CDE slams licensing bill as most ‘anti-business’ since apartheid ended

The Centre for Development and Enterprise (CDE) has torn into the draft Business Licensing Bill proposed by the department of small business development, describing it as the most anti-business legislation since the end of apartheid.

In its submissions opposing the bill — which would replace the 1991 Business Act — the policy analysis and advocacy organisation raises several constitutional issues with the proposed legislation in its current form.

They include the extraordinary powers granted to authorities to enter business premises, and even private homes, without a warrant, and the obligation on provinces and municipalities to adopt uniform licensing laws and amend their bylaws, “undermining the constitutionally protected autonomy of these spheres of government.”

The CDE has called for the ministry to withdraw the bill, arguing small and informal firms would be hardest hit if the bill was passed into law.

“The Business Licensing Bill expands state power, creates opportunities for corruption, and imposes new burdens on firms at a time when South Africa urgently needs pro-growth reform. The Business Licensing Bill is not salvageable,” the CDE says.

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.

“This is not a case of tightening definitions, clarifying exemptions, or adjusting processes. The bill is conceptually unsound, administratively disastrous and economically illiterate. Cabinet has allowed this bill to proceed much further than it should have — a worrying sign of how poorly economic policy is being scrutinised.

“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.”

Earlier this week the department of small business development extended the deadline for public comments on the bill to November 28 due to “heightened interest from stakeholders across the country”.

The bill comes after the publication earlier this year of the country’s first national policy-level guidance on general business licensing, to cut costs and red tape.

The aim is to harmonise national, provincial and municipal business licensing to ensure synergy and alignment with regulations and business licensing bylaws.

Preferential treatment

Through the bill, the government is proposing preferential business licensing for small businesses, a move that could see municipalities lower application fees and reduce municipal rates for small enterprises.

The draft bill says local councils can make bylaws to provide for preferential business licensing for small businesses, and these may include a shortened and simplified application and renewal process, lower application fees and the waiver or suspension of fees.

The bill also provides for the appointment of inspectors to enforce business licensing laws. Their powers would include monitoring and enforcing compliance with the Act and investigating complaints submitted to the licensing authority., among other powers.

CDE executive director Ann Bernstein said the provisions are draconian and will discourage entrepreneurship and weaken livelihoods that are already under immense pressure.

“This Bill will stifle small business growth and undermine South Africa’s competitiveness. It is irrational, unconstitutional and damaging. It should be withdrawn,” Bernstein added.

“South Africa needs urgent pro-growth reform, not heavier regulation and deeper centralisation.”

The National Employers’ Association of South Africa (Neasa), which represents about 7,000 businesses, said the proposed changes are “nothing but BEE in disguise”.

Among the proposals that Neasa has taken umbrage with include empowering local councils to make bylaws to provide for preferential business licensing for small businesses owned by previously disadvantaged groups.