What you need to know:
Alcohol manufacturers and distributors are
warning that continued closure of bars will cost workers, sorghum
farmers and government Sh9.1 billion and 57,000 jobs in three months to
September unless the businesses are reopened.
The Alcoholic Beverages Association of Kenya
(Abak), which brings together key players such as Kenya Breweries
Limited (KBL), says the measure has hurt consumption and triggered
reduced demand for products such as barley and wheat used to produce the
beverages.
Kenya shut bars on March 22 as part of
measures to control the spread of Covid-19 resulting in massive
disruption on alcohol value chain that is heavily depended on bars and
restaurants.
Consumption of alcohol was also impacted
negatively by restrictions on social gatherings such as weddings and
parties to achieve social distancing rules.
Supply chain losses
“The impact of Covid-19, closure of bars, ban
on consumption of alcohol in restaurants and eateries will lead to
supply chain losses of Sh9.1 billion and 57,000 jobs losses between
July-September 2020,” says Abak.
This comes at a time Pubs, Entertainment, and
Restaurants Association of Kenya has warned that about 80 percent of its
members risk closing shop permanently as operating costs such as rent
pile.
Abak analysis shows that job losses across the
alcohol value chain that includes farmers and factories will hit 57,417
resulting into forgone revenue amounting to Sh2.72 billion.
KBL’s supply chain for senator Keg has for
instance totally collapsed since its packaging is not convenient for
take-away option as is currently required of all alcoholic drinks.
Barley, sorghum demand
Abak expects demand for barley and sorghum to
fall by three million kilogrammes and 4.8 million kilogrammes
respectively taking away Sh419 million from over 6,300 farmers.
Reduced demand for both grain and finished goods is expected to cost transporters Sh760 million.
The lobby sees job losses and reduced
consumption of alcohol costing the national government Sh5.88 billion in
excise duty, value added tax and excisable goods management system
(EGMS) fees.
County governments are also expected to take Sh3.4 billion hit on cess and liquor license payment as bars remain shut.
The projected fall in tax revenue due to
government comes on the back of net earnings of major player, East
African Breweries, having plunged to six-year low.
EABL net profit declined by 39 per cent to Sh7
billion for the year ended June as net sales for the second half the
year dipped by nearly a third due to disrupted supply chains.
palushula@ke.nationmedia.com
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