Fears tough new laws will throttle economy

14 July 2014 - 08:36 By TJ STRYDOM
Johannesburg Stock Exchange.
Johannesburg Stock Exchange.

A battery of new laws and regulations - some already in force, others looming - will make it tough for business and individuals alike at a time when the economy is hovering on the edge of a recession.

Issues as wide-ranging as land ownership, private security, mineral resources and visa requirements have come to prominence in the past two months as the newly elected government takes the reins.

These include:

  • The Restitution of Land Rights Amendment Bill, signed into law by President Jacob Zuma less than two weeks ago. The Bill sets a new deadline for land claims - December 31 2018 - 20 years after the initial cutoff date;
  • The Private Security Industry Regulation Amendment Bill, which takes a hard line against foreign-owned security companies and is still awaiting Zuma's signature;
  • Amendments to the Mineral and Petroleum Resources Development Act that would grant the state an automatic 20% shareholding in oil and gas projects, and then the right to buy a controlling stake; and
  • New regulations for visas, which have already separated spouses and are of concern to employers of foreign nationals.

Roelof Botha, an independent economist and Gordon Institute for Business Science faculty member, fears that the possible repercussions of the laws have not been taken into account.

"It is clear that no macroeconomic impact study was undertaken before pushing ahead with these laws and regulations."

Botha believes the new rules - and what they reveal about the legislative authority's way of thinking - are in conflict with the National Development Plan, the state's blueprint to make South Africa a success for all its citizens by 2030. The business- friendly NDP envisages the economy growing by 5% a year - a far cry from the estimated less than 2% growth rate this year - in order to tackle massive unemployment and poverty.

"If the government is serious about implementing the NDP, its first task should be not to make laws that undermine the plan."

Botha is most concerned about the new visa regime.

Economists agreed that, after the electricity crunch and volatile labour relations, a skills shortage was South Africa's biggest problem, he said.

"The new rules would make it both more expensive and more difficult to attract the skills many of our companies need on a temporary basis."

SA Chamber of Commerce and Industry policy analyst Pietman Roos is worried about regulations that would require an individual who wants to start a business in South Africa to get its feasibility approved by the Department of Trade and Industry first.

"This is a layer of bureaucracy we don't need."

If someone was willing to invest in the country, possibly create jobs, and to take all the normal risks of starting up then surely it should be welcomed, not hampered, Roos said.

Not only smaller businesses will be affected by changes to legislation. Amendments to the Minerals Resources Development Act would give the government a share of oil and gas projects.

Though the Chamber of Mines endorsed the amendments, new Mineral Resources Minister Ngoako Ramatlhodi has sent them back to parliament's portfolio committee.

According to Botha, the government is getting too involved in the day-to-day working of the economy, crowding out the private sector in many ways.

"And the [proposed Mineral Resources Development Amendment Act] scares me somewhat as it looks a bit like the forerunner of the sort of policies we have seen in Venezuela and Zimbabwe."

Botha is concerned, too, about the perception being created among foreign investors by proposed regulation of the security industry, a massive employer - of as many as 950000 people in South Africa.

Agriculture is another possible job-creation hub, with the NDP aiming for one million more people to be employed in the sector. But organised agriculture has flagged the Restitution of Land Rights Amendment Bill as putting this in jeopardy.