Trade and Industry Minister Rob Davies. Photo: Leon Nicholas.

Johannesburg -

The government has pledged to take criticism of a business licensing bill currently before the trade and industry portfolio committee seriously, but Trade and Industry Minister Rob Davies says the country needs a national database of all businesses and a “bad boys” list of companies that are breaking the law.

This follows a flurry of criticism from business organisations on the Licensing of Businesses Bill, which requires all businesses to seek a licence to operate within a municipality. It is intended that it will apply to all business including informal businesses.

Critics of the bill say that it will wrap more red tape around small businesses, which already face a disproportionate administrative burden.

While a re-think on aspects of another trade and industry ministry bill – the amendment to the broad-based black economic empowerment (BEE) legislation – where it affects business could also be considered, Davies said it was likely to stop short of changing racial definitions.

He did not believe that the ANC majority on the committee would rethink the race-based definitions, which include African, white, coloured and Indian, because these race groups had suffered under apartheid.

Arguing that this legislation too was anti-business, Cope MP Graham McIntosh said a cut-off date of 1994 – when South Africa became a non-racial democracy – should be inserted.

Davies said the racial discrimination legacy remained, and needed to be redressed.

Business Unity SA, the Manufacturing Circle, the SA Chamber of Commerce and Industry (Sacci) and the SA Informal Traders Alliance have all expressed concerns about the licensing bill.

They all argued that small businesses would struggle under the law’s new burden.

Responding to concerns expressed by McIntosh that the bill was targeting “Somali spaza shops”, the minister said that anyone who was a South African citizen or a foreigner who had legitimate rights to be in the country would be able to continue to trade quite happily.

Sacci said while it did not necessarily support the limit suggested by McIntosh, more consideration should be given to cut-off dates for affirmative action and empowerment in the Broad-based BEE Amendment Bill, which was also before Parliament.

Sacci chief executive Neren Rau said there was “a cost” to the implementation of black empowerment and the government should give some consideration to putting timelines to the process.

Department of Trade and Industry director-general Lionel October told the trade and industry portfolio committee that South Africa still had a long way to go to achieve empowerment and it would be premature to start thinking now of time limits.

The Licensing of Businesses Bill’s expressed purpose was to “promote the right to freedom of trade, occupation and profession and any rights contained in the constitution”. It intends to promote a “standardised regulatory framework within which business licensing would take place”.

Davies told Business Report that certain municipalities – including Cape Town metro – already had hawking licence procedures. “If you want to be a hawker you have to get a permit to hawk in a particular place,” he noted.

While he emphasised that his department would be “listening very carefully” to opposition to the licensing bill, he said: “We want corporate identities… the collection of basic ids.”

But he noted that there was a sizeable “illicit” economy in the country that presented “unfair competition”. These included traders who sold illegally imported goods or counterfeit goods.

Davies said a national database, provided from all the municipalities, would be matched by a “bad boys” list of illegal operations.

But Rau said this would be another compliance burden, especially on small business.

In addition to the lack of capacity of many local authorities, there was already a national database of companies through the Companies and Intellectual Property Commission, he noted.

One of the loopholes in the licensing bill was that small businesses would be deemed to have a business licence – which would last five years – if the municipality failed to provide it within 30 days of application, Rau said.