The draft Business Licensing Bill, gazetted by the Department of Small Business Development is expected to close for public comment today (Friday 28 November) after it was announced in September. The bill aims to achieve a registry of all businesses operating within the country in both the formal and informal sectors. This will be accomplished by the businesses having to register with, and obtain a licence from, their local municipality. This Bill replaces the Business Act of 1991 which required businesses that served food, operated health facilities such as massage parlours, or entertainment venues, to be licensed with local authorities.
Within the planned legislation:
• the new business licences will be valid for five years before having to be renewed via what is said to be “a simple process”;
• it confers on a number of institutions the authority to examine businesses and their licences;
• inspectors will be able to fine a business or confiscate goods if the operators are found to contravene the Bill or other laws such as selling pirated goods.
• licensing authorities have to issue business licences within 30 days of the application;
• authorities could extend this period by 14 days under certain circumstances.
• an operator must produce its licence on demand to an inspector or face a fine. (1)
The Bill intends to provide an uncomplicated, facilitative framework for the licensing application procedures by providing set norms and standards. Another endeavour is to promote competent governance and support.
However, there has been backlash from different entities accusing the bill of being vague, confusing and unworkable. The Centre for Development and Enterprise (CDE) said that the Bill could be the most “anti-business and growth-retarding law passed by the government since the advent of democracy.”
“The Bill reflects a desire to clamp down on foreign nationals’ participation in economic activities, but would have wider implications for everyone,” said the CDE. “Government should withdraw the Bill before it destroys confidence, before municipalities attempt to enforce it, and before already struggling entrepreneurs are told they must pay for the privilege of running a business and creating jobs.” The CDE added that the government should instead focus on more growth-focused legislation.
According to Lionel October, Director General of the DTI, the Bill will merely extend and standardise the issuing of licences. This process already exists but is not being implemented uniformly. It is claimed that the process of registration would be simple, fast and cheap. Advantages of this Bill according to October are:
• by registering, informal sector traders would also be able to get onto a database which would allow them to gain access to government support programmes;
• that registration of informal businesses would help the Department to target support at such businesses;
• the Bill would also help the government to crack down on traders selling items such as pirated DVDs;
• that businesses such as bars, taverns or restaurants already in possession of the necessary licence needed to operate, would be exempt;
• that the granting of licences will ensure greater security to operate a business: He gave the example of a shebeen operator who doesn’t have a liquor licence and who could therefore easily be closed down or harassed by the police or officials tasked with enforcement. With a licence, a shebeen operator is able to upgrade and expand their operations.
Areas of concern to business are:
• the compliance burden is too onerous, diverting time and resources away from the core business of companies;
• the Bill will spur on illegal business activity as operators seek to avoid complying with the Bill, which can lead to increased bribery and corruption;
• this Bill will heighten the risk profile of businesses, which already have to contend with challenges of access to finance;
• the accumulation of regulatory requirements raises costs of doing business;
• the Bill will impose an increased administrative burden on the authorities, who already lack capacity;
• the Bill does not give clarity of application to businesses with a national footprint;
• the Bill speaks of an automatic revocation of a licence, if non-compliance is found, and a business owner can only appeal once the business has been closed. This does not provide a fair process for a business to plead its case before the licence is revoked. This appears to be an unjust administrative action that undermines the provisions of section 33 of the constitution
Public comments are still encouraged till midnight.
Source: Department of Trade, Industry and Competition
Department of small business development