Chorus of warnings over ‘backwards’ new law in South Africa
The Business Licensing Bill has received more pressure, with the Western Cape Government (WCG) and the Centre for Development and Enterprise (CDE) rejecting the Bill in its current form.
The draft Business Licensing Bill, gazetted by the Department of Small Business Development, proposes the introduction of a national registry for all businesses operating in the country.
The draft was published in September and is open for public comment until November 28, 2025.
The Bill is intended to modernise outdated legislation and create a uniform system where all businesses register with and obtain licences from local municipalities, replacing the current Business Act of 1991.
The law would require every business to have a licence valid for five years. Municipalities would also have 30 days to grant or reject an application, with the option to extend this period by 14 days.
Inspectors would also gain broad powers to demand proof of a licence at any time, issue fines, or confiscate goods if operators are found to violate the Bill, such as those dealing with counterfeit goods.
The CDE said that the Bill could be the most “anti-business and growth-retarding law passed by the government since the advent of democracy.”
“The Bill reflects a desire to clamp down on foreign nationals’ participation in economic activities, but would have wider implications for everyone,” said the CDE.
“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.”
The CDE added that the government should instead focus on more growth-focused legislation.
Provincial push back
The WCG has also opposed the Bill in its current form, claiming that it is vague, confusing and unworkable.
It added that the Bill introduces an additional layer of regulation that will increase red tape, duplicate existing compliance processes, and delay business start-up times.
“Legislation like this does nothing to support small business growth and job creation,” said Premier Alan Winde.
“The WCG is driving programmes that directly support business growth. We don’t want this compromised by cumbersome national legislation.”
The WCG highlighted the following flaws in the Bill:
- It undermines job creation and the Growth for Jobs Strategy
- Evidence-Based Policy is absent, with no socio-economic impact assessment (SEIA) having been provided.
- There are constitutional issues, as the Bill encroaches on municipal and provincial competencies, particularly in areas such as trading regulations and street trading.
- It will impact municipal capacity by imposing significant new responsibilities on municipalities without addressing existing capacity constraints.
- The laws completely contradict government’s goals of reducing red tape and making it easier to do business by adding to conditions for business licencing that already operate under highly regulated Red Tape Reduction Goals, as most of the conditions for business licensing are already under existing and highly regulated frameworks.
The WCG added that many municipalities are already under pressure to meet legislated timeframes for processing business licences.
This is due to capacity constraints and administrative inefficiencies, with the proposed legislation just overburdening an already strained system by increasing start-up costs.
This will lead to postponing revenue generation, especially for small businesses that rely on quick market entry to survive.
“This Bill is a step backwards for small business development,” said Minister of Agriculture, Economic Development and Tourism, Ivan Meyer.
“Instead of reducing red tape and creating an enabling environment for entrepreneurs, it adds unnecessary bureaucracy that will stifle economic growth and job creation.”
The WCG government has recommended that the Draft Bill be withdrawn and substantially revised to address its issues.
It added that instead of creating parallel licensing processes, the focus should instead be on streamlining existing regulatory frameworks through a digital, risk-based compliance system.
It argues that a new system will enhance efficiency and support economic growth. The Bill already received public condemnation from the Free Market Foundation and Sakeliga.
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