The opposition Democratic Alliance introduced the Ease of Doing Business Bill in Parliament in late February this year. The most significant objects of the cryptically titled bill are to:

  • measure the impact of regulatory measures, especially red tape contained in a regulatory measure, on business;
  • measure and reduce red tape and the cost associated with red tape when conducting business in the Republic; and
  • create a business-friendly environment for business in the Republic.

The introduction of the bill is not a bolt from the blue. There has been a recognition for some years that small businesses in South Africa are suffering as a result of having to comply with excessive administrative red tape. As long ago as 2013, the Department of Trade and Industry announced a set of “ Guidelines for the Reduction of Municipal Red Tape”. The first version of the present bill was published under the title “Red Tape Impact Assessment Bill” in April 2016 and has followed a long and circuitous route, disappearing from the agenda and from public attention for lengthy interludes, before resurfacing in its present form.

The meaning of the term “red tape” for the purposes of the Bill is of course crucial. In the Bill, it is “the information that a business must submit or maintain and the procedures that a business must follow to gain administrative approval or to comply with prescribed requirements in one or more regulatory measures, where the submission or collection of such information or compliance with the processes and requirements are complex, time-consuming and costly, and includes -

  • completing paperwork;
  • obtaining licences;
  • requiring a decision to be approved;
  • filing requirements;
  • certification requirements;
  • reporting; and
  • investigative and inspection enforcement practices and procedures”.

Small businesses that are already struggling under the burden of compliance with the many and complicated requirements that apply to them should not, however, expect a quick fix. The bill does not identify specific instances of red tape that are seen as especially troublesome and does not propose amendments to any existing laws or regulations. It only looks to put measures in place by which proposed and existing laws are to be examined to assess the burden of red tape they will or do create.

The bill provides for the establishment of a body to be known as the Regulatory Impact Assessment Unit. The Unit will be tasked with researching and formulating guidelines and strategies to be followed by organs of state, Parliament and self-regulatory industry or professional bodies when formulating legislation, codes or policies. The guidelines and frameworks are to be designed with a view to assessing the impact of regulatory measures on different communities, and the effective and efficient implementation of those measures, and to measuring and reducing red tape. The bill proposes that the Minister establish the Unit within twelve months of the bill being enacted and coming into effect.

The bill requires Ministers and Parliament to endeavour to develop business friendly regulatory measures and ensure the continuous reduction of the cost burden of regulatory measures for small business and to ensure that all stakeholders are given the opportunity to provide input during the development of regulatory measures. Any organ of state or self-regulatory body proposing a new regulatory measure must submit it to the Regulatory Impact Assessment Unit. The Unit must conduct a mapping exercise to analyse whether the measure requires any additional resources to be implemented, imposes obligations or costs or has unintended consequences for communities and businesses. If the Unit identifies any such issues, it must conduct a regulatory impact assessment and prepare a statement setting out the financial and non-financial implications of the proposed regulatory measure. The recommendations in the statement must be implemented in the process of finalising any regulatory measure.

Regulatory measures pertaining to matters of national security or to matters declared by law to be privileged, confidential or secret need not be published for stakeholder input. Legislation that deals only with the administration, procedure or practice of a court or government department is exempted from the requirements of the bill.

In addition to the provisions for proposed regulatory measures to be assessed, the Bill also proposes that government ministers and self-regulatory bodies must be responsible to reduce red tape in all regulatory measures under their control. A self-regulatory body must report annually to the Regulatory Impact Assessment Unit on the costs of red tape in respect of the regulatory measures used by the body and the steps it has taken to reduce red tape and the costs occasioned by it. Ministers must within two years of the Bill being enacted and coming into effect, identify any legislation that they administer that needs to be repealed and replaced in order to reduce red tape and the cost thereof and, with the introduction of any new legislation, repeal or replace any legislation so identified.

Notably, the Bill does not actually identify specific problem areas or litigation that are seen as being particularly “business unfriendly” or sources of costly red tape. It merely creates an enabling environment in which governmental and non-governmental bodies responsible for creating and administering regulatory measures are enjoined to be aware of, and guard against imposing cumbersome and costly compliance requirements that negatively impact the efficiency and profitably of, in particular, small businesses. In follow-up articles to this one, we will consider some of the existing measures are persistent sources of frustration to business owners in South Africa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.