/ 3 May 2013

Half-hatched law lays hawkers low

Half Hatched Law Lays Hawkers Low

Neo Mkoena's small, makeshift table is laid out neatly. Rows of shiny red tomatoes, bulging green peppers and half-cabbages are arranged for sale. She sits behind it on a pavement in Yeoville's bustling Raleigh Street, bunching spinach into packets.

She tells us about the business she has run here for seven years and of how "it is helping a lot" — to support her husband, who does piece jobs, her six-year-old child, and her twins, one of whom is disabled. "He is four but he cannot walk. I always need to take him to the doctor."

Mkoena is about to tell me more, but we are interrupted. A sudden ripple of fear runs through the row of hawkers on the pavement. Not saying a word, she quickly throws her spinach into a pram standing next to her table and hides her tomatoes.

All the while, she is glancing over her shoulder at a Johannesburg metro police car crawling along the road behind her. "We are not allowed to be here because we don't have proper tables," whispers Mkoena. "The coppers, they come and take all my stuff. It can happen any time."

Mkoena runs one of almost four-million single-person "survivalist" businesses in the country. They are among the 6.3-million South African businesses that may soon be required to apply for licences in terms of proposed legislation.

In terms of the Licensing of Businesses Bill 2013, the owner of a business who cannot produce a licence will be fined and/or imprisoned for up to 10 years. The Bill also outlines a vast inspectorate — policemen, metro cops, customs officials, health inspectors and peace officers — who have the power to search and confiscate goods if a business contravenes the licensing requirements.

The legislation has been touted by government as a way of promoting the right to freedom of trade. But it has come under bitter attack by business and opposition parties alike, with some describing it as unenforceable, some saying it directly contradicts the national development plan, and others labelling it xenophobic and "apartheid under another name".

During a recent parliamentary session, Trade and Industry Minister Rob Davies defended the aims of the proposed legislation. The Bill was aimed at weeding out illegal operators, he said. It would help clamp down on trade in illegal and counterfeit goods. It would also give the government a better idea of the size and scope of the informal sector, such as hawkers, street vendors and spaza shops.

But detractors say it merely increases the control of government over the economy and achieves no specific aim.

"There is a problem statement, but this is absolutely not a solution to that problem," Geordin Hill-Lewis, an MP and the Democratic Alliance's spokesperson for trade and industry, said.

"All of those things they are trying to outlaw are already crimes under different pieces of legislation. The problem is not with the law, it is with the state's capacity to enforce the law," he said.

"There is no evidence to suggest that simply making a business apply for a licence will make all of those enforceable. Businesses who don't want attention simply won't apply for licences."

Terence Corrigan, research director of the independent private sector research company SBP echoed Hill-Lewis's opinion. "The most charitable description of this Bill is that it is ill-conceived," he said.

Whatever the Bill might achieve, he said, would be "hopelessly disproportional" to the bureaucratic burden it would place on the private sector. "It's like using a sledgehammer to kill a fly. And they haven't identified the fly."

Critics have expressed almost universal concern about the burden of bureaucracy entailed in the Bill. The proposed law would require all businesses, no matter how large or small, to apply for a licence and pay an application fee at the local municipality.

"No logical administrative reason"
The FW de Klerk Foundation condemned the proposal, which is intended to replace the Businesses Act of 1991 — under which only those providing perishable foodstuffs, health services and adult entertainment required a licence.

"The Bill provides no logical administrative reason for the extension of licences to all businesses," said the foundation.

"Theoretically, everyone attempting to scratch out a living by selling goods in townships or at roadside stalls will have to be in possession of a licence. This will undermine the ability of the poorest members of society to earn a living and will, in practice, impede their right to choose their occupation, trade and profession freely in terms of section 22 of the Constitution."

Charlos Marleka sells pineapples in the streets of Johannesburg. His capital consists of a trolley, a sharp knife and some small black plastic bags. He worked while he talked, peeling and cutting a pineapple, which sold for R5 to a customer waiting nearby. "I can't pay for a licence," he said. "It [would cost] too much."

