This article was first published by Business Brief in the August/September 2025 Issue
South Africa’s new National Business Licensing Policy is a bureaucratic Frankenstein. It is an overbearing, government-centric monstrosity that threatens to throttle entrepreneurship and suffocate economic dynamism. It certainly does nothing to assist business whether small, medium or large. Beneath its progressive rhetoric lies a tangled web of bureaucracy, preferential treatment and regulatory overreach that threatens to stifle the very entrepreneurial spirit it claims to nurture.
Ms Stella Tembisa Ndabeni-Abrahams, minister of small business whose department is supposedly responsible to facilitate the development and growth of small business to contribute to national economic growth and job creation, is expected to advocate for a conducive regulatory environment for small businesses. Far from fostering growth and job creation, she has published a blueprint for stifling innovation through suffocating regulation, protectionist nationalism, and bureaucratic inertia; her policy does not empower businesses of any size. It chains them to a government-controlled nightmare, risking the collapse of a fragile economy in desperate need of liberation, not yet more onerous compliance.
South Africa stands at a critical economic juncture, grappling with the imperatives of rejuvenating growth, creating employment, and redressing inequalities. Against this backdrop, the introduction of the National Business Licensing Policy (NBLP) signals the ANC’s intention to recalibrate the regulatory framework governing business operations. Ostensibly designed to modernise outdated legislation, enhance intergovernmental coherence, and promote social equity, the policy undermines the very foundations of economic vibrancy through regulatory overreach and market distortion.
The inherent tensions and unintended consequences embedded within the NBLP are set to destroy entrepreneurial freedom and competitive markets with new layers of expensive bureaucratic interference, ideal for the propagation of yet further rent-seeking opportunities across the whole Republic.
One of the most conspicuous features of the NBLP is its blueprint for rapidly expanding the already overweight bureaucratic apparatus with continuous legislative review, “stakeholder” engagement, and the establishment of dedicated governance structures across national, provincial, and municipal spheres. While claiming coordination and modernisation goals, the envisaged proliferation of regulatory bodies and procedural layers portends a complex bureaucratic morass with very many more opportunities for bribery and corruption.
Rather than alleviating administrative burdens and creating a conducive business environment, this multiplicity of actors and forums risks exacerbating business deterrents and compliance inefficiencies. Business owners, particularly those at the small and micro enterprise level, are likely to encounter elongated approval timelines, inconsistent interpretations of regulations, and escalating direct and indirect compliance costs. This is to say nothing of the inevitable demands for bribes and intimidation for which the bureaucracy has regrettably become so well known. Such a scenario is inimical to fostering innovation and deters investment precisely at a time when South Africa’s economy requires entrepreneurial dynamism, agility and liberty.
Economic history and comparative international experience teach that regulatory complexity begets opacity, rent-seeking, and delays, elements that discourage rather than encourage new market entrants. Simplification, clarity and predictability in regulation must therefore take precedence over possibly well-intentioned but administratively throttling reforms.
Central to the NBLP is the provision for preferential licensing aimed at historically disadvantaged groups and South African citizens, including the reservation of certain sectors exclusively for nationals. This policy is ostensibly motivated by what appear to be laudable social justice objectives.
However, instituting such preferential measures through licensing mechanisms inevitably distorts the competitive landscape. Market entry criteria that hinge on identity-based quotas or nationality risk protecting incumbents and selected groups from competition, fostering endemic inefficiency and complacency. Licensing becomes less a regulatory safeguard and more an instrument of economic exclusion, cloaked in the guise of empowerment.
Opportunity and success should derive from merit, innovation, and responsiveness to market demands, not administrative fiat. Artificial barriers to entry undermine consumer choice, stifle entrepreneurial creativity, and deter both domestic and foreign investment. Preferential licensing is therefore a double-edged sword that will perpetuate economic stagnation rather than alleviate it.
Business licensing regimes, by their very nature, impose constraints on the freedom of individuals to trade. Broad licensing requirements frequently serve as tools of protectionism and of extractive corruption.
The NBLP’s apparent emphasis on fairness, transparency, and ethical allocation of licenses does little to mitigate the fundamental problem: licensing acts as a barrier to entry, disproportionately impacting smaller operators and new entrepreneurs. Rather than fostering competition, it entrenches incumbency and diminishes market responsiveness.
Regulatory restraint is critical to allowing a South African entrepreneurial class to develop and to flourish, and to encourage both local and foreign investment.
The policy’s social objectives echo a global imperative: addressing historical inequities through economic inclusion. Yet the means proposed, preferential licensing and sectoral reservations, miss the mark.
Economic inclusion is most sustainably achieved by opening markets, not by restricting them as the NBLP does. Removing unnecessary regulatory hurdles, improving access to finance and infrastructure, and enhancing education and skills development for everyone creates a fertile environment for all entrepreneurs. Markets thrive when participants compete on a level playing field, where meritocracy prevails and where consumer sovereignty prevails.
Licensing preferences risk engendering dependency on bureaucratic discretion and favouritism, potentially breeding corruption and inefficiency. The road to genuine empowerment lies not through protectionist measures but through policies that expand opportunity universally and fairly.
South Africa’s socio-economic challenges demand bold and effective solutions. The National Business Licensing Policy represents a regulation-heavy approach that threatens to suffocate the entrepreneurial spirit that is vital to economic renewal.
The policy’s embrace of complex governance structures, preferential licensing, and expanded regulatory controls, risks fatally stymying innovation, increasing costs, and erecting barriers to entry. To achieve sustainable, inclusive growth, South Africa must pivot toward a licensing framework that is simple, predictable, equitable, and minimally intrusive, one that champions open markets, encourages competition, and empowers entrepreneurs irrespective of their background.
Policymakers would do well to heed lessons from both economic theory and practical experience: that economic freedom, underpinned by sensible regulation, is the most reliable engine for prosperity and social advancement. The NBLP’s promise will only be realised if it reconciles its professed noble social objectives with a commitment to market-friendly reform.
South Africa’s economic future hinges on unleashing the dynamism of its entrepreneurs, investors, and innovators. The NBLP’s current trajectory, marked by regulatory expansion and preferential licensing, will simply undermine these goals.
A freer, simpler, and more predictable regulatory environment, one that minimises bureaucratic hurdles and treats all participants equally, would better serve South Africa’s ambitions for inclusive and sustainable growth.
The Government of National Unity must immediately call for reconsideration of this policy’s regulation-heavy approach and instead embrace market principles that reward merit, encourage competition, and empower every South African to participate fully in the economy.
