In a rare win for South African entrepreneurship, the Minister of Small Business Development, Stella Ndabeni-Abrahams, has withdrawn the Business Licensing Bill.

The Bill, published for comment in September last year, would have empowered the minister to designate licensing requirements for any type of business. Businesses so designated would then need to obtain the required licences. These would be valid for a period that “may not exceed five years”, after which a new application would need to be made.

Municipalities (and to a limited extent provincial administrations) would constitute licensing authorities. Compliance would be pursued by inspectors with substantial powers – along with a system of penalties of escalating severity. Given the state of municipal governance, success in this respect was implausible.

It introduced principle of “redress” in granting licences, which implied a large role for black economic empowerment (BEE) criteria in issuing or approving licences.

The Bill included provisions for exemption from its requirements, provided the business in question could demonstrate grounds for doing so, itself potentially a very onerous process.

The Business Licensing Bill represented the latest expression of a government approach to businesses (and particularly to small businesses) that views them as a phenomenon to be controlled, rather than an activity to be welcomed. South Africa’s Small Business Act of 1996 was notionally intended to provide a framework for the small business community, but largely failed to do so, and did not take up many of the concerns small businesspeople had, such as concerns over labour legislation.

A previous draft Business Licensing Bill was introduced in 2013, also with heavy demands on businesses and stiff penalties for failing to meet them. The small business think tank The Small Business Project said at the time: “It's like using a sledgehammer to kill a fly, but they haven't identified the fly.” This proposal was withdrawn.

In addition, despite government assurances that it hopes to make South Africa an investment destination of choice, businesses have to contend with failing governance, BEE requirements, and demanding labour legislation. The government has also had an apparent desire to formalise informal enterprises, although many would not survive this.

The 2025 Bill was roundly condemned. The Centre for Development and Enterprise described it, if passed, as possibly the most “anti-business and growth-retarding law passed by the government since the advent of democracy”. Dr Brian Benfield of the Free Market Foundation called it a “blueprint for bureaucratic domination, one that will make starting, running, or even maintaining a business in South Africa more difficult, more uncertain and more perilous than ever.” The Institute of Race Relations highlighted the unconstitutionality of some of its provisions, and said: “The Bill is one of the worst interventions that could possibly be made. Far from encouraging investment, growth and jobs, it will send a message to all enterprises, both large and small, that the business environment in South Africa is even more hostile and adverse to private enterprise.”

Business bodies such as Sakeliga, Business Unity South Africa, and the National Employers’ Association of South Africa also took issue with the Bill or with various parts of it, largely because of the additional burdens it would place on already struggling firms.

The Democratic Alliance warned: “The Bill hands the Minister sweeping powers to decide which businesses need licences, giving authorised people the ability to enter premises, seize goods, and impose fines. This creates uncertainty, opens the door to corruption, and makes it harder to start and grow businesses.”

The withdrawal of the Bill is a reprieve from what would have been a damaging imposition. Businesses still struggle under many other laws that need to be removed.