South Africa’s draft Business Licensing Bill has drawn sharp criticism from economists, business groups, and employers who warn that it could weaken investment and further strain already fragile business confidence. The Bill proposes a national registry of every business and requires all operators to obtain a five-year licence from their local municipality.

The central concern is where the Bill places power. By giving municipalities full authority to approve or reject business licences, the legislation concentrates control in institutions that are often beset by governance failures and deeply established corruption. The Bill proposes that municipalities be given the powers to determine who may operate a business, when, and under what conditions, opening the door to delays, political interference, and bribe-taking.

The Bill is also redundant. Businesses already comply with extensive registration requirements, including the South African Revenue Service, the Companies and Intellectual Property Commission, and various other sectoral and industry-specific licencing criteria. Adding another layer of paperwork would increase costs and reduce competitiveness at a time when the economy remains cripplingly short of investment and job creation.

The Bill further grants inspectors wide powers to demand proof of licensing, issue fines, and confiscate goods, which could entrench arbitrary enforcement and further corruption.

The timing is particularly troubling. The Government of National Unity has recently enjoyed positive momentum. Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement showed stabilising finances and rising revenues. South Africa secured its first credit rating upgrade in almost two decades last week. The Johannesburg Stock Exchange’s All Share Index climbed from about 76 000 points before the May 2024 election to more than 110 000 points after the GNU was formed, a 44.7% increase in around 18 months. The messaging, and boost to investor sentiment, has been extremely positive.

Experts warn that pushing ahead with the Business Licensing Bill sends a very different message to investors, business owners, and employers, that the government is not, in fact, supportive of investment and is not acting in a manner to support a national economic recovery.