“New Businesses Licensing Bill is a Job Killer

The Democratic Alliance is concerned that the Businesses Licensing Bill, recently gazetted by Trade and Industry Minister Rob Davies, will have a harmful effect on job creation in the small business sector. The main provisions of the Bill are contrary to the policy proposals made in the National Development Plan. It will make it more difficult to start and grow a business in South Africa, and should therefore be opposed.

I will write to the Chairperson of the Portfolio Committee on Trade and Industry, Joanmariae Fubbs, to ask that Minister Davies be called before the Committee for an urgent briefing on his rationale for introducing this wrongheaded draft Bill.

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. It calls for a quick and easy process for starting a new business and transferring property, the cutting of unnecessary red tape, and the streamlining of administrative processes.

South Africa is ranked 53rd out of 185 economies in terms of the ease of starting a business (World Bank, Doing Business 2013), which is ten positions lower than our ranking in 2012. Mauritius ranked 14th and Rwanda ranked 8th. That we are ranked so low and that we are slipping further, should be a cause of serious concern.

In this context, the Licensing of Businesses Bill clearly runs counter to everything the NDP calls for. This Bill requires every business in South Africa, no matter how big or small, to apply for a license to operate from the local municipality in which they are situated. The local municipality must keep a comprehensive database of information on every business that it licenses. Every police officer, traffic officer and a host of other officers will be empowered to be license inspectors, with far reaching powers of search, seizure, and issuing of fines. The penalty for operating a business without a valid license could be up to 10 years in prison.

The Bill does not, so far as I can tell, help to solve any particular problem. The Minister must answer some key questions:

• What necessitates the introduction of this Bill?
• What specific problem does this Bill aim to address, and in what way?
• How does this Bill reconcile with the aims of the National Development Plan?

All that this Bill will do is make it even more difficult to start and run a business in South Africa. It will be another small factor acting to dissuade entrepreneurs from turning their good ideas into start-up businesses, and ultimately that means fewer jobs. We need a Department of Trade and Industry that supports business to invest, grow, and hire more staff; not one that continuously erects new obstacles for business to climb.

Statement issued by Geordin Hill-Lewis MP, DA Shadow Deputy Minister of Trade and Industry, April 18 2013” (source)

This from today’s Cape Times:

“Fresh produce hawkers have lodged an urgent application in the Western Cape High Court to stop the City of Cape Town’s law enforcement officials from demolishing several structures they trade from in Mitchells Plain in terms of a by-law relating to streets, public places and the prevention of noise nuisance.

It is the city’s stance that the structures were erected without consent.

And while the notices were served to traders in that area only, traders from other parts of the province fear the city will take action on them too, says attorney Rooshdeen Rudolph.

They formed the Western Cape Fresh Produce Crisis Committee and, according to Rudolph, its membership is growing after news of the city’s action spread in the informal trader industry.

Rudolph said two structures have already been demolished.

In an affidavit before the court, committee vice-chairman Zihad Bam said Rudolph wrote to the city on behalf of the committee to ask it to give the traders 14 days to make written submissions regarding the issue.

However, no response was received, prompting the committee to lodge an urgent application in the High Court.

Bam said it would not prejudice the city to wait for another 14 days, “especially if regard is had to the fact that (the committee’s) members have been trading in the manner they have for years without causing any harm to the environment or the community”.

“To date there has not been a single incident reported to the SA Police Service to suggest that the members of the applicant committee are causing a threat or disturbance in the area,” he said.

The case was supposed to be heard on Friday but did not proceed because the parties involved were negotiating a settlement.”

This from West Cape News (link) following up from this story last week 

“

Bribery accusations and local demand for Somali spazas puts paid to 2008 agreement

Police inspect a Somali-owned shop in Makhaza, Khayelitsha, that closed its doors over the weekend of February 26 after receiving threats from local business owners. Photo: Nombulelo Damba/WCN

A 2008 agreement preventing new Somali-owned shops from opening in Khayelitsha was undermined by bribery and the demands of local residents, it emerged at a meeting called on Wednesday to find a solution to recent tensions between local business owners and Somali traders.

