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New bill a ‘job killer,’ compliance nuisance and bureaucratic burden

An extension for public comment on the proposed business licensing bill may be granted.

JOHANNESBURG – As if businesses do not already have enough compliance hoops to jump through, the proposed Licensing of Business Bill  not only means more paperwork but more costs as well. Some even go as far as saying it would be a job killer.

The Department of Trade and Industry (dti) has received requests to extend the date for public comment on for the bill until the end of May 2013. Judging by the responses to the bill, a significant number of concerns have been raised.

Business Unity South Africa (Busa) said that even though the bill is meant to increase the regulation of illegal trade, it may have unintended consequences by creating another bureaucratic burden for business. Under the bill all businesses in the country, whether formal or informal, must register with, and obtain a licence from, their local municipality.

On Monday, the South African Institute of Race Relations (SAIRR) stated that the bill could not work because government departments would not be able to deal with the increased bureaucratic workload. Dr Anthea Jeffery, SAIRR head of special research, said that approximately 6.3 million businesses would be affected, as the proposed bill requires every single business to be registered at a municipality.

Municipalities already have to monitor building controls, health and safety, as well as electricity installation. In addition to this, more human capital would be required as the bill has a broad definition of who qualifies to be an inspector.

Critically, those who contravene the proposed bill will either pay a fine or face jail time.

This bill replaces the Business Act of 1991 which required businesses that served food, operated health facilities such as massage parlours, or entertainment venues to license with local authorities. The licence which would be issued thirty days after the initial application would be valid for five years.

The SAIRR adds that in addition to registering at a municipality, each municipality would have to provide the provincial MEC with an up-to-date report. The MEC in turn would have to report to the Trade and Industry minister Rob Davies twice a year, if not more frequently.

Jeffrey added that already inept municipalities will have to hire extra officials to issue out licences, maintain registries, write reports, and keep accurate financial records. This is contrary to dti Deputy-Director General Zodwa Ntuli saying in March that the bill is not intended to place extra pressure on municipalities. The SAIRR emphasises that all of the extra work will require finances that municipalities do not have.

Geordin Hill-Lewis, DA shadow minister for Trade and Industry, said that the business bill would be a job killer. Hill-Lewis added that the bill contradicts the National Development Plan (NDP) because it places unnecessary pressure on small businesses who would be burdened to apply for a licence.

It seems the bill will not create a conducive environment for business to grow. According to the GEM  survey released on Monday, South African’s entrepreneurial climate is already dire, with fewer locals taking the risk of starting a business, or even thinking about doing so not  

Responding to how many public comments the bill received, dti spokesperson Sidwell Medupe said that the date could possibly be extended and only then would the department be able to offer an analysis of the responses.  

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