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Government, Alcohol Manufacturers Suffer Sh9.1 billion Loss due to Closure of Bars

The continued closure of bars will cost sorghum farmers, workers and the government Sh9.1 billion, the Alcoholic Beverages Association of Kenya (ABAK) has said.

ABAK, which brings together key players such as Kenya Breweries Limited (KBL), said that the measure accounts for the loss of 57,000 jobs in the three months leading to September.

Since the government shut bars in March this year, there has been a massive disruption in the alcohol chain which is mainly dependent on bars and restaurants. The government ordered the closure of bars as one of the measures to curb the spread of the Covid-19 disease.

Since then, restaurants have been opened with a cap on operating hours. Initially, sit in customers were allowed to have a drink with their food, however, following a surge in the infection rates during the month of July, drinking alcohol in restaurants and bars was banned.

The consumption of alcohol was restricted to homes with purchases from supermarkets and Wines and Spirits shops allowed for a specific period of time. The consumption was also affected by the ban of gatherings and events such as weddings which traditionally drive up alcohol sales.

Read: Uhuru Bans Sale Of Alcohol In Eateries

“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.

The Pubs, Entertainment and Restaurants Association of Kenya (PERAK) also warned that about 80 percent of its members risked closing their businesses permanently following the continued losses and pile up on their expenditure.

Abak’s analysis shows that the the 57,417 imminent job losses cuts across farmers and factories and will result in foregone revenue worth Sh 2.72 billion.

Over 6,300 farmers will also suffer forgone revenue worth Sh 419 million as the demand for barley and sorghum declines by 3 million kgs and 4.4 million kgs respectively. This will trickle down to the transport industry who will lose about Sh 760 million.

The reduced consumption of alcohol and job losses will also cost the government Sh 5.88 billion in excise duty, value added tax and fees. The county government is also set to lose Sh 3.4 billion which accounts for issuance of bars and liquor licences.

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