Recent, belated enforcement of the 2008 agreement reached between the Zanokhanyo Retailers Association and the Somali Retailers Association in the aftermath of the xenophobic attacks that year resulted in two Somali-owned shops being looted and at least 25 others being forcibly closed over the last two weeks.

Following this, a meeting to find a solution for new Somali-owned spaza shops was held yesterday at Lingelethu Community Centre.

The meeting was attended by Sibongile Mbotwe, special advisor to Police Minister Nathi Mthethwa, Somali and local spaza shop owners, faith organisations and high ranking police officers.

Chairing the meeting, Reverend of International Ministers Association Templeton Mbekwa said there had been an outcry from local business owners who felt that the 2008 general agreement between Zanokhanyo and the Khayelitsha Somali Retailers Association had not been adhered to.

The 2008 agreement stated that from November 1, 2008, new spaza shop owners would only be allowed to trade if approved by both organisations.

But Mbekwa said the South African Police Service (SAPS) and City of Cape Town law enforcement agencies had not enforced the agreement.

“Some times you find that Somalis spaza shop owners are fighting amongst themselves for competition of business,” he said.

He said following a proliferation of Somali-owned spaza, local shop owners in Harare started investigating. Apparently one Somali trader said police and community members were being paid off so that he could open shop.

The Somali spaza shop owners had apparently told their local counter parts that they were “untouchable” said Mbekwa.

Complaints from the approximately 50 local shop owners were that there was a proliferation of new Somali traders and that local Sanco branches, ward councillors and police officers were being paid by Somalis to let them open shops.

Reggie Mthembu, who owns a spaza shop in Khayelitsha site C, said the Somali community comprised just a handful of residents in the area, they operated about 90% of the spaza shops there.

“We can’t compete with them. We start a spaza shop with a capital of R200 they open their spaza shop with a capitol of R200 000,” he said.

A uniformed police officer who identified himself as Warrant Officer Sosha agreed there were some police officers who were being paid by Somali traders.

He requested that a new list of old and new local and Somali spaza shops be compiled and made available to the two affected parties.

But Mbekwa said the proliferation of Somali traders was by request of residents who had told Sanco committee members they preferred Somali-owned shops to those owned by South Africans, and RDP house beneficiaries even invited Somali business owners in Bellville to rent their RDP houses and open their shop therein.

Somali Retailers Associations spokesperson Abdi Ahmed said every time tensions arose new government officials were sent in to broker a deal which was not adhered to.

Ahmed said the association wanted to find a solution that was implemented in “a fair and just manner”.

Speaking after the meeting, Sibongile Mbotwe said the local community should arrange a mass meeting to inform the residents about the challenges in question, find solutions and implement them.

“The solution that will come out of that meeting will be a solution that everyone will own because they will be part of that meeting,” said Mbotwe. – Peter Luhanga

From The Sunday Times

“Foreigners who own spaza shops and other businesses may soon be subject to by-laws that could be stricter than their South African counterparts, according to a report on Saturday

As you yesterday, South Africa has legislated against Transfats. A maximum of 2% of oil content may now be from transfats and a maximum of 1% of oils in foods claiming to be transfat free.

The Daily Maverick reports on it here: Link

In the article they quote a Pretoria University Nutritionist who notes that while Europe has had such legislation for some time, they have continued to send foods to us that would not be legal there.

The Daily Maverick points to a series of challenges likely to face any operationalising of the legislation.

“That is, if anyone ever challenges those products. The department of health, which could not be reached for comment, doesn’t have the resources to test for such things, and has previously said it will rely on food companies to act honestly. It is perhaps more realistic to expect competitors to police one another, but that leaves consumers without a champion, or even much information. Disclosing the level of trans-fats in food is not yet mandatory, it’s just illegal to have too much.

