GEORDIN HILL-LEWIS: New bureaucratic hoops to jump through will not lead to economic liberation

If red tape created jobs, South Africa would have full employment by now. South Africa’s small businesses do not need another layer of bureaucracy. They need breathing room and a government that trusts them, supports them and clears the path for them to thrive.

Unfortunately, the proposed Business Licensing Bill does the opposite. It risks burying entrepreneurs under a new mountain of paperwork and delay, undoing years of progress towards cutting red tape and improving the ease of doing business in cities such as Cape Town.

At its core the bill starts from a faulty premise: that every business must have a licence to operate. It then constructs a sprawling framework of regulations, committees and enforcement mechanisms to manage this unnecessary complexity. But the real question we should be asking is not how to license businesses more efficiently, but why we should license them at all.

Almost every new measure the bill seeks to introduce already exists in South African law. Businesses are already required to comply with building regulations, zoning schemes, health and safety standards, environmental approvals and fire safety checks. A restaurant cannot open its doors without a health certificate. A manufacturer cannot operate without compliance with occupational health and safety laws. Adding a new “business licence” layer simply duplicates these existing processes, requiring applicants to prove, once again, that they’ve already complied with the same rules elsewhere.

The City of Cape Town has argued that if the national government’s goal is to simplify, integrate and support small business growth, this bill moves in exactly the opposite direction. Municipalities already manage the practical side of local economic activity — from land use to trading permits to environmental compliance. The new bill would force cities to establish parallel systems, issue thousands of new licences, and assess “applications for exemption” — without the staff, budgets or technical capacity to do so.

The irony is that the bill’s own preamble commits to promoting “economic unity and inclusion”. Yet the administrative weight it creates would suffocate small businesses, informal traders and start-ups — the very people it claims to empower.

Cutting red tape in Cape Town

Cape Town has taken a very different approach. Through its “Ease of Doing Business index”, the city has been working systematically to achieve its ambition of making Cape Town the easiest place to do business in Africa. The index measures the time, cost and simplicity of completing essential business processes from building plan approvals to electricity connections to trading permits. Each year it identifies specific bottlenecks, departments or regulations that delay entrepreneurs, and then targets reforms to remove them.

This approach has delivered real results, and there is still much more the city will do. It has reduced average building plan turnaround times, streamlined business zoning applications and introduced online applications and submissions for key processes. These changes mean fewer forms, fewer queues and faster approvals, because we know that time is capital for small businesses.

Cape Town’s success shows what happens when a government focuses on enabling growth instead of regulating it to death. According to the city’s latest quarterly jobs report, Cape Town added 40,000 jobs in the third quarter of 2025 alone — the highest among South Africa’s metros — bringing year-on-year gains to 70,000 and keeping the city’s unemployment rate at 21.6%, compared to the national average hovering near 34%.

With 1.826-million Capetonians now employed, this progress is more than just a statistic. It is true empowerment. It’s being driven by Cape Town’s record R40bn infrastructure pipeline over the next three years, three quarters of which will be in low-income communities. This construction boom alone is expected to create 130,000 construction jobs, and it is being driven by cutting red tape, investing in growth and trusting citizens to build their future.

The national government should be learning from these kinds of local reforms, not imposing new bureaucratic hoops that undermine them.

Danger of centralisation

The bill’s structure also raises deeper constitutional and practical concerns. It centralises significant power in the hands of the small business development minister, who would be able to “designate” which types of businesses require a licence. This infringes on the areas of provincial or municipal competence. That means the national department could unilaterally decide that new categories of businesses must now apply for a licence to operate, in effect redrawing the regulatory landscape without local oversight.

This kind of creeping centralisation is not consistent with the spirit of the constitution, which allocates “trading regulations” and “street trading” to local and provincial spheres of government. South Africa’s constitutional model of co-operative governance rests on the principle of subsidiarity; the idea that decisions should be made as close as possible to the people they affect. Pretoria cannot possibly design a one-size-fits-all licensing regime for the diverse economies of South Africa’s towns and cities.

Even the bill’s stated good intentions are unworkable in practice. Determining whether a business is “low risk” or whether an applicant has a “proven track record of compliance” requires substantial investigation and documentation. Licensing authorities would have to check histories of compliance, verify credentials, consult multiple departments and issue written decisions within 30 days — an impossible ask given current municipal capacity and workloads.

What this amounts to is another system that will delay legitimate businesses while doing little to stop bad actors. Entrepreneurs who want to follow the rules will spend weeks and months navigating new application forms, while those who don’t will simply continue operating outside the system.

In Cape Town we believe in a different model of partnership between the government and business. We recognise that regulation is necessary for safety, fairness and accountability, but it must be proportionate, risk-based and designed to enable rather than obstruct. Every new form and every new requirement carries a cost for the businesses. For a small enterprise, that cost can mean the difference between hiring one more employee or closing its doors.

South Africa’s economic recovery depends on its cities being engines of opportunity, not gatekeepers of compliance. The Business Licensing Bill would move us backwards, not forwards, towards more bureaucracy, not more growth.

Cape Town is showing that it is possible to create a regulatory environment that is both safe and business-friendly, one that rewards innovation, encourages investment and helps entrepreneurs turn ideas into jobs.

South Africa doesn’t need another licence to do business; it needs the freedom to do business.

• Hill-Lewis is executive mayor of Cape Town.