by Piet Coetzer

Licensing of Businesses Bill has absurd consequences

Draft law will end the existence of informal sector

The trolley of a recycling goods collector may soon need a licence.
Trash trolley.jpg

The Licensing of Businesses Bill(LBB), if it becomes law, will be at cross-purposes with the National Development Plan’s proposed economic blueprint for South Africa. It will also destroy the concept of an informal sector. Even those at the very bottom of the economic food chain, retrieving trash in their shopping trolley for recycling, will have to register their little enterprise. And that is not where the absurdities of the new proposed law end.

At the macro level the LBB published by the minister of trade and industry, Rob Davies this year with 30 days for public comment, should be rejected and withdrawn on three counts according to commentators:

       It is seriously at odds with the government’s own declared guiding economic document, the National Development Plan (NDP), since it rather destroys than enhances the NDP’s vision of creating an environment in which it is easier, simpler and cheaper to do business. The NDP calls for a quick and easy process for starting a business and transferring property. Furthermore, it envisions a state that cuts red tape, streamlines administrative processes and supports businesses to invest, grow and hire more staff – the LBB goes in the opposite direction;

       According to some commentators, including the Law Review Project, the LBB violates the Constitution in a number of respects. These include the impingement of central government on functions reserved for provincial government, the seizure of goods arbitrarily by officials, the disproportional double punishing of convicted persons by prohibiting them from carrying on business and the lack of independence of appeal bodies; and

       While minister Davies declared that it will help the government get an understanding of the size and scope of the informal sector, there will be no “informal business” left in the country. Any and everything that can be remotely regarded as a business will be operating under an official and formal licence and be part of a formal register of businesses.

It is however, at the micro level of implementation that the implications of the bill become really absurd. This is clearly illustrated by a few examples:

       The person who offers to wash your car in the car park while you do your shopping will first have to apply for a licence to do so. If he does not, he becomes a criminal who potentially can be sent to prison for 10 years;

       An artist offering her or his work for sale on a website or has an exhibition in a church hall where people can buy will be in violation of the law if a licence was not first obtained from the local municipality. The same arrangement will apply for a stall at one of the country’s multitude of art festivals’;

       If you put up a table at a flea market to try and get rid of your old collection of vinyl records, a licence would be required. The same might apply if you want to flog some of your old stuff to a secondhand  shop when moving to a smaller abode;

       Even if you indulge in some form of barter, like maybe exchanging the doubles in your stamp collection for old coins, you might be deemed as being involved in a business or a form of selling under the definitions contained in the bill;  and

       The “trolley people” who collect stuff from waste bins in residential areas to sell it to businesses which recycle plastic, glass and the like would also need a licence to conduct their efforts to raise some cash to keep body and soul together.

All of the above examples will become a reality if the bill becomes law in terms of the clause that reads: “Business means the offering of goods or services for sale to the public. Hawker means a person who goes from place to place, or along the streets, selling goods which he carries with him or her which is conveyed either by vehicle, pushcart, trolley, bike, barrow, basket, carrier, or otherwise on a public road or at any other place accessible to the public or in, or from a temporary static structure or mobile structure.”

Another clause defines “sell” as: “... includes in possession for purposes of sale or any purpose of trade or manufacture or to offer, advertise, keep, display, transit, consign, convey or deliver for sale, or exchange, or to dispose to any person. In any manner whether for a consideration or otherwise; and sold, selling and sale have corresponding meanings.”

Among the other myriad objections to the bill are the room it creates for corruption and injustice. It creates an army of officials that can enforce the proposed law, among others by confiscation of goods, if for example a business causes a “public disturbance”. The official may demand to see their business licence and if they cannot produce a licence, he can then confiscate the contents of their trolleys, for which he may issue a receipt. He may then instruct these “business people” to appear before him at his office.

Only time will tell if the objectors to the LBB will succeed in preventing it from becoming part of the law of the land.

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