On November 8, 2022, the Parliament of Uganda, presided over by the Right Hon. Speaker, Anita Among, permitted Tororo District Woman Representative, Hon. Sarah Opendi to introduce the Alcoholic Control Bill 2022.
The Bill is intended to address the regulation of the manufacture and importation, sale, and consumption of alcoholic drinks. At its core, the bill was presented to address the harmful use of alcoholic drinks that cause a high burden of disease and has significant social economic consequences and often result in harm to other people.
The Private Member's Bill seeks to repeal the current legislations that include, the Liquor Act, the Portable Spirit Act, and the Enguli (Manufacturing and Licensing) Act, all enacted in the 1960s.
The intention is to replace them with a comprehensive piece of legislation that contains provisions to address consumption, regulation of manufacture, importation, promotion and advertising and labeling of all alcoholic drinks.
To be clear, I am not averse to this bill. Whereas legislation is needed, legislators have to be careful and ensure that it does not hurt the economy if the real problem isn't properly identified. Let's address it here and now.
The foremost problem of the alcohol industry in Uganda is illicit alcohol. Yet, the bill proposes the exclusion of native/illicit liquor. Yet, native liquor forms majority of the illicit alcohol in Uganda (65 per cent).
This presents the risk of increased illicit trade and an unleveled playing field for the legitimate/formal sector that contributes over 30 per cent to the total government revenue.
Illicit alcohol is any alcohol that does not fulfill official requirements including payment of relevant taxes, necessary health standards and permits, and compliance with the local laws and norms.
In Uganda, the illicit alcohol consists of three categories; illicit homebrew, illicit/ illegal imports and sale of counterfeit and surrogate alcoholic beverages. Illicit alcohol homebrew is popularly known as Waragi, Malwa and Tonto and surrogate alcohol includes pharmaceutical alcohol such as ethanol. Illicit alcohol is a danger to society and the economy in many ways.
For instance, when you pick up a bottle of Bell Lager, Nile special or Club, the alcoholic beverage percentage in the liquid is very clearly indicated. This is not the case with the "Kasese waragi" or Omuramba or malwa that you pick up at your local Kafunda.
The latter's alcoholic content is not measured and/or regulated, which might pose great health risks. No wonder we have had reports of deaths, blindness, and other adverse effects from the consumption of these products due to methanol poisoning.
Just three months ago, 17 people died in Arua due to the consumption of such adulterated alcohol. In June 2017, 11 people died in the township of Nansana after consuming toxic gin.
April 2010, more than 80 people died in Kabale due to drinking Waragi and in October 2009, five people also succumbed to death in Kasese after drinking crude Waragi.
Sadly, these aren't all the statistics; most deaths, unless they occur in significant numbers, are not picked up by the national media, or do not cause a stir at all. These numbers also exclude those who get blind and other health complications.
All happens because illicit alcohol is unregulated, both in the standard of production, the conditions in which it is packaged and sold. It is also untaxed thus cheap on the market and highly consumed by the poor.
According to the Euromonitor Illicit Alcohol Trade Report 2021, illicit alcohol accounts for 65 per cent of all alcohol sales and consumption in the country.
Between 2017- 2021 alone, the value market size of illicit alcoholic drinks increased at a compound annual growth rate (CAGR) of 18.3 per cent from Shs 2.2 trillion in 2017 to Shs 3.6 trillion. Due to inadequate enforcement measures toward illicit alcohol, the government suffers significant revenue leakage to the tune of Shs 1.6 trillion in evaded taxes, according to the aforesaid report.
To put it into perspective the amount of money lost to illicit alcohol only could fund a ministry's annual budget. The bill comes at a time when Uganda's economy is recovering from the effects of Covid-19. These recovery efforts have been hampered by the effects of a global economic phenomenon characterized by higher-than-expected inflation, which has led to increased cost of doing business.
This is, therefore, not the time to curtail the regulated, licensed alcohol beverages sector, which contributes to the tax base of the country with a collection estimated at more than Shs 1 trillion (about 5 per cent of total taxes collected by Uganda Revenue Authority) annually.
Throttling this industry through stringent legislation and taxation will not only directly impact stakeholders in the alcohol industry and the value chain like farmers, transporters and retailers, but indirectly to the people of Uganda because these taxes contribute to provision of the social and infrastructural services that are sorely needed.
While illicit alcohol may be a source of employment in poorer communities, it has far-reaching negative impacts on consumers. Despite government efforts toward curbing illicit trade such as the Digital Tax Stamp (which has led to a decline in tax leakage) and the ban on sachets, there is still room to do more, without imposing undue regulations on the formal alcohol industry.
For example, there has been notable success of some grass root administrations such as Gulu, where underage drinking and the distribution of distilled homebrew is banned. Additionally, private sector players have implemented successful initiatives and campaigns promoting responsible drinking to their consumers which can be an asset in creating in terms of more awareness about the health dangers of illicit alcohol to consumers.
Updating the alcohol laws is also essential. That should come with stringent penalties and punishments that can deter illicit alcohol trade. Importantly, a favourable tax regime on regulated alcohol would encourage more illicit manufacturers to join the regulated alcohol industry through reduced prices of regulated alcohol.
This would make alcohol more affordable for consumers and create a competitive level playing field. Most importantly, the tax base will be widened. With more consumption of regulated alcohol, which complies with regulatory standards on health and safety, many of the negative health impacts can be mitigated.
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I have also noted the proposal on location of bars. It is stated that for purposes of determining suitability of premises for licensing, bars should not be within 200 meters away from the places of worship, schools, health units or residential areas.
From a realistic standpoint, the state of Uganda's physical planning, this is impractical and would mean closing at least 80 per cent of the existing bars in Uganda.
The problem of alcohol in Uganda is not its availability but abuse, like is the case with many other non-alcoholic products. Abuse and deviation cannot be stopped by laws but self-regulation, awareness, and positive social influence, especially from families.
You can restrict drinking in the bars but you can't stop people from buying and drinking without control in the privacy of their homes. Remember what happened during the Covid-19 pandemic?
Bars were closed but numbers show that the consumption of alcoholic beverages actually went up and people were drinking from their houses.
So, alcohol abuse should be addressed through a multi-pronged approach and multi-stakeholder awareness, just as it has been done with other socially undesirable habits like unhealthy eating, and speeding.
I appeal to government to instead change the Alcohol Control Bill to bringing unlicensed alcohol (illicit alcohol) under regulation by ensuring registration, certification, licensing and tax compliance.
The author is the director Policy and Business Development, Private Sector Foundation Uganda
