Reference: Published by SME South Africa (26 Sept 2024)

Running a business involves following the rules and regulations that apply to it. While some laws are broad, others are specific to certain industries or sectors. In certain cases, businesses need to obtain special permits to operate in particular areas, known as trade licenses.

A trade or business license is a permit that allows you to legally operate a business in a specific location. This license ensures that your business and its premises comply with all safety, health, and building regulations.

As a business owner, it is crucial to ensure you have the proper licenses and permits in place. Failing to do so can result in hefty fines, and could even jeopardize your business’s ability to operate.

This article explores what a trade license is in South Africa and how to stay compliant.

Why You Need a Business License in South Africa

In South Africa, business licenses and regulations are governed by specific laws. One of the primary legal frameworks overseeing licensing is the Business Act of 1991, which mandates that certain businesses must obtain a trade license before commencing operations.

The Business Act specifies the following key points:

• A licensing authority may be designated for specific areas by a notice in the Official Gazette.
• No business may operate in an area governed by a licensing authority without an appropriate trade license or hawker’s license.
• A license will not be issued if the business premises do not meet local zoning, safety, or health standards.
• Similarly, a license will not be granted if any equipment, storage facilities, work surfaces, or other elements used for handling or selling food fail to comply with regulations.
• Licenses may be granted on the condition that businesses make necessary adjustments to meet compliance standards before the final license is issued.

Licensing authorities have the power to suspend or revoke licenses if businesses fail to maintain compliance, and non-compliance with regulations can result in fines or even imprisonment. Additionally, ongoing violations may incur daily penalties.

The Business Act also allows for appeals in cases where license applications are denied or if approval takes longer than 21 days.

Which Businesses Require a Trade License?

Not all new businesses require a trade license, but some, particularly those in the food industry, do. According to the Business Act, the following types of businesses need a trade license:

• Food establishments
• Adult entertainment venues
• Cinemas
• Nightclubs
• Arcades
• Pool halls
• Hawkers
• Businesses with three or more vending or slot machines
• Spas, saunas, and health clinics
• Public baths and massage parlors
• Laser and ultraviolet treatment centers

If your business falls into any of these categories, it’s important to ensure that you secure the necessary trade licenses to stay compliant and avoid fines.

How to Apply for a Trade License

To apply for a trade license, you will need to submit an application to the relevant local authority, typically your municipality. The documents required for a new business license application may include:

• A certified copy of your ID or documentation from the Department of Home Affairs
• Registration papers from the Companies and Intellectual Property Commission (CIPC)
• Lease agreement (for home-based businesses)
• Liquor license (if applicable)
• Gambling authority documentation (if applicable)
• Proof of address
• Menu (for restaurants)
• Certificate of acceptability (issued by Municipal Health Services)
• Fire safety clearance certificate

Renewing Your Trade License

Trade licenses in South Africa are typically valid for 12 months, after which they must be renewed. To renew your trade license, the following documents are generally required:

• Previous trade license
• Copy of your ID or relevant documents from the Department of Home Affairs
• Liquor license (if applicable)
• Updated menu (if applicable)
• Gambling authority documentation (if applicable)
• Fire safety compliance letter
• Certificate of acceptability for food premises
• Latest lease or title deed (for home-based businesses)
• Business registration papers from the CIPC

Having all necessary documents prepared in advance will streamline the renewal process and help ensure your application is not rejected due to missing information.

While managing these legalities may seem like a tedious task, it’s essential to keep your business in good standing. Failing to secure or renew your trade licenses can lead to fines or, in severe cases, the closure of your business.

Reference: Published by Staff Writer (BusinessTech), 3 April 2024

The South African Department of Employment and Labour has released Draft Regulations for public commentary, reflecting changes in the Employment Equity Amendment Act signed by President Cyril Ramaphosa in April 2023.

These regulations set out sectoral numerical targets for employment equity, urging employers, especially those with over 50 employees, to align with these new benchmarks to accelerate transformation within the workplace.

Detailed guidance is provided on developing Employment Equity Plans, considering the workforce profile against sector targets and the Economically Active Population data. This approach underscores a strategic move towards more inclusive employment practices, balancing ambition with realism to foster a diverse and competitive workforce.

The consultation period invites stakeholders to contribute to shaping a more equitable employment landscape by May 2, 2024.

For a comprehensive understanding and to contribute to the public comment, visiting the official notice or seeking detailed documentation is advisable.

Reference: Published by Anthony Molyneaux (TimesLive), 7 March 2024

A dispute over alleged unpaid music royalties in renowned South African restaurants has resulted in the South African Music Performance Rights Association (Sampra) initiating a criminal case. Sampra has pressed charges against Life and Brand Portfolio, a well-known restaurant group, accusing them of neglecting to pay license fees for the music played in their establishments over the past four years. Notable restaurants under Life & Brand Portfolio include La Parada, Tiger’s Milk, Harbour House, Grand Africa, Lucky Fish and Chips, Live Bait, The Lookout, and Old Town Italy.

