Licensing of Businesses Bill 2013 is draconian, unworkable, contradicts the NDP and should be withdrawn 

Last week, the Free Market Foundation (FMF) submitted written comments to the Department of Trade and Industry opposing the proposed Licensing of Businesses Bill gazetted on March 18 by Minister Rob Davies. The FMF believe that this Bill is draconian, unworkable and should be withdrawn. Licensing laws criminalise ordinary economic activity and create opportunities for corruption. Many licensing laws once considered essential have been repealed.

The proposed legislation will take the country back to the days of apartheid when strict licensing laws kept black South Africans out of business and allowed the government to keep a firm grip on their activities. A former treasurer of NAFCOC, Sy Kutumela, said  at the time that a black person required 32 different approvals in order to start a small grocery store in a township. Small, aspirant entrepreneurs in low income communities will be hit hardest by these proposed licensing requirements which will place them at the mercy of officialdom, just as they were during apartheid...      

It's another example of how government bureaucratic red tape will strangle any new business at birth and penalise small business and budding entrepreneurs, precisely the people this country needs to create growth and jobs. It will be even more difficult to get a foothold into the legal economy especially for poor, ill-educated and disadvantaged citizens. It will criminalise otherwise legitimate businesses. If they don't obtain a licence, they will face penalties of a fine or imprisonment. Why? For what purpose has this Bill been initiated? 

Does the right hand of government know what the left is doing? Politicians from the President down have promised less red tape yet this is the very opposite. The Bill requires every business, in virtually any and every sector in the entire country, to obtain a licence to trade. It applies to every provider of any goods or services and is wide enough to cover most forms of trade with few exceptions.

The provisions directly oppose the policy proposals made in the National Development Plan which state the need for government to create conditions which make it easy and simple to do business by cutting red tape. How does this Bill fit with the NDP thinking?

The Minister says optimistically that licensing will be easy. This is unlikely. The Bill provides no clear transitional period for existing businesses to obtain licences. Municipalities, already crippled by lack of capacity, will, as designated licensing authorities, be swamped with applications. 

The wording is vague. It is not clear that licensing authorities will be obliged to issue licences to businesses that qualify. The Bill does not say that a licensing authority ‘must' issue licences to businesses which satisfy the requirements but that it 'may'. What if they don't? Does a business then close down taking jobs with it, or face prosecution? 

Licensing authorities can impose any licence condition at their sole discretion, and amend any licensee's licence conditions unilaterally. This opens the door to corruption.

The Bill envisages ‘deemed licences' where the licensing authority has not issued or renewed a licence. This won't work in practise. Businesses risk being penalised for being unable to produce a licence. Inspectors will have powers to impose fines on a licence holder who ‘fails to produce a business licence' upon request, and to ‘close any premises pending further investigation'. Businesses with licences ‘deemed as having been issued' will be punished. 

The Bill will have draconian consequences for anyone convicted of contravening the counterfeit-goods, tax, food-safety or immigration laws. Municipalities will be able to order those found guilty to stop trading thus inflicting punishment twice for the same offence which is contrary to good law. 

The Bill is vague, badly drafted, and impractical and will criminalise legitimate business. What has gone wrong? Why, when SA has over 7 million unemployed, is the government creating more barriers to new business start-ups and job creation?  Parliament should refuse to entertain such a Bill for the harm it will do to low-income entrepreneurs and the economy as a whole.

Statement issued by the Free Market Foundation, April 19 2013

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