Cape Town opposed to Licensing of Businesses Bill

Garreth Bloor says onus for enforcement would be placed on municipalities, business owners without licences could face imprisonment

City of Cape Town opposes the proposed Licensing for Businesses Bill

As part of the City of Cape Town's commitment to building an Opportunity City, that is, a city with an economic enabling environment in which investments grow and jobs are created, this administration firmly opposes the recently proposed Licensing for Business Bill.

At a time when this administration is seeking to cut down on bureaucratic red tape and ensure a more efficient and accessible environment for business, we believe that the bill will be counterproductive and discourage entrepreneurship unnecessarily.

Any piece of legislation that actively seeks to make it more difficult for businesses to register and apply for licensing should be avoided.

Various provisions in the proposed bill hinder the process of setting up a new business.

For instance, the proposed bill dictates that new businesses will have to register at both local and national level, making it logistically difficult for many owners.

In addition to this, business owners would, under the new bill, be required to renew their licences every five years, adding an unnecessary regulatory and financial burden. Smaller businesses would be worst affected by this measure.

The Informal Sector often acts as the entry point to the market for various small business owners. The new bill requires that each hawker apply for a business licence, failing which they could face a penalty of up to 10 years imprisonment for engaging in unauthorised trade. This can only be seen as illogical in the face of the high unemployment rate in South Africa.

The proposed bill also suggests that if the licensing authority has failed to respond to a business as an applicant within a specified period, that business should assume that the licence has been granted. This provision creates a plethora of issues relating to enforcement and general uncertainty about the economic climate.

Significantly, the proposed bill requires that municipalities change existing regulations within their jurisdiction and places the onus of inspection and enforcement on the municipality, without any budgetary provision made for this by National Government. The fact remains that municipalities simply do not have the resources to carry out the enforcement of this proposed bill.

Research shows that increased red tape is one of the top three external shocks to generating an income. It is regrettable that, despite this, the Department of Trade and Industry has proposed a bill that would require the small business owner to jump through even more hoops to get his/her business registered and informal business owners facing possible imprisonment for non-compliance.

The City of Cape Town cannot support the proposed bill. Rather, we will support any initiative of our counterparts at National and Provincial level that aids in cutting red tape for entry into the market economy.

Statement issued by Councillor Garreth Bloor, Mayoral Committee Member for Economic, Environmental and Spatial Planning, City of Cape Town, April 18 2013

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