By: Lonwabo Mtyeku | Photo Credit: Supplied
NAFCOC Retail Sector welcomes reform but calls for reduced red tape and stronger support for township enterprises
South Africa’s proposed Business Licensing Bill, 2025 is being positioned as one of the most significant regulatory reforms affecting small businesses, informal traders and township enterprises in recent years.
The Bill seeks to modernise the country’s licensing framework by replacing outdated legislation with a harmonised national system that aims to improve transparency, governance and consistency across municipalities. Government has indicated that the legislation is intended to simplify licensing processes, reduce duplication between regulatory authorities and create a more enabling environment for entrepreneurship and economic participation.
The proposed legislation comes at a time when South Africa is seeking to stimulate economic growth, expand opportunities for small businesses and improve the ease of doing business, particularly among historically disadvantaged communities.
Among its key objectives, the Bill aims to introduce preferential licensing mechanisms for small enterprises, streamline application processes, establish clearer regulatory standards and provide greater recognition of informal and township businesses operating across the country.
The NAFCOC Retail Sector (NAFRET) has welcomed the Bill’s broad objectives, describing it as an important step toward creating a more inclusive and efficient business environment.
In its formal submission on the Bill, NAFRET stated that it supports efforts to establish “a modernised, harmonised national licensing system” and praised government’s intention to simplify compliance requirements while improving governance and regulatory coordination.
However, the organisation has cautioned that the legislation’s success will ultimately depend on whether it genuinely reduces administrative burdens for small businesses.
“While NAFCOC Retail welcomes the Bill, we emphasise that its successful implementation depends on the reduction of administrative burdens currently faced by township enterprises, informal traders, hawkers and other small black-owned businesses,” the organisation said in its submission.
According to NAFRET, many small businesses operate with limited resources and are unable to absorb costly, complex and time-consuming compliance requirements.
The organisation has therefore called for licensing processes that are simpler, faster and more affordable. It argues that application systems should be digital, mobile-friendly, multilingual and easily accessible to entrepreneurs operating in townships and rural communities.
Municipal Capacity Remains a Key Challenge
One of the central issues highlighted by business organisations is the capacity of municipalities to administer the new licensing framework effectively.
The Bill places substantial responsibilities on local government structures, including processing applications, monitoring compliance and enforcing regulations.
NAFRET has warned that existing municipal capacity constraints could undermine implementation if not addressed.
The organisation has called for increased staffing, specialised training, integrated technology systems and stronger accountability mechanisms to support municipalities.
“A national rollout plan and capacity-building programme should accompany the legislation to ensure uniform and fair implementation,” NAFRET noted.
Formalising the Informal Economy
Supporters of the Bill argue that one of its most important benefits is the opportunity to bring informal businesses into the mainstream economy.
South Africa’s informal sector plays a significant role in employment creation and local economic activity, particularly in townships and underserved communities.
NAFRET believes the Bill should go further in removing barriers that discourage entrepreneurs from formalising their businesses.
Among its recommendations is the removal of rezoning requirements for home-based township businesses operating from garages and small residential spaces.
The organisation argues that such requirements often create unnecessary obstacles for entrepreneurs attempting to operate legally.
It has also proposed dedicated enterprise zones where fees and compliance requirements are reduced to encourage business growth and job creation.
Governance and Anti-Corruption Measures
The Bill also seeks to strengthen governance and oversight within the licensing system.
Business organisations have emphasised the importance of transparency and accountability to prevent corruption and abuse.
NAFRET has proposed the establishment of independent municipal licensing boards that include representatives from organised business, alongside clear conflict-of-interest rules for officials involved in licensing decisions.
The organisation believes that stronger oversight mechanisms will help build confidence in the licensing process and ensure fair treatment of all businesses.
Balancing Regulation and Economic Growth
While there is broad support for the Bill’s objectives, stakeholders continue to stress the importance of ensuring that regulation does not become a barrier to entrepreneurship.
NAFRET has warned that any provisions that duplicate existing requirements relating to tax, health, safety or zoning could undermine government’s broader efforts to reduce red tape.
“The Bill must prioritise enabling entrepreneurship, economic growth and job creation rather than expanding administrative hurdles,” the organisation said.
The retail sector body has also called for stronger collaboration between municipalities, the South African Revenue Service (SARS), the Companies and Intellectual Property Commission (CIPC) and other regulatory agencies to simplify compliance and reduce duplication.
Looking Ahead
As consultations on the Business Licensing Bill continue, policymakers face the challenge of balancing effective regulation with the need to create a business-friendly environment that supports economic growth.
For organisations such as NAFCOC Retail Sector, the legislation represents a significant opportunity to formalise businesses, improve governance and expand economic participation. However, they maintain that its success will depend on whether it delivers practical benefits to the entrepreneurs who need support most.
If implemented effectively, the Business Licensing Bill, 2025 could become a cornerstone of South Africa’s efforts to build a more inclusive economy, strengthen township enterprises and create a licensing system that promotes both compliance and growth.
