ZAMBIA – The Illicit alcohol trade has been rampant across the globe at the expense of the legitimate alcohol manufacturers who contribute not only to the exchequer but also create thousands of job opportunities.
Other than looking at the economic implications of the illicit trade, consumers health’s are at a risk as the illicit market continues to predominantly supply smuggled beverages that often lack proper certification from standards agencies.
According to the recently launched EY Economic Impact Analysis report by Zambian Breweries, the illegitimated trade has grown at such a rapid rate that government lost K21 billion (US$1.09 billion) to the national output in 2018 alone.
All this overshadows the success attained by players such as Zambian Breweries who generated about K5.8 billion (US$301m) worth of output in 2019 while creating over 80,000 direct and indirect jobs and contributing K1.6 billion (US$83m) to government revenue.
According to the Euromonitor report of 2018, Illicit alcohol accounts for about 70% of the local alcohol market share.
At the global font, one in four alcohol bottles are illegal, representing 25.8 percent of all global consumption.
These findings corresponded to data from the World Health Organization (WHO) that placed unrecorded alcohol at 25.5 percent of total worldwide adult consumption during the same period with marked growth projected over the new decade.
“It is time the illegal alcohol sector was made to play by the rules and participate in promoting public health while also increasing its contribution to economic growth.”Zambian Breweries
Triggers of illicit trade
Assessing its cause, the leading brewer notes that despite Zambia having fairly strong legislation like the Liquor Licensing Act of 2011 and the National Alcohol Policy (NAP) among others – the lack of strong and consistent enforcement means that the illegal market has continued to undermine the formal sector and its capacity to contribute to economic development.
Rise in local excise taxes on popular premium clear beer brands between 2013 and 2016, has also been identified as a contributing factor to smuggling and an explosion in counterfeit products.
“It is not uncommon to find retailers selling both legitimate brands and counterfeit beverages in the same store, making the consumer an unwitting accomplice in the illegal sector’s growth,” highlights Zambian Breweries.
Measures to curb the trade
To this end, the alcohol manufacturer has called for transparency in the manufacturing sector to tracking and plugging revenue leaks.
Also, Zambian Breweries has called upon consumers to insist on genuine beverages, and promote fair trading practices in the sector.
Further to that a multi-stakeholder approach will hasten the development of effective strategies that will either eradicate or convert the illicit market into a legitimate alternative sector.
“It is time the illegal alcohol sector was made to play by the rules and participate in promoting public health while also increasing its contribution to economic growth,” states Zambian Breweries.
Despite the unfair competition being witnessed in the market due to the presence of such products, Zambian Breweries has had a positive impact on the economy with its contributions being quantified in terms of increased employment opportunities across the value chain, growing labour income, gross value added (GVA) and economic output.
This has been achieved in part by the company’s commitment to sourcing raw materials such as sugar, maize, sorghum, barley, and cassava from local farmers.
Consequently, there has been a marked increase in job opportunities in the agricultural sector and associated industries resulting in secondary benefits for rural communities.
However, the company notes that if the illicit trade is left unchecked, its growth could negatively impact Zambia’s capacity to attain its socio-economic development targets like the United Nations Sustainability Development Goals.
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