame them, given the example set by Zuma and his cronies?

Using restrictive licensing practices as an empowerment tool in an industry where the reality already pretty much reflects the South African demographic is lazy, and certainly dishonest. A sign of a new spirit – and a new spirit of engagement – in Tuynhuys would be a presidential fiat putting a stop to this charade. DM

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