‘We need stricter laws for small and informal businesses’

2019-08-12 21:30

Following an unprecedented attack on the police who were raiding illegal traders in Joburg inner city last week, government intends looking to other countries to find ways to regulate small businesses and informal traders.

Small Business Minister Khumbudzo Ntshavheni believes Bangladesh, Ghana, Nigeria, Pakistan and Somalia, among others, could be where the solutions are found to properly regulate these traders, especially foreign nationals.

The police were forced to retreat after recent clashes between law enforcement agents and informal traders on the streets of Joburg went viral. A reinforced team returned to the city centre this week and millions of rands of illegal and counterfeit goods were confiscated.

Ntshavheni said the country should not shy away from tightening the rules out of fear that South Africa would be labelled xenophobic or accused of stoking xenophobic fires.

Speaking to City Press on Thursday the minister said, for example, “in Nigeria there is a presidential decree that foreigners are not allowed to conduct business in certain informal sectors”.

She added that Ghana, Zimbabwe, Botswana, Angola and Tanzania had similar restrictions in place.

“So it is only us who are told that we are being xenophobic or priming people for xenophobia when we want to do that. In other countries they tell you that you cannot run a spaza shop. We cannot be a democratic country that is not allowed to protect our people,” Ntshavheni said.

Khumbudzo Ntshavheni, South Africas small business
Khumbudzo Ntshavheni takes her oath of office.. Picture: Waldo Swiegers, Bloomberg

An analysis of the regulatory policy frameworks shows that most countries protect local business ownership. In Bangladesh for example, government may, for the promotion of foreign private investment, sanction the establishment of any industrial undertaking with foreign capital, as long as it does not exist in the country. The business has to be desirable and should be carried on in Bangladesh on a scale adequate to the economic and social needs of the country.

Also factored in are the:

  • Development of capital, technical and managerial resources of Bangladesh;
  • Discovery, mobilisation or better utilisation of the natural resources;
  • Strengthening of the balance of payments of Bangladesh; and
  • Increasing employment opportunities.

According to its policy framework, Ghana has economic activities reserved for its citizens and Ghanaian-owned enterprises. The document states that “a person who is not a citizen or an enterprise which is not wholly owned by a citizen shall not invest or participate in those activities”.

These include “the sale of goods or provisions of services in a market, hawking or selling of goods in a stall at any place, the operation or car hire that has a fleet of less than 25 vehicles, beauty salon or barber shop, printing of recharge scratch cards for the use of subscribers of telecommunication services and production of exercise books, retail of pharmaceutical products,” among others.

Nigeria prescribed 100% ownership by Nigerians in laundries, estate management, retailing, advertising and bakeries. A 60% ownership in banking, insurance, food processing, petrochemicals and iron and steel, and 40% ownership in construction, manufacturing of rubber, paints, plastics and most industries is policy.

According to the Stats SA labour dynamics survey of 2017, the majority of small business owners are non-nationals who employ South Africans.

“That should worry us when the economy must be driven by small business. The world over, small business and informal traders drive the economy,” said Ntshavheni.

According to the Stats SA labour dynamics survey of 2017, the majority of small business owners are non-nationals who employ South Africans.

Ntshavheni said the economy had, between December last year and July this year, lost up to R340 million in taxes as a result of counterfeit goods, some of them found in informal trading.

“So it is a seven months loss. The SA Revenue Service figures may be higher but that is what the brand owners have lost.”

Her department was talking to Sars, the department of trade and industry and other stakeholders to establish the three to four years economic loss as a result of counterfeit goods and how to close it. “When the money goes, it means government is not collecting revenue. If government cannot collect revenue, it means all services such as healthcare, free education, maintaining roads, helping Eskom to clean up its act and so forth are affected.

“So government should be decisive and pursue national interests and protect it own sovereignty. We must have laws and regulations that protect our people. The obligation of any government is to its citizenry.”

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May 24 2020