If you run a small business in South Africa or are planning to start one soon, you must familiarise yourself with the National Business Licensing Policy. The policy was announced in a media statement at the 28 May 2025 Cabinet meeting and has already sparked a lot of debate. Some welcome it because it promises order and fairness, and others are reluctant to accept it due to worry about red tape.
The reality sits somewhere in the middle. There are real opportunities in this policy, along with very real challenges that entrepreneurs need to understand. And the entrepreneurs who take time to unpack it now will be a step ahead of others when the policy starts shaping new by-laws and licensing systems in the next two years.
Let’s break down the National Business Licensing Policy to help you make better decisions for your business.
Why the Policy Exists in the First Place
For decades, South Africa has had a complex licensing system. Each municipality has its own rules, its own documents, its own fees and, in many cases, very little capacity to enforce anything. A trader in one city could register and get licensed within days. A trader in another could wait months, while another might not even require a license, depending on the kind of business. These differences hurt small businesses because you never know what to expect.
The government drafted the National Business Licensing Policy to bring order to this. It sets the direction for a new, national standard for general business licensing. It aims to make the system fair, transparent and easier to navigate. It also aims to make the rules the same across provinces and local councils, which in turn helps create certainty for entrepreneurs.
This uniform system has been needed for years. Many municipalities still rely on manual processes, and most licensing records sit in old files that nobody looks at again after approval. The new policy pushes for modern systems and encourages councils to digitise procedures. A national framework also reduces duplication, which is something business owners have been calling for.
What the New Framework Means for SMEs
Unlike what many entrepreneurs fear, this policy is not a new law. It is a framework that guides future laws and by-laws. This means your immediate licensing process probably will not change today. But that change is coming. Councils will start aligning with national rules once legislation is drafted.
You might be wondering, what will this look like for a small business owner? Here’s an outline of what to expect:
1. Standardised Business Licensing Requirements
You can expect clearer national guidelines on the documents you need, how long approvals should take and what your municipality must check before issuing a licence. This will reduce the guesswork that has frustrated business owners.
2. A Push Toward Digital Licensing Processes
Expect an online system where you can submit your forms, track progress and renew your licence without standing in queues. Some municipalities have already tested digital systems during the lockdown years, but the new policy pushes them to adopt them fully.
3. Less Red Tape for Small Business Owners
The policy encourages shorter waiting periods and simplified checks for low-risk businesses. Many micro businesses have been operating informally for years because the process took too long or was unclear. A clearer system opens the door for more entrepreneurs to join the formal economy.
4. Licensing Fees Based on Real Administrative Costs
The government has made it clear that a licence must not be a revenue tool. Fees must be based on the cost of processing applications, not on raising income. This could lead to more reasonable costs, especially in smaller municipalities.
Potential Advantages of the National Business Licensing Policy
1. National uniformity
When each municipality has their own rules, it makes expansion harder. A national model helps businesses grow across provinces without facing new and unfamiliar procedures each time.
2. This policy is linked to economic transformation
The government wants historically disadvantaged groups to get better access to economic activity. A predictable licensing system means fewer hidden barriers that once pushed many black owned and migrant owned businesses out of the formal space.
3. It prepares the ground for future monitoring systems
Although the policy avoids heavy oversight, a digital system creates a record of business activity. This helps the state understand trends, risks and sector growth. It also reduces corruption at the local level, since applications are processed through a traceable system.
4. Informal businesses may benefit more than anyone expects
Informal traders have long operated between rigid rules and unclear bylaws. Standard procedures and a fair cost model could make the road to formalisation easier than before.
