Bill gives officials wide powers

Dear Corruption Watch

With the new Draft Licensing of Businesses Bill to leave more and more administrative discretion up to public servants, it seems to me that opportunities will multiply for them to ask for ‘contributions’ and/or businesses to offer bribes or other favours. How best can we regulate business appropriately without allowing too much discretion?

Decision Maker

Dear Decision Maker,

This is a classic policy problem: where is the sweet spot between affording officials the necessary discretion to address the circumstances of each case, while still ensuring consistent and accountable regulation? The more discretion officials have, the more open the system is to abuse. The less discretion officials have, the less room they have to make an informed decision based on all the facts and the more likely it is that the decision will be unjust.

It is impossible to answer this policy question in the abstract. We have to look at the law in question, the ill it attempts to regulate and how it sets out to do so. The Licensing of Businesses Bill is not a new idea in South Africa. Certain businesses are currently required to get licenses under the Business Act. In addition, many businesses must get approval under other laws applicable to their particular industry. A grocery store or restaurant must get approval from the health authorities before they can serve food. A bottle store must get a liquor licence. A garage must get environmental approval. There are also zoning requirements which must be met.

The point is that there is already a lot of red tape that businesses have to go through in order to operate. At all those levels, there is a potential for abuse and corruption. 

The Licensing of Businesses Bill in its current form creates even more opportunities for abuse and corruption, by appearing to confer discretion on the licensing authorities when deciding whether or not to grant a license. There are also contradictory provisions in the Bill. These provisions will surely be confusing too for the decision-maker, which is a recipe for corruption. The Bill also grants very broad, seemingly unchecked powers to traffic officers amongst others, as licensing inspectors, who have been marred by reports of corruption. Inspectors are enjoined with powers to conduct inspections, monitor compliance with the legislation, question any person on any premises in respect of any matter relevant to an inspection, remove and confiscate goods, to name a few. 

Interestingly, the discretion granted in the Bill is a move away from current Business Act. The Business Act (which only regulates certain businesses such as suppliers of food) confers much less discretion, uses clear language, and mandates licensing authorities to issue licenses, where requirements are met. 

Many administrative decisions are subject to an internal appeal, including decisions under the Bill, and all decisions are subject to review by the courts. The Department of Trade and Industry could argue that if a decision-maker exercises discretion unfairly or tries to encourage a “contribution”, one could either appeal or review the decision (and of course report the official to the police for soliciting a bribe). This however, is little comfort to current or prospective business owners. Appeal and review procedures are time-consuming and costly. 

We should not have to resort to challenging decisions after they are made, especially where we are dealing with decisions that affect our livelihoods. Rather, we should be governed by legislation that is sufficiently clear to avoid any doubt; and as regards this particular Bill, is limited in the discretion it confers on the licensing authority where the requirements for a business license are made clear, and are met by an applicant.