16 May 2013
South African Trade and Industry Minister Rob Davies says his department has considered the concerns raised by businesses on the Licensing of Businesses Bill and that when the draft law is presented to Parliament again it will be “significantly different”.
The Bill was put out for public comment in March, and the comments period came to an end last month.
Addressing a media briefing in Parliament in Cape Town on Wednesday, Davies also stressed that there was no provision in the Bill that targeted foreigners.
However, he said, his department would not scrap the Bill, saying it was designed to combat the significant illicit economy that was operating in South Africa’s urban and peri-urban areas, and which posed a serious a threat to small businesses in the country.
“This is the economy of illegal imports, this is the trade in sub-standard products, this is the economy of people who don’t pay their VAT … and they then compete unfairly with people who do observe these requirements – that is the economy that is there.”
Davies said business associations continually called on his department to shut down such operators, and the Bill would help to tackle this problem. Raids, he said, often proved fruitless as such operators soon resurfaced somewhere else.
“It never was our intention to have an onerous registration process, which requires business people themselves to do a lot of things,” he said.
The idea is to have municipalities, in the course of registering people for all kinds of services, to then forward these names to a national database.
The department also wanted a database containing those found to be involved in illegal activities; transgressors could be then excluded from operating in South Africa.
Davies said that in South Africa, five out of seven small businesses failed in their first year of starting up, compared to a 50% failure rate internationally.
Business regulations were not the main reason for this, he said. Rather, the country’s high business failure rate was more a result of black entrepreneurs having been actively undermined and business ownership by black people outlawed during apartheid.
The state, Davies argued, should not only remove red tape but also ensure that it offered active support to small businesses, for example through incentives and incubation.
He said there was a tendency to see any kind of regulation as “red tape”, whereas there was a distinction between red tape, which was bureaucratic and unnecessary, and regulation which was needed for good reason.
The department was moving to reduce red tape, he said; the new Companies Act made it easier for small companies to do business by removing some accounting and audit requirements.
Added to this, he said, when the BEE Bill is passed into law large, companies will no longer have to compel their black small suppliers to get BEE verification, as this will be replaced by having such suppliers sign an affidavit to attest to their BEE status.