According to Corrigan, small-scale businesses were the hardest hit by red tape. Research conducted by SBP showed that small businesses already spent 4% of their turnover complying with bureaucratic requirements. Large companies employed people full-time to take care of such matters, he said.

But "for smaller companies, getting a licence could take a whole day. That's time they could have spent selling something," he said. "It's a big ask. The DTI [department of trade and industry] is wanting people to fly before they can crawl."

Critics unanimously point out that to increase the bureaucratic burden for small businesses directly contradicts the government's national development plan.

"The national development plan repeatedly and correctly emphasises the need for the government to create an environment in which it is easier, simpler and cheaper to do business in South Africa," Hill-Lewis wrote in a statement.

"It [the Bill] runs counter to everything the national development plan calls for."

"Cause of serious concern"
Hill-Lewis observed that the World Bank had recently ranked South Africa 53rd out of 185 economies in terms of the ease of starting a business — 10 positions lower than its ranking in 2012. "That we are ranked so low, and that we are slipping further, should be a cause of serious concern," he said.

"We are not making starting a new business an attractive option," said Corrigan. "This will be another small thing to dissuade people."

On Wednesday, which was the closing date for public submissions on the Bill, the department's spokesperson, Sidwell Medupe, said he could not yet confirm how many responses had been received. Although he acknowledged there had been a large number of negative comments, he said the department had received positive feedback as well.

In the eyes of Pat Horn, co-ordinator of Streetnet International, an organisation that represents about 4 000 street vendors, one of the biggest problems with the Bill is that it repeals the Business Act of 1991. According to Horn, this has more consequences than merely a change in licensing requirements.

"What the Businesses Act added to the new South Africa was a developmental approach towards street vendors and informal traders, instead of the old abolitionist approach which characterised the apartheid era," Horn wrote in a submission to the department.

"We believe that the repeal of the Businesses Act and replacement with this Bill, which does not in any way address the developmental element of informal trade, would take us back to the era of forced removals."

Representatives of street vendors are concerned that the increased powers given to "inspectors" and a broadened range of law enforcers could make informal traders even more susceptible to harassment —the kind that Mkoena and Marleka know only too well. According to both, police regularly seize goods amounting to thousands of rands.

"Sometimes they take even R1 200 [worth of goods]," said Marleka. "They even take my trolley."

According to Lawrence Mavundla, outgoing president of the National African Federated Congress of Commerce and Industry, "the return of licensing will be apartheid in another name".

The Bill targets foreign nationals who sell illegally. The director general of the department, Lionel October, said last week that foreigners would not be excluded from registering of a business if they had a permit to be in the country.

But, said Horn, refugees would still find themselves on the wrong side of the law. The Bill would open up a big opportunity for xenophobic victimisation, she said.

"You shouldn't be criminalising people who are selling to make a living. You should be criminalising people who break the law."

Wheeling his trolley across the street, Marleka, a Malawian with a valid work permit, feels the same way. "I just want protection," he says.

Licensing 6.3-million in 30 days is 'delusional'
According to the South African Institute of Race Relations, municipalities would drown under the responsibility of licensing all businesses within 30 days, as the Licensing of Businesses Bill 2013 stipulates.

Dr Anthea Jeffery, head of special research at the institute, outlined the enormity of the task. South Africa has 1.3-million businesses already registered, 3.8-million one-person ­"survivalist ­enterprises" such as hawkers, about 760 000 microbusinesses that employ one other person, and about 470 000 businesses with two employees each. "This suggests that at least 6.3-million businesses will have to apply for licences to continue operating."

Each municipality will need to maintain an up-to-date register of all businesses in the area and provide a report to the local MEC at least twice a year, Jeffery observed. Lionel October, director general of the trade and industry department, said the department would help municipalities that did not have the capacity to carry out these new functions. It would also train and put systems in place to aid the process. But researcher Terence Corrigan is still sceptical. "The expectation is just delusional. This is overburdening something that functions anaemically at best," he said.