Business registration bill is bad news

Whilst Business Unity South Africa (BUSA), welcomes the positive intention of the Department of Trade and Industry, to promote an environment conducive to business expansion and its purpose of ensuring compliance, BUSA’s assessment of the Draft Licensing of Business Bill 2013, is that it is yet another piece of legislation that overwhelms small businesses with its compliance and regulatory framework.

 Based on consultation with its members, BUSA’s view is that the current draft bill will inadvertently yield consequences that will instead retard the growth and development of SMEs and further harm a sector which is presently struggling with a high business failure rate. We also find the bill to be contrary to the spirit of the National Development Plan, whose objectives are to have 90% of all jobs by 2030 derived from the small enterprises sector.

 Areas of concern to business are –

  • The compliance burden is too onerous, diverting time and resources away from the core business of companies

  • The draft bill will spur illegal businesses, which can lead to increased bribery and corruption

  • This bill will heighten the risk profile of the business, who already have to contend with challenges of access to finance, cash-flow bottlenecks

  • The accumulation of various regulatory requirements raises the cost of doing business

  • The bill will impose an increased administrative burden on the authorities, who already lack capacity

  • The bill does not give clarity of application to businesses that have a national footprint

  • The bill speaks of an automatic revocation of license, if non-compliance is found, and a business owner can only appeal once the business has been closed. This does not provide a fair process for business to plead its case before the license is revoked. This also appears to be an administrative injustice that goes against the provisions as reflected in Section 33 of the Constitution.

 Taking all these considerations into account, BUSA believes that the draft licensing legislation should be subjected to a regulatory impact assessment analysis as soon as possible, a mechanism that should in any case be more frequently used to test proposed legislation and regulations in SA. Additionally, we need to increasingly align economic and business policies with the spirit of the NDP and objectives of the State of the Nation Address and deliberately nurture SMEs, instead of creating more overwhelming paperwork.

Statement issued by BUSA

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