Original Research

A cost–benefit analysis for alcohol in South Africa for the year 2019

Graham Barr
South African Journal of Economic and Management Sciences | Vol 27, No 1 | a5314 | DOI: https://doi.org/10.4102/sajems.v27i1.5314 | © 2024 Graham Barr | This work is licensed under CC Attribution 4.0
Submitted: 05 September 2023 | Published: 11 March 2024

About the author(s)

Graham Barr, Department of Statistical Sciences, Faculty of Science, University of Cape Town, Cape Town, South Africa

Abstract

Background: This article considers the impact of the production and consumption of alcohol on the economy of South Africa and on South Africa at large. It does this through estimating the costs of alcohol consumption for the South African (SA) society on the one hand, and comparing it to estimates of the economic benefits of having an established alcohol manufacturing industry in South Africa on the other.

Aim: The study aims to use available data to objectively assess the role of alcohol in the SA economy.

Setting: The study is conducted at a macro-level on the SA economy.

Method: Quantitative assessment of the net economic benefit (or cost) of the SA alcohol industry was used for conducting the study.

Results: The study indicates that the production of alcohol contributes significantly, both directly and indirectly, to Gross National Product (GDP) and generates broad-based employment in the economy. The damage caused by the consumption of alcohol to society is significant and primarily includes the suffering and even death resulting from medical conditions associated with the consumption of alcohol.

Conclusion: Taking all factors into consideration, the alcohol industry has a large net positive contribution to the SA economy, levels of employment, and SA society.

Contribution: There has been much debate and discussion about the net impact of the alcohol industry on South Africa. This study makes a clear contribution to the debate in that it calculates empirically, on a solid statistical foundation, a Rands and cents estimate of the net contribution of the alcohol industry to the South African economy.


Keywords

industry; alcohol; benefits; costs; evaluation

JEL Codes

I18: Government Policy • Regulation • Public Health; L51: Economics of Regulation; L66: Food • Beverages • Cosmetics • Tobacco • Wine and Spirits

Sustainable Development Goal

Goal 12: Responsible consumption and production

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