Licensing of Businesses Bill skewered for reprising apartheid-era law

Posted 15 April 2013 Written by Ciaran Ryan
Category Business

The ostensible purpose of the Licensing of Businesses Bill, which has been tabled by the Department of Trade and Industry for comment, is to help control illegal imports, counterfeit goods, and poor quality products.

The Department of Trade and Industry thinks it’s necessary to be seen to be doing something about this. So, henceforth, should the bill pass in its current form, all businesses, formal and informal, would have to register with a municipality.

This looks ominously like the apartheid-era insanity of licensing and by-laws introduced over the years to keep black hawkers off “white” streets. These restrictions were undone by the Businesses Act of 1991, which prevents municipalities or any other public body from enacting laws requiring hawkers to have a licence, unless selling food from a movable structure. Massage parlours and entertainment businesses also require a license.

But Trade and Industry minister Rob Davies has never met a free market he did not find deserving of his interference. So we will have the Licensing of Businesses Bill, which DTI hopes will stamp out illegal cigarettes, drug dealing and the like.

Now the hawker police will be back, in the form of inspectors checking up on the licences of hawkers. If found operating without a licence, they could face 10 years in jail, or a fine. Comments on the proposed bill must be in by April 17.

Licensing authorities have 30 days to issue a license, with a 14 day extension period, failing which the business is presumed to have been registered. The licenses are valid for five years, after which they must be renewed.

All this comes at a time when South Africa is being skewered for its unfriendly attitude to business.

How licensing will help in this is anyone’s guess. “The regulatory burden on the SA economy continues to grow. The long-term outlook for entrepreneurial activity in SA is bleak,” says Chris Becker, an economist with ETM Analytics in Johannesburg.

According to Sunday Times, Lawrence Mavundla, ex-president of the National African Federated Chamber of Commerce and Industry, says the bill means the "return of licensing will be apartheid in another name.”

“In 1985, Lawrence Mavundla decided to set up shop as a hawker. He unwittingly signed up for a bureaucratic nightmare, which would not allow him to get a licence until the following year.

"The requirement was that I had to apply for a licence and advertise in two newspapers —  English and Afrikaans," he said. "The health department, noise, traffic —  all had to give approval," according to Sunday Times.

The nightmare ended with the passing of the Businesses Act in 1991. "When I asked in front of the president, [Jacob] Zuma, why we are still having the hawkers squads, taxi squads and liquor squads, Davies said that hawkers sell drugs and counterfeits," Mr Mavundla is reported as saying. “I was very dissatisfied ... the minister must therefore be bringing these restrictions to try to deal with these perceived criminals."

There is also the question of whether over-stretched municipalities will be able to cope with the additional workload.

Small and medium-sized businesses are already spending 4% of turnover dealing with red tape, according to business environment specialists SBP, while the World Bank – which ranks SA 39 out of 185 countries for the ease of doing business – found SA had slipped 10 places in the rankings in terms of the ease of starting a business. 

The Department of Trade and Industry argues that the bill will not add to the ted tape already being experienced, and some exemptions will be granted to allow hawkers – without saying exactly who qualifies – to notify authorities rather than apply for a license.
Email your comments on the bill to Ms Baneka Dalasile: [email protected] or fax them to (021) 394 1729.

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