South Africans are among the heaviest drinkers in the world. The country has the highest per capita rate of alcohol consumption in Africa. Excessive drinking is especially widespread in the Western Cape. Research estimates that per capita alcohol consumption in the province is between 30% and 40% higher than the national consumption.
In a bid to reduce alcohol-related harms in the province, the Western Cape government has proposed a policy to restrict trading hours for onsite alcohol consumption. International research shows that reducing trading hours is an effective way to curb alcohol consumption and its associated harms. This type of policy is also supported by the World Health Organization.
My colleagues and I at the University of Cape Town recently conducted a modelling study. We wanted to determine the health and economic impacts of restricting the hours of onsite alcohol consumption.
We considered three latest closing-time scenarios: midnight, 1am and 2am. Data for the model baseline was drawn from national surveys on alcohol consumption, the national treasury's annual budget reviews and publications from Statistics South Africa and the South African Medical Research Council.
We estimated the impact of each of the proposed closing times on the number of cases and deaths associated with certain health conditions. The study also assessed the policy's impact on alcohol expenditure, excise tax, value added tax and retail revenue. Finally we estimated the impact on the cost of combating alcohol-related crime in the Western Cape.
Our results make it clear that limiting the hours for onsite consumption of alcohol will save lives. It will also prevent alcohol-related diseases and injuries, and reduce hospital and crime prevention costs.
On the other hand, national tax revenue and revenue to the alcohol industry will decrease.
We looked at how the policy might affect public health costs of six alcohol-related conditions. We also factored in the hospital costs of treating these conditions. The conditions we looked at were: road injury; intentional injury; liver cirrhosis; HIV; TB; and breast cancer.
Model estimates suggest that all closing-time scenarios correspond to decreases in six areas. These are:
- alcohol consumption
- number of deaths due to the six alcohol-related conditions
- number of cases of these six conditions
- hospital costs of these conditions
- cost of combating alcohol-related crime
- revenue from alcohol sales and alcohol taxation.
We estimated how much lower the number of cases of the six conditions would be over the next 20 years. The cases averted were:
- 163,800 to 453,000 under the midnight closing-time scenario
- 88,700 to 220,300 (1am scenario)
- 12,600 to 28,300 (2am scenario).
Correspondingly, the total hospital cost saving over the next 20 years is between:
- R326.8 million and R890.2 million (midnight scenario)
- R130.5 million and R381.2 million (1am)
- and between R18.7 million and R46.0 million (2am).
(At the time of publication the exchange rate was R19.42 to the US$)
In the year following the policy's introduction, tax revenue (excise and value added tax) on alcohol sales is expected to decrease by between R100 million and R333 million under a midnight closing-time scenario. Under the 1am scenario it would fall by between R54 million and R179 million. And in the 2am scenario tax revenue would fall by between R9 million and R27 million.
Retail revenue would decrease by between R328 million and R1,093 million (midnight closing time), between R176 million and R587 million (1am) and between R27 million and R89 million (2am).
What this all means
The Western Cape government has expressed a clear commitment to protecting health in the Alcohol Harms Reduction White Paper. Introducing uniform trading-time restrictions for onsite retailers of alcohol is a good first step.
A midnight closing time restriction is the most pro-health policy option. A 2am closing time is the most pro-industry. But the research does suggest that, from a public health standpoint, the 2am closing time still represents a modest improvement on the status quo.
Applying evidence-based policies to reduce alcohol consumption is necessary to reduce alcohol-related harms and deaths. The possibility of limited economic costs should not be a deterrent to this policy objective.
The alcohol industry may also point to the direct, indirect and induced job losses resulting from this policy. Concerns about employment losses are genuine and valid. But employment losses are only one side of the issue and should be considered with caution. One needs to consider the overall effects of the policy on employment. Jobs will be created in sectors attracting new demand as people spend some of their money on goods and services other than alcohol. It is nearly impossible to predict the number of jobs that will be created directly because of the policy, or because of the lives saved and lengthened.
What more needs to be done
Whatever closing time the government chooses, this policy won't solve every problem. It will need to be enacted alongside other policy interventions geared towards reducing alcohol consumption and its associated harms.
These policies include banning alcohol advertising; adopting a minimum alcohol unit price; reducing the legal limits for drinking and driving; and making it easier for people to get counselling and medically assisted treatment if they struggle with alcohol dependence.
A comprehensive policy framework that targets alcohol consumption at an individual and societal level will be required to combat alcohol-related illness and death, and the adverse health, economic and social consequences.
Sam Filby, Research Officer, Research on the Economics of Excisable Products, University of Cape Town