And that is ignoring one of the primary sources of trans-fats: frying oil that is reused too often. We wouldn’t recommend relying on the local fish ‘n chips shop to do regular testing.”

I think this is key, particularly at the lower end of the market - the non-supermarket sector - where regulation is less effective, where the consumers are more price pressed and so purchasing more heavily processed foods, and where consumers have less information on nutrition and legislation.

NUMSA (the National Union of Metalworkers of South Africa) have released their submission to the Portfolio Committee on Economic Development. It is length and is in full here.

Here is an excerpt:

“We want to submit that in our country the retail sector is important in its own right but cannot be seen in isolation from its supply chain and the manufacturing, food, agriculture, agro-processing, clothing and textile, chemical and transport industries that are involved in the production of goods for sale through retail outlets. The retail sector acts as the intermediary or conduit between those productive sectors and the end-consumer.

Thus, the creation of enormous and unmatched countervailing power or buyer power as a result of the entry of the world’s largest retailer into the South African retail sector will impact not only on Massmart’s competitors in the retail space, which include SMMEs and informal traders, but also reverberate up the supply chain.

This would have several harmful effects on both the retail sector and its suppliers. Economists have studied this phenomenon and describe, among others, the waterbed effect, the spiral effect and the creation of monopsony (single customer market - market in which there is only one buyer) that follows the arrival of Wal-Mart’s business practices and business model in a given market or sector.

It is our submission that there are two areas of concern in relation to employment issues. The first is the effect on employment within the wholesale/retail sector itself and the second on the local industries and businesses that supply the sector.”

From today’s Independent (source)

“

Is the world’s retail giant about to swallow Africa?

The decision to allow Wal-Mart to enter South Africa will threaten hundreds of smaller, local competitors, claim critics of the move

By Alex Duval Smith in Cape Town

Friday, 3 June 2011

ALAMY

Stallholders could lose out to retail giant Wal-Mart

Pavement trader Babalwa Ngcolo makes a “fair living” selling tomatoes at one rand apiece (8p) from a board laid out on two plastic crates near Cape Town railway station. “Of course, there is competition,” she says glancing at the woman to her left with identical stock, “but if she has a good day today, I may have a good day tomorrow”.

Mrs Ngcolo cannot imagine any of the large stores ever threatening her small business. But according to trade unions, the landmark decision on Tuesday by the South African Competition Tribunal to allow US retailer Wal-Mart to enter the African continent is bad news for Mrs Ngcolo and millions like her.

Eight months after the world’s biggest store group made its first offer to buy warehouse retailer Massmart, the Pretoria-based tribunal allowed the purchase of 51 per cent of the South African group for £1.5bn.

“We’re pleased that the competition authorities have recognised the benefits that our investment in Massmart can deliver,” Wal-Mart International chief executive Doug McMillon said. Massmart chief executive Grant Pattison greeted the news with a pledge to create 3,000 jobs in 200 new stores in the next three years.

But Mike Abrahams, spokesman for the South African Commercial, Catering and Allied Workers Union said the tribunal’s decision was a “disappointment”. “The tribunal disregarded our evidence about the broad public impact of the takeover. They completely failed to consider that when you talk about Wal-Mart you are talking about a whole different history and scale than in any other takeover situation.”

The Arkansas-based group has 4,000 stores in the US and as many outside. It trades in 14 countries and, until this week, had a presence on every continent except Africa. It is the biggest retail group in the world. Its buying power makes competitors tremble and the company has notched up hundreds of court appearances on four continents for union-bashing, discrimination and price-fixing. The group’s annual sales are three times the South African national budget. If Wal-Mart were a country, it would be listed among the world’s 30 top economies.

Massmart, which was set up in 1990 by entrepreneur Mark Lamberti, is South Africa’s biggest food and general goods retailer with 288 stores in 14 African countries. The company last year shed 1,500 jobs and has been accused of doing so in preparation for the deal with Wal-Mart. Its revenue last year was 47bn Rands (£4.1bn), the latest in a series of 10 per cent year-on-year increases.

