New Cogta by-law draft allows limit on foreign spaza shop ownership

A new legal framework is being touted to maximise the potential of the township economy.

Minister of Corporate Governance and Traditional Affairs (Cogta) Velenkosini Hlabisa last week gazetted a draft by-law aligned with the Municipal Systems Act of 2000.

Informal traders in economically underdeveloped areas have been central to the debate around food poisoning which has claimed the lives of at least 20 children in the last few months.

Focus on foreign ownership

Cogta’s draft is aimed at “transforming townships into vibrant economic hubs” through a plan “to harmonise township business ecosystems”.

The by-law has a heavy focus on foreign ownership, allowing the government to set quotas for the number of South African-owned businesses and staff employed by foreigners.

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The draft clearly defines a foreigner as, “an individual who is neither a South African citizen, nor a permanent resident, but is not an illegal foreigner in terms of the Immigration Act 13 of 2002”.

Fixing the number of businesses within a specific category that may be owned and operated by foreigners will also be permissible.

“In determining the quotas a municipality must ensure, amongst others, that a proportion of the total staff employed in the business are South African citizens or permanent residents in line with all relevant legislation,” clause 3.3 of the draft states.

An extract from Cogta’s Standard Draft By-Law for Township Development. Picture: Cogta

Limited to township environment

The gazetted draft places an emphasis on municipalities developing spatial and economic objectives for townships.

Townships, as per the draft, are defined as, “residential townships where only the most basic amenities and infrastructure are provided which were initially established during the colonial and apartheid eras”.

In doing so, the draft compels municipalities to establish a task team whose specific role is addressing the trade of illegal goods and services.

ALSO READ: Ramaphosa slams ‘unscrupulous’ spaza shop owners amid food poisoning crisis

Other steps encouraged by the draft include facilitating skills development and providing improved access to infrastructure and markets for township businesses.

To do this, the draft states that entrepreneurs and businesses should be empowered through a multitude of training, mentoring, compliance and awareness workshops.

Prohibitions and restrictions

A host of by-laws already exist, such as those in Johannesburg which cover 25 aspects of public life and business operations.

Cogta’s draft prohibits the already banned trading in a garden, park, on a sidewalk or in a place obstructing traffic, unless holding a licence stating otherwise.  

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Under prohibitions and restrictions, Clause 9.F states that traders will not be able to conduct business adjacent to a building selling goods of the same or similar nature.

Additionally, business owners must keep identification records of suppliers and traders will not be allowed to sleep overnight in their shops, unless the property is zoned for residential use.

Those found in violation of the draft by-laws will receive a written warning with a date by which to remedy the infractions.  

A second transgression will see the trader’s licence immediately cancelled. The trader may appeal the notice but after a failed appeal, they will be barred from reapplying for five years.

NOW READ: Are foreign-owned spaza shops vital to the township economy?