Raising the drinking age to 21: Pros and cons

Project name:
Evaluating the economic, health and social impacts of the proposed Liquor Amendment Bill, 2017

Service:
Regulatory economics and accounting
Shared value

Sector:
Health
Public and Social

Area of Expertise:
Socio-economic impact assessment
Business impact assessment

Client:
National Economic Development and Labour Council (NEDLAC)

Date:
2017

Country:
South Africa


Most South Africans do not drink alcohol, yet South Africa’s consumption per capita is extremely high by international standards. The inference is that those who do drink, drink in excess. Heavy episodic drinking (binge drinking) is typical and there are also high levels of youth drinking.

On the positive side, alcohol provides an important social and leisure benefit for many responsible citizens who drink in moderation without creating harm to themselves or to anyone else. Importantly, the rights of these citizens should not be impacted punitively by the intended or unintended consequences of regulation. Moreover, the alcohol industry supports a large value chain. Taxes on alcoholic drinks are also significant contributors to the fiscus. 

On the negative side, there is almost universal consensus by stakeholders, including industry, that South Africa has a problem with hazardous drinking. When compared with international benchmarks it is clear that our drinking habits are problematic, especially levels of heavy episodic drinking and youth drinking.

Considering these public harms, government has a legitimate mandate to set policy to reduce the harmful effects of alcohol.

Government (led by the Department of Trade and Industry and supported by the Department of Health) proposed a number of amendments to the national Liquor Act, 2003 in line with the National Liquor Policy, 2015. The most notable being amendments to Sections 9, 10, 13 and 34A that dealt with:

• New restrictions on the advertising of alcohol;
• A change in legal drinking age (LDA) from 18 to 21;
• Changes to the licensing requirements with regard to B-BBEE; and
• Extended liability for manufacturers, distributors and retailers of alcohol.

The proposed amendments were significant and would have an impact on economic, social, health and other public policy interests. The amendments would therefore be supported by those who prioritised public health, social, children and familial issues, and opposed by those who favoured economic growth, consumer choice and libertarianism.

The National Economic and Development Labour Council (Nedlac) determined that the debates and passage of the amendments should be well informed by an independent study on the likely impact of the amendments. With funding from the South African Liquor Brands Association (SALBA), it commissioned Genesis Analytics to conduct an urgent independent study on the likely economic, health and social impacts of some of the amendments proposed in the Liquor Amendment Bill, 2017.

The Genesis team first modelled a business-as-usual baseline scenario to 2025 that excluded the policy changes. Then it modelled the combined effect of the proposed change in legal drinking age (LDA) from 18 to 21 and advertising restrictions, using low and high impact scenarios. 

The results of the economic model uncovered the effect of the proposed amendments on overall output, tax and employment in the alcohol industry and economy-wide in the low impact and high impact scenarios. The immediate impacts on the advertising and media industry were also evaluated. 

Drawing on international literature, regional analysis, consulting industry and health experts as well as using other multiple approaches Genesis was able to gather information to estimate the likely impact of the change in LDA and advertising restrictions on consumption volumes. Among drinkers aged +15 it was able to quantify the number of young, hazardous and heavy drinkers who would reduce their consumption. Genesis was also able to estimate the public health savings associated with the proposed policy changes. 

Genesis’s technical inputs, rigorous, independent and objective study provided the social partners and government with facts and evidence to debate further the merits of the amendments.

Why Nedlac wants a new study to quantify cost of liquor

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