By Ackel Zwane
After wholesalers broke the line of distribution by selling liquor directly to the consumer instead of via distributors, traders countrywide blame the Liquor Licenses Act of 1964 for being too archaic to regulate the industry. As a result, the liquor outlets operators say there is hardly a reason to pop the champagne during the double national celebrations marking 55 years of independence from British rule and the birthday anniversary of King Mswati III slated for September 6. How much damage, if any, has this law caused in the 55 years of independence?
Members of the Eswatini Liquor Association (ELA), an organisation claiming to represent all liquor traders from the four regions of the country, allege that wholesalers supply 75% of the market through the informal sector, that is by selling to individual unlicensed outlets popularly known as shebeens. The Ministry of Commerce and Trade, however says the expectation is clear that the wholesalers must not break the chain by selling directly to the end-user but must sell strictly to distributors. The traders on the other hand argue that there is no monitoring of whether the wholesalers do comply with the expectations especially because the shebeens are not licensed and therefore not checked by the inspectors from the Liquor Licensing Board.
“They don’t pay rent, taxes, registration and application fees. They are unregulated yet we must compete with them,” said a trader from Ticantfwini, a high-density suburb of Manzini with many such informal liquor traders. This trader is no longer operating because he said he was forced out of business by the unfair competition.
However, Section 24 (3) of the Act provides that “if, in the course of a search made under this section, liquor or a still is found for which the permit required by law is not produced, the person authorised to search may seize and detain the liquor, all packages or other things in which it is contained, a wagon or other vehicle in which it is being conveyed, the still, any other things which may be material to the charge to be preferred, and if the person whose premises or other property searched is not the holder of a licence, all marked money, liquor bottles, corks, funnels, glasses, or other utensils, used in connection with the storage or sale or distillation of liquor found there.”
Chief Commercial Officer Sonto Hlophe says it is irregular for wholesalers to sell to the end-user. “The law may be silent to some degree in this regard in that it does not stop wholesalers from acquiring a retail licence but it stands that wholesalers must sell to distributors,” she says.
Section 6(3) of the Liquor Licensing Regulations 1964 says about wholesalers: The holder of a wholesale liquor licence shall fix and maintain, in a conspicuous place on the front of the licensed premises, a sign exhibiting, in capital block letters at least two inches high, his name and the following words – “Licensed to sell liquor by wholesale only”.
A tour to the ‘rogue’ wholesalers in Matsapha Industrial Sites and Manzini confirmed the open sale of liquor to individuals. A security guard at one wholesaler near the maximum-security prison in Matsapha said there was no instruction to turn back customers coming to buy in small units. Another near the police station in downtown Manzini staff was freely selling beers to Ngwane Park shebeen operators.
Meeting at the Manzini Club last week some of the traders felt the colonial law was directly to blame for the crisis in the industry, so much that regulation and other control systems had collapsed, particularly in the peri urban areas of Manzini, a city surrounded by high-density suburbs with most unlicensed liquor outlets whom the wholesalers are alleged to supply. “Some of our members do not even attend our meetings because they are comfortable trading under conditions where there is no monitoring,” says Thami Hlatshwayo, president of the association.
On a similar note, Hlatshwayo opined that even though the spirit of the law calls for a heathy distance between business outlets of the same nature, there is no one to make sure that this is upheld, as a result there has been mushrooming of bottle stores particularly in the rural areas and very close to one another yet the market is very limited. “At some point government must stop the issuance of licences to control flooding. There are just too many people doing the same thing in the same space,” adds Hlatshwayo. He cites the example of Australia whereby petrol stations faced stiff competition from supermarkets whereby the latter sold fuel at discounted prices thus kicking out of business the petrol stations which sell to the end user.
Apart from the old law, poor monitoring and inspection is partly to blame for lack of compliance with the permits in rural areas. “In the rural areas some bottle stores operate 24/7 due to corruption and this will cause the industry to implode. The inspectors, including law enforcement officers simply look the other way after a handshake. Government must enforce the law by withdrawing licences of rogue operators, it is only then that traders will comply with the permit,” said one operator who preferred not to be named. He alleged that in practice the inspectors would be in favour of one outlet against the other in the same location, for various reasons ranging from briberies to nepotism if not direct business interest on the part of the inspector.
Hlophe, in the same vein, emphasised that this old law, currently under review, imposes stiff penalties on those who will elect not to comply. She was referring to the Liquor Licenses Bill No. 15 of 2021. This bill seeks to replace the 1964 law.
The traders also noted another unfair practice in the competition among themselves that bars in rural areas do not have opening and closing time. The bottle store opens at 9am and closes at 8pm and that means customers who knock off at 5pm will only have about an hour to spend money at the bottle store while the bar, which opens at 11am to midnight will have ample time to sell its stock. Hlophe on the other hand is of the view that people are free to acquire the licence that will fit their business interest because there are several types of liquor licences: Wholesale liquor licence; Hotel liquor licence; Club liquor licence; Sports club liquor licence; Unfortified wine and malt liquor licence; Restaurant liquor licence; Bottle store liquor licence; Restricted bottle store liquor licence; Brewer’s licence; African beer manufacturing and wholesale licence; Canteen licence; Employer’s liquor licence; African beer licence; Temporary liquor licence.
In February Minister of Commerce Manqoba Khumalo implored liquor businesses to adhere to the stipulations of the Liquor Licenses Act of 1964 in accordance with the terms of their licence types.
“The ministry is keen to accept grievances from the public on any social disturbances caused by non-complying licence holders. Allegations will be investigated and if they are found legitimate or hold substance, the ministry has taken a stand to revoke those licences,” he said in a statement. “Continued breach of terms of licence shall lead to that licence being confiscated and subsequently revoked.
Currently, the Ministry has revoked at least two licences, in the Hhohho and Shiselweni regions for breaching the terms of their liquor licences. Following the call by the minister there has been overwhelming visibility of the police on the ground particularly in Mliba, Siteki, Siphofaneni, Mbabane and Manzini. In an attempt to enforce this law government at some point sought the assistance of the army to patrol hotspots particularly during the Easter long weekend.
In lieu of a way forward, the traders want to transform the industry to develop codes of ethics in a similar fashion as the construction industry so that they can enforce discipline among members without having to wait for the police or inspectors from the ministry.
“Let’s police ourselves instead of relying on police. Let us create a nighbourhood watch of sorts at regional level. Let’s own the powers to discipline operators who are found at fault,” said Hlatshwayo.
The other view was to request from the Licensing Board the right to hire and place security guards at the entrances of all wholesalers to stop individual end-users coming to purchase drinks for own consumption.