It has been estimated that the informal economy in South Africa accounts for approximately R160 billion in revenue.1 A large proportion of this is made up of the taxi industry, and casual labourers, but a substantial part of this economy also consists of spaza shops, shabeens and similar businesses.

The Business Act 19912 makes provision for the licensing of businesses, and matters connected therewith. It falls under the authority of the Minister of Trade and Industry; but, practically, the administration of the Act has been assigned to provincial administration.

The administration in each province can appoint a licensing authority to undertake the licensing of businesses – which includes the sale or supply to consumers of food and foodstuffs, massage parlours, amusement arcades, night clubs, cinemas, adult entertainment facilities, and the like.3

  1. It is an offence to carry on business unless you are the holder of an appropriate licence.4 5

  2. It is also an offence to carry on business in contravention of any condition of a licence issued to you.6

  3. The holder of a licence is guilty of an offence even if another person in control of the business, or a director, manager, employee or agent of the business, conducts it in such a way as to breach any condition of the licence.7


  2. In terms of the Act, regulations and by-laws can be promulgated which govern businesses, particularly in the informal sector. It is beyond the scope of this book to address these delegated laws. As amended; the latest amendment was effected by Act 94 of 1998. 

  3. Sports clubs, and charitable, religious, educational, cultural and agricultural institutions are exempted if all profits are devoted to the purposes of the institution. 

  4. This can also mean you must have a hawkers’ licence if you are a hawker of food. 

  5. Section 2(3) read together with section 5(1) 

  6. Section 2(3) read together with section 5(1) 

  7. Section 5(2)