Massmart’s target customers are the growing Southern African middle class who, like professionals everywhere, drive cars and enjoy topping up their weekly shop with a bargain garden table or kitchen appliance. South Africa is the continent’s most vibrant consumer market and forecasters say that the 59 million Africans who earn at least £5,000 a year will have doubled in number by 2014.

Proponents of the Massmart takeover see it as crucial to investor confidence in South Africa where the influential trade union confederation, Cosatu, is part of the African National Congress governing alliance. Those backing Wal-Mart’s arrival also claim it will create jobs: “All new employment is worth having in our country where up to 60 per cent of the population doesn’t enjoy the dignity of having a formal job,” said Johannesburg-based economist Mike Schüssler.

Tuesday’s tribunal ruling followed months of talks and discomfort in the ANC alliance which accommodates strongly pro-market forces alongside apartheid-struggle comrades from the unions and the communist party. In December, Economic Development Minister Ebrahim Patel put in place an expert panel to consider the offer and his department and two others – Agriculture and Trade and Industry – came out against the deal.

Among their claims was that if Wal-Mart shifts Massmart’s local procurement policies by as little as 1 per cent, as many as 4,000 jobs will be lost. In their evidence to the tribunal, the unions cited a German study suggesting that for every two jobs Wal-Mart creates when it opens stores, three are destroyed as competitors go out of business.

While the tribunal said it would release its full reasons for the judgment only on 29 June, Mr Abrahams said the decision seemed to mark a complete “capitulation” by the respected competition body. Indeed, while the judgment included a short list of conditions – including no sackings at Massmart for two years, a pledge to recognise collective bargaining agreements for three years and the creation of a 100m Rand support programme for local suppliers – the very same “demands” had been contained among sweeteners offered by Wal-Mart at the tribunal’s hearing in March.

But experts in competition law said South Africa had been left with little choice than to open the door to Wal-Mart. As a member of the World Trade Organisation and signatory of the General Agreement on Tariffs and Trade, South Africa would not have been permitted to demand, for example, that Wal-Mart should buy domestic products.

“If Wal-Mart’s entry into the South African market had been denied, South Africa would have been breaching its international commitments,” said Paul Kruger, a researcher at the Trade Law Centre for Southern Africa.

Outside Cape Town station yesterday, Mrs Ngcolo declared herself happy with the business of the day. She had never heard of Wal-Mart. Neither had she ever set foot in the nearby Massmart-owned Game store. “Game is too expensive for me,” she explained, “and it is too expensive for all the people who buy tomatoes from me. I am not too worried.”“

ETV were reporting on long expired food being sold in Vanderbijlpark. This follows up on a similar story in Cape Town towards the end of last year (http://www.iol.co.za/news/south-africa/western-cape/hungry-still-eating-expired-food-1.1010964?ot=inmsa.ArticlePrintPageLayout.ot) and the re-worked chickens (http://www.mg.co.za/article/2010-12-21-supreme-poultry-we-do-rework-chickens).

The labeling of food with expiry and best before dates has been voluntary in SA. In 2010 the Department of Health approved new food labeling legislation which was meant to come in on 1 March this year. Under this legislation producers are required to include the following on packaging:

• Use by date on perishables to ensure safety
• Best before date on non-perishables to ensure freshness
• Batch number and manufacturer’s address to ensure traceability
• Declaration of common food-related allergens
• Ingredients list
• Foods that make health claims must provide nutrition information in a standard format
• Quantitative Ingredient Declarations (e.g. % olive oil in margarine)
• Nutritional contents/comparative claims (e.g. ‘low fat’ vs ‘reduced fat’ claims (http://www.ncf.org.za/docs/publications/consumerfair/2010/vol25/part2.pdf)

This can only be good for consumer rights. but:

What will the cost of this be for smaller producers?

What level of monitoring and enforcement will there/can there be? Can the food industry self-regulate?

Given the importance of the informal sector and the bulk breaking and repackaging that takes place, will this changing legislation have any impact on the food safety of the poor?