According to Pfanani Lishivha, CEO of Sampra, these establishments have been using music unlawfully and refusing to pay the required license fees, preventing recording artists from earning ‘Needletime Rights’ royalties. Sampra, a nonprofit organization, emphasized that the collected license fees are meant to be distributed as ‘Needletime Rights’ royalties to recording artists and record companies.

Despite Sampra’s efforts, Life & Brand Portfolio remains firm in its alleged illegal use of music, leading to a legal case against the group for what is deemed as illegal and unethical conduct. Lishivha expressed concern about the exploitation of artists’ intellectual property, stating that legal action will be pursued against music users refusing to pay ‘Needletime Rights’ license fees in the coming months.

Lishivha criticized Life & Brand Portfolio, accusing them of being content with artists facing financial struggles while their businesses thrive on the exploitation of artistic talents. Sampra is determined to take a stand against such unethical practices, emphasizing that legal action is a last resort but necessary to ensure that recording artists receive their due compensation. Despite being given the opportunity to comment, Life & Brand Portfolio did not respond to questions sent by the group.

Reference: Published by Luke Fraser (BusinessTech), 11 February 2024

Due to the hard operating environment, South African entrepreneurs are increasingly unwilling to start new enterprises, limiting the creation of urgently needed jobs.

The Stellenbosch Business School’s 2023 Global Entrepreneurship Monitor South Africa (GEM SA) study shows that South Africa’s early-stage entrepreneurial activity (TEA) has dipped below pre-pandemic levels.

According to the report, the country’s weak economy and insufficient enabling environment for businesses limit entrepreneurship’s potential to boost economic growth, job creation, innovation and technology advancement, and social cohesion.

South Africa did improve its score on the GEM National Entrepreneurial Context Index (NECI), which measures the favourable environment for entrepreneurship and launching a new business, from 46 out of 50 nations in 2021 to 40 out of 51 in 2022.

However, South Africa was one of just three countries where all 13 of the enabling conditions for entrepreneurship were classified as insufficient (scoring less than five out of ten).

“Overall, we are not seeing resilience and recovery of entrepreneurial activity to pre-pandemic levels in South Africa compared to global and African perceptions, although these also are not optimistic,” stated Angus Bowmaker-Falconer, the primary author of

“This is reflective of our poorly performing economy, the impact of the energy crisis and deteriorating transport, logistics and other public infrastructure and service delivery, and the lack of a favourable enabling environment to support business start-up, growth and sustainability.”

The report’s co-author, Associate Professor Natanya Meyer, expressed concern that the intention to start a new firm has dipped below pre-pandemic levels.

“The percentage of adults aged 16-64 intending to start a new business in the next three years declined to 10% in 2023, the lowest in 20 years, after reaching an all-time high of 20% in 2021/22,” Meyer stated in a press release.

TEA, which includes active enterprises less than three years old and new businesses up to three and a half years old, fell from a pandemic high of 17.5% to 8.5% in 2022/23, a significant decrease from the 11% recorded in 2019.

Furthermore, established business ownership (more than 3.5 years) fell nearly half from 3.5% in 2019 to 1.8% in 2022/23, following a big peak of 5.2% during the pandemic years.

“The extent to which the COVID-19 epidemic affected entrepreneurship levels remains unclear. Lockdowns and related restrictions severely affected people’s ability to work and had a negative impact on trade and markets, putting pressure on economies around the world,” Bowmaker-Falconer added.

“At the same time, this crisis presented ‘problems to be solved’, and many new and established businesses pursued these opportunities.”

“In lower-income economies such as South Africa, there was generally less financial support from governments, as well as possibly fewer available jobs and income alternatives, which may have pushed more people into starting their businesses in 2020 and 2021.”

Furthermore, the company departure rate, or the percentage of persons who left their business in the previous year owing to selling or shutting it down, fell to 5% in 2019 from an all-time high of 13.9% in 2020/21, with the pandemic being the primary cause for business owners to leave.

The report also revealed that entrepreneurs had low and diminishing expectations about their company’ ability to create jobs.

In 2019, three out of ten business owners said they planned to hire six or more individuals in the following five years.

However, this figure fell to two in ten by 2022, which Bowmaker-Falconer attributed to the overall dismal economic conditions and enabling environment.

What to improve

Although the report’s findings reflect a bleak image of the condition of entrepreneurship in South Africa, Meyer emphasized that several obstacles arising from the Covid-19 pandemic must be overcome, in addition to the myriad issues faced by the country.

“As can be seen by the featured case studies in the report, South Africans are resilient, and with a better ecosystem environment factors in place, more and better-performing businesses will emerge,” she went on to say.

“Therefore, improving policies and creating a more conducive enabling environment should be a main priority for policymakers and other stakeholders.”

Reference: Published by Luke Fraser (BusinessTech), 5 September 2023

In August, South African business activity increased for the first time in a year, with the latest S&P Global South Africa Purchasing Managers’ Index (PMI) returning to positive territory after months below the line.

The PMI is a composite indicator of the private sector’s operating conditions. It increased from 48.2 to 51.0 in August.

This is the first time in six months that the PMI has risen beyond the neutral 50-point market level.

