TEASA has made a submission to the Department of Small Business Development (DSBD) on its Business Licensing Policy, with an emphasis on licensing informal businesses, in order to combat poverty, by allowing small businesses to leverage formal avenues for raising capital, as well as to combat illegal practises within the informal buniess sector.
The church stands in support of legal informal businesses, because through them, jobs can be created and dignity restored to the previously disadvantaged people of South Africa.
In preparation for this submission, we held a webinar with Mr where he highlighted the importance of regulation in the small and informal business sector.
To watch a recording of this webinar, please use this link. This webinar was accompanied by a PowerPoint Presentation that can be accessed using this link: TEASA Business Licensing Webinar 28 March 2024
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TEASA Submission on the Business Licensing Policy
1. Preamble
• This policy is very much welcome, long overdue and timely intervention
• The Evangelical Alliance of South Africa ( TEASA) is a membership body of evangelical denominations, ministries and individuals.
• We are not just concerned with the spiritual well-being of our citizens but also their material well-being, particularly poor and vulnerable members of our society
• There are many enterprising poor citizens who surely deserve of the support of the state as well as all of us.
• Many poor and ordinary citizens depend on the enterprising poor citizens
• The state should move with speed to finalize this policy after enlisting the necessary comments from stakeholders
• Its finalization and effective implementation will benefit many ordinary citizens who are at the margins of our economy
2. Benefits of licensing
2.1 Situational Analysis
• South Africa has a high rate of unemployment, particularly in rural areas – small towns, villages etc.
• There are many people who are making a living in the survivalist economy as the enterprising poor. They are hawkers, they run spaza shops and many micro businesses.
• It is a known that our spatial and town planning hardly provide for serviced spaces for this sector of our economy to engage in meaningful entrepreneurship
• Most of the nodal areas where there is lot of economic activity hardly provide for serviced and formally demarcated spaces for micro /informal businesses
• The current registration of companies is ‘too formal’ and ‘far-away’ for many micro-businesses to fully take advantage off.
2.2 Formalization
• Many micro /informal businesses have not formalised, not out of choice, but because we have not put anything that is fit-for-purpose for them
• The existing mechanism through the companies or cooperative act were either costly or not suitable for those who operate as a single proprieter.
• Lack of formalization has also denied many of them access to finance and benefits available from state institutions, public procurement and private banking
3. Foreign Investment
3.1 Competition
• South Africa has been flooded by many migrants from a number of countries including Lesotho, Zimbabwe, Nigeria, Mozambique, Malawi, Pakistani, Ethopia, Somali.
• Historically our mining industry recruited labour from some of our SADC neighbours.
• The uncontrolled influx of migrants from a number of countries further central, north and west of continent is a recent development.
• Now they have been joined in larger numbers by migrants from some Asian countries like Chinese, Pakistani and Bangladesh
• Some of the migrants come from countries with bigger informal /micro economies than ours
• They have also introduced competitive practices in this sphere of the economy that have displaced lots of our micro businesses in inner cities, townships and villages,
• Increasingly it has become common that ‘spaza shops’, hair salons, mobile phone repairs etc are now run by foreign nationals /migrants
• DHA has embarked on a process of developing a white paper on ‘citizenship, migration and refugee protection’. There should be synergy about the policy provisions that come out of the DHA processes versus what DSBD will propose about foreign migrants investment
• It is the same with white paper process by DHS. They are exploring whether to include foreign migrants in public housing provision.
• It is important that DSBD should clearly clarify what is in our national interest and which sectors of the micro economic sector should be available only to locals and which sectors should be open for foreign migrants as part of encouraging investment.
3.2 Illicit Economy
• There is a view that part of the reason why competition brought about by foreign migrants have so easily displaced locals is because some of them are engaged in the illicit economy
• The policy should propose harshly punitive measures for any foreigner who operates a business that is not registered or licensed, s/he is not registered for tax and his money is not circulated legally through our finance system.
• There should be harsh laws too for them to sell products that have been brought into the country illegally and are not quality assured by our regulatory bodies.
4. Spatial development and informal /micro businesses
• Municipalities when developing spatial plans do not make provisions for spaces for micro businesses.
• Micro businesses have to occupy spaces illegally in many towns and villages, because they are an afterthought and provision is hardly made for legal & serviced spaces for them.
• Economic nodal points should be compelled to make demarcated and serviced spaces available for micro businesses by law.
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