Business Licensing Bill

After strong opposition from small business, entrepreneurs and others alike, the proposed Business Licencing Bill tabled before the last election disappeared from public view. There is a chance it is making a comeback in 2015.

What is it?

Officially titled the Licensing of Businesses Bill (PDF download of original bill from 2013), it requires all businesses to be licensed by their local municipalities and pay an application fee to secure that license. It also grants authority to municipalities and inspectors who can shut down businesses based on various criteria.

This proposed new law would require all businesses, no matter how small, to purchase a business licence from their local municipality. It would appoint an army of civil servants as business licence inspectors, and arm them with expansive powers of interrogation, warrantless search and seizure, on the mere suspicion that a business was being conducted ….” – Ivo Vegter, Daily Maverick

The bill has been justified on the basis that it will help deal with confiscating counterfeit goods. Selling stolen or counterfeit goods is already illegal, with stiff penalties and jail terms for offenders. The government already has, or should have, a comprehensive database of every registered company in the country, in the form of the Companies and Intellectual Properties Commission (CIPC).

Some politicians are quick to affirm its support for small businesses. High costs and bureaucracy, perpetuated through legislation like the Business Licensing Bill, belie this claim. The truth is that this bill makes it more difficult for entrepreneurs to start and grow businesses, and that makes it an all-around bad idea.

A photo of a Business in Cape Town

Even if it the bill has been changed substantially, more business licencing is not needed!

Instead, government must enforce existing laws and improve the current ease of doing business by listening to the voice of job creators who are taking risks and creating businesses. No entrepreneur should have their business shut down on a whim without due process under equality before the rule of law.

Entrepreneurs in Public Policy have worked with entrepreneurs to identify some of what is really needed to improve the business environment!

The Business Licensing Bill must be replaced by enabling the growth of small businesses.

Small Businesses in Gugulethu - a photo

Criticism of the Business Licensing Bill

“It further increases the burden of red tape on businesses and makes entrepreneurship even less attractive in South Africa”
Why you should really worry about the Business Licensing Bill by Felicity Duncan, Moneyweb.

“Established businesses can and will use it as a sledgehammer against competitors, and especially against upstart competitors who haven’t yet learnt how to navigate the maze of red tape, or can’t afford entire “compliance departments” to manage the bureaucracy… In fact, expect big business to back Davies and to support this Bill. After all, they can afford the cost of bureaucracy, and benefit from hurdles for their competition.”
The Big Business Bribery Bill by Ivo Vegter, Daily Maverick.

“It is unclear what the point of this Bill is… Everything that the Bill apparently seeks to stamp out is already provided for in other Acts and regulations, including concerns about bootlegging, illegal immigrants, public safety and tax collection.”
Licensing of Business Bill: A titanic mess of admin and poor logic by Sipho Hlongwane,  Daily Maverick.

“The Bill will create barriers to entry by small businesses into the economy. Since the greatest share of the future business growth in this country will be in the hands of small entrepreneurs, government must ensure that no statutory constraints, intended or unintended, are placed on small business growth.”
Why the Licensing of Businesses Bill is unworkable by Leon Louw and Gary Moore, Free Market Foundation.

“(The Bill) will undermine the ability of the poorest members of society to earn a living and will, in practice, impede their right to choose their occupation, trade and profession freely in terms of section 22 of the Constitution.”
Half-hatched law lays hawkers low by Thalia Holmes, Mail & Guardian.