“The August South Africa PMI pointed to an encouraging turnaround in the private sector economy midway through the third quarter, as companies reported an increase in output for the first time in a year and demand conditions were broadly steady,” said David Owen, Senior Economist at S&P Global Market Intelligence.

“While inflationary pressures continued to sap customer spending power in many areas, there were hints that order books may be starting to improve, leading firms to make concerted expansion efforts.”

Despite significant increases in wages and material prices, the recovery in output enabled businesses to hire more workers and purchase more goods. The surge in layoffs is due to firms’ need to boost capacity and reduce work backlogs.

Despite the fact that new order inflows fell for the fourth month in a row due to load shedding and the cost-of-living issue, the newest statistics revealed that the drop was the weakest in the series.

Several companies also reported a rise in customer numbers and a revival in domestic demand. Export sales, on the other hand, fell somewhat in August.

There was nevertheless good news for inflation, as business costs rose at their slowest rate since January, resulting in a slower increase in a firm’s output charges.

Price pressures maintained, however, as a result of the rand’s weakness, wage hikes, and supply concerns, which were compounded by the Cape Town taxi driver strike.

Companies also witnessed a modest gain in input stores during August, while inventories fell during the previous four months. This expansion occurred despite a significant deterioration in supplier performance.

Looking ahead, South African firms remained optimistic about future activity, despite a modest drop from a nine-month high in July.

Firms were confident about increased demand, lower inflation, and a reduced impact of load shedding on their operations.

However, Owen cautioned that the August improvement should not be overblown.

“August’s rebound does little to turn the tide after a dismal start to 2023.” “Load shedding, supply disruption, and currency weakness continue to stymie firms and have an impact on demand,” he said.

“Progress on these issues would undoubtedly benefit South African businesses in the latter part of this year.”

Reference: Published by Staff Writer, 17 February 2023

https://businesstech.co.za/news/business/665485/8-things-stressing-out-businesses-in-south-africa-right-now

Companies are fretting about load shedding and mounting economic instability in South Africa, an SNG Grant Thornton study finds, with many being forced to close their doors due to the rising cost of energy.

Almost 100 corporate leaders in South Africa, including CEOs, managing directors, chairpersons, and other top decision-makers from diverse industries, participated in the study.

Companies identified the excessive frequency of load shedding and the ensuing increase in operating expenses as their top concern.

Due to load shedding and the high cost of diesel, energy costs are a major concern for 74% of South African mid-market enterprises, compared to 47% of respondents before the COVID 19 outbreak.

According to 67% of respondents, this is another major worry for the nation. The research also indicated that overall economic uncertainty increased dramatically over the first half of 2022, rising 11%.

After the worsening state of the transportation infrastructure (54%), labor expenses were identified as the third major worry (57%).

Load shedding and rising energy prices have pushed many enterprises to shut down, which has a negative impact on sales and disrupts the supply chain. According to Yugen Pillay, director of business consulting at SNG Grant Thornton, this had an even greater impact on the already high unemployment rate and budgetary restrictions.

The study found that load shedding caused unnecessary downtime for enterprises as they looked for alternatives such backup generators, uninterrupted power supplies (UPS), and solar power options.

According to Pillay, businesses are experimenting with alternative energy sources, but doing so has come at an additional cost. This is particularly true for generators, which use diesel, a commodity whose price has significantly increased as a result of the global oil market’s upward trend, which is being driven by geopolitical concerns.

Some of the largest enterprises in the nation are suffering from the severe consequences of load shedding; retail chain Pick n Pay estimated that it costs R60 million per month to keep diesel generators running and the lights on in its outlets nationwide.

According to the merchant, load shedding is now a constant reality that businesses must adapt to or risk losing money.

The cost of Shoprite’s diesel to keep the lights on, meanwhile, was estimated to be over R3 million per day.

During the next 12 months, SNG Grant Thornton expects the outlook to improve, particularly in terms of investment and economic conditions. The dangers to the economy are, nonetheless, negative.

Following Eskom’s announcement that load shedding would become a permanent feature of the nation, the South African Reserve Bank (SARB) reduced its economic growth projection closer to zero on January 26 from 1.1% to 0.3%.

The expectation of South Africa’s economic growth for the following two years has also been drastically reduced by the central bank. Forecasted growth rates have been cut in half for 2024 and 2025, from 1.4% to 0.7% and 1.5% to 1.0% respectively.

The message is consistent across industries: if South Africa wants to see economic growth, it must immediately address load shedding and the broader energy crisis.

In an effort to address this, President Cyril Ramaphosa proclaimed a state of calamity over the energy crisis during last week’s State of the Nation Address (9 February) in an effort to further reduce red tape and expedite projects to address the energy crisis.

However, the public has strongly opposed this choice due to worries that it will encourage more “tenderpreneurship,” as was evident during the pandemic. The action is being contested in at least three different legal cases.

Additionally, the president declared that he would name a “minister of energy” to the presidency whose primary duty would be to address load shedding and the energy problem.

This has also encountered opposition.

Companies have voiced their dissatisfaction with the president’s promises and lack of action, and ratings agencies have taken notice, raising questions about whether the national government will be able to change its history and truly carry out the promised reforms.