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New law will hinder businesses - body
New law will hinder businesses - body

New law will hinder businesses - body


Fin24/ Sapa - Apr 19th, 08:01

Cape Town - A draft law proposing all businesses be licensed with municipalities, will "create more red tape", warns the Cape Chamber of Commerce and Industry.

In a statement published on its website, the chamber says the licensing of businesses bill, approved by Cabinet and published for public comment last month, is "an unnecessary new measure" that would do nothing to help businesses grow and create more jobs.

"All it will do is create more red tape and add another cost for people who want to start new businesses," it quotes Cape Chamber of Commerce president Fred Jacobs.

"We should be encouraging [those wanting to start businesses], not inventing new controls."

Licensing of Businesses Act

Announcing Cabinet's approval of the bill last month, acting government spokesperson Phumla Williams told a media briefing it would replace the 1991 Licensing of Businesses Act.

The new bill, once enacted, would provide a simple enabling framework for business licence application procedures by setting norms and standards, she said at the time.

The bill was subsequently published on March 18 by Trade and Industry Minister Rob Davies, allowing 30 days from that date for public comment.

According to the document, the draft legislation also aims to provide a framework for "support monitoring and standard setting by national government in order to build local government into an efficient, frontline agency capable of integrating the activities of all spheres of government for the overall social and economic upliftment of communities... ".

Illicit business activities

Briefing the media on the bill at Parliament last month, Davies said the bill was also aimed at cracking down on illicit business activities.

"All kinds of outlets [are] springing up that may well be involved in illegal imports and things of that sort. So, we have been saying for some time that we need to crack down on things like illegal imports, or sub-standard goods, or counterfeit goods, and things of that sort."

Any person wanting to run a business, whether formal or informal, would have to register with a municipality.

Among other things, licensing authorities had to issue business licences within 30 days of the application. However, the authority could extend this period by 14 days under certain circumstances.

Valid for five years

A licence would be valid for five years before having to be renewed via a simple process.

The bill also provided for a licence to be revoked under certain circumstances.

"We are saying we want an easy, simple, straightforward process for legal business activities.
Davies said that licences will be automatically revoked if businesses are found to be guilty and in contravention of the law.

He told journalists at the time that the bill provided a tool to "know who is conducting business in our localities, and, secondly, to make sure that within the framework of business activities... we cut out illicit activities".

Cape Chamber of Commerce and Industry

The Cape Chamber of Commerce and Industry said the present system, introduced in 1991, had greatly simplified the business licensing process, restricting it to businesses where health and safety issues were involved, and "there was little reason to scrap it as proposed by the legislation".

The only reasons given for the new bill were that it would help the authorities deal with unspecified illicit practices and that it would give the government an idea of what business activities were taking place across the country in all the municipalities.

"It is difficult to avoid the impression that the information on business activities will lead to more controls and interference with business, and we have quite enough legislation to deal with illicit activities.

"If people are selling fake goods they can be charged with fraud and be sued in the civil courts by their victims. If they are selling liquor without a licence they can be charged. The government ought to be looking for ways to reduce red tape not add to it," it says.

The chamber supported an analysis of the legislation, conducted by Business Unity SA, which "confirmed that it [the proposed new law] would lead to additional red tape, especially for the major retail chains, which had stores in hundreds of towns throughout the country and [employed] many thousands of people".

Trade and industry spokesperson Sidwell Medupe was quoted on Wednesday as saying the registration fee for businesses "will be about R50". 

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