The first notable initiative in government by the Inkatha Freedom Party (IFP) – South Africa’s second oldest existing federalist institution – has been to centralise the regulation of spaza shops under the central government. The xenophobic dimension is less surprising.
Tshwane mayor Nasiphi Moya, a member of the “unofficial opposition” ASA (as they insist on being called), says “spazas are strictly for locals!” Meanwhile, in Soweto, “civic group” Operation Dudula has stopped foreigners from registering their businesses.
One moment the controversy is ostensibly about “illegal” immigrants, but then we effortlessly shift, on a dime, over to foreign nationals per se being the problem.
IFP leader and Minister of Cooperative Governance in the so-called Government of National Unity (GNU), Velenkosini Hlabisa’s, centralising “standard bylaw” on township economies empowers municipalities to discriminate against legal foreigners doing business in South Africa. This bylaw was approved by Cabinet under the GNU’s rules of sufficient consensus, meaning the “reformers” approved it.
And Operation Dudula is actively stopping those foreigners who try to be legal from doing so. So do not let anybody ever convince you again that this was ever about “legal” versus “illegal”.
Liberty First
This week, the Free Market Foundation (FMF) published the fourth in its series of five Liberty First policy reform proposals. This edition deals with “Legal System and Property Rights,” the corresponding area of measuring economic freedom in the Economic Freedom of the World annual report, published by the Fraser Institute.
While South Africa ranks best on this area compared to the others – Size of Government, Free Trade, Regulation, and Sound Money – its absolute score leaves much to be desired.
The Liberty First initiative was launched in recognition of the potential for reform under the GNU. While this potential remains, the spaza shop crackdown is a telling indication that the ostensible reformers in the coalition are being swept up in the perfectly usual African National Congress (ANC) politics of centralisation, overlegislation (the substance of Hlabisa’s bylaw already exists in law), and “us vs them” bigotry.
In this week’s report, which I authored, four categories of reform are identified: Federalisation, Rule of Law, Private Property, and Civil Liberty. Each of these are already a distinctive feature of the South African Constitution.
Federalisation
The FMF has indicated multiple ways in which to more appropriately respect the federal design of the South African Constitution (centralising the regulation of municipal trade to the national sphere is not one of them).
These include devolution legislation that assigns many of the functions that the central government cannot hope to carry out on its own, downwards.
This cannot go unfunded, however, which is why fiscal relations legislation should also be adopted that not only gives more money to the provinces and municipalities from the National Revenue Fund, but also entitles them by law to the greater share of the taxes the Revenue Service raises within their jurisdictions.
This will encourage healthy competition between the provinces and municipalities to attract high-value taxpaying businesses and individuals to base themselves in those jurisdictions, which would entitle those governments to more money.
Parliament should also adopt self-determination legislation under section 235 of the Constitution, and grant any self-defined linguistic and/or cultural community in South Africa significant authority over state services in those communities. This legislation should entitle communities to govern themselves especially in matters of education, welfare, healthcare, and safety, and to provide municipal services to their paying members.
Crucially, these community initiatives must be self-funded, but must also be entitled to substantial tax and rate relief and exemptions.
Rule of Law
The recent spaza shop crackdown is just another in a long line of “feelgood,” emotional reactions by the political elite that harms the rule of law.
Virtually everything in the Department of Cooperative Governance’s standard bylaw is already law in some form or another.
Already – and predictably – township businesses are flouting these existing laws. Not because they want to, but because these first world standards that often define the precise dimensions (length and width) of trading stalls and prohibit noise or air pollution “of any kind,” are wholly inapplicable in South Africa’s township reality.
What we are talking about here are invariably poor, usually informal shops that cannot afford to hire compliance officers or lawyers to help them navigate the byzantine leviathan that is South Africa’s regulatory-administrative state. Adopting yet another law changes nothing, except encourage further disrespect for the law.
This does not mean we need “better law enforcement.” Being too zealous in enforcing economic regulations like these would be very destructive, for already the choice for informal entrepreneurs is to either remain informal or go out of business.
In our high-unemployment, low-growth environment, this is not the rational or sensible way to go about solving the problem.
The answer, of course, is to deregulate and to liberalise.
By reducing the compliance burden, we would incentivise informal businesses to register and operate within the bounds of law. But if operating within the bounds of law is so burdensome that these entrepreneurs simply cannot do it, then we are allowing policymakers to be mischievous with our socio-economic future.
This new standard bylaw reproduces legal content that already exists, and as such amounts to overlegislation. But not only that, it is overlegislation on something we know will not be complied with.
This is not good for the rule of law.
What the FMF has proposed in the category of the rule of law, instead, is for the courts to drop their deferential posture when they come across breaches in the rule of law – overlegislation being one.
The rule of law is a set of pretty much universally agreed upon principles about the making, content, and application of law. And in this respect, the courts have been very reluctant to tell Parliament or the executive when they step out of line.
A reformist Parliament should therefore adopt legislation that directs the courts to uphold the defined principles of the rule of law when they come across breaches in legislation or in regulations. This would include directing the courts to invalidate any legislation that gives regulators or ministers an unrestrained discretionary power.
Our law is replete with discretionary powers that government officials can wield without limitation. This must be brought to an end.
The law should also make it legally compulsory for any new legislation, regulations, or policies, to be subjected to neutral and high-quality impact assessments. Currently it is only a matter of Cabinet policy that such assessments must be conducted, but this policy is flouted more often than it is adhered to, And, with few exceptions, every impact assessment reads like a marketing pamphlet written by the author of the regulation that is supposed to be under scrutiny.
We cannot have departments or sponsors of regulations or legislation drafting their own impact assessments. Independent, neutral, third parties must do so, and do so according to a set framework that mandates looking into budgets and cost, among other things.
This is another glaring issue with the standard township economies bylaw: there is no independent impact assessment, which, if it did exist, would have made clear that small businesses cannot abide any further overregulation, and that even if adopted, the law would likely be ignored.
Private Property
Alongside a robust legal system, private property represents the other foundation of prosperous market economy. The right to private property is already guaranteed by section 25 of the Constitution, but many – especially in South Africa’s townships – still lack security of tenure.
The FMF has recommended that Parliament immediately abandon any legislative schemes it has undertaken to weaken this fundamental right. The Expropriation Bill and any future attempts to amend the Constitution to undermine the property rights of all South Africans should be withdrawn.
The focus, of course, is specifically on confiscation.
Real expropriation law knows no concept of compensationless takings. The legal concept of expropriation understood around the free world includes the payment of compensation, and for good, logical reasons.
The wordplay that politicians, academics, the media, and activists have engaged in to try and pretend that there is such a thing as “expropriation without compensation,” or so-called “nil compensation,” should be put to rest.
Every country where property has been seized by the state without paying market-plus compensation has become a poor dump. Investment and development will dry up if Parliament continues to play this game in South Africa.
Also in respect of this, the FMF has proposed that Parliament adopt new land reform legislation that rejects the paradigm of redistribution in favour of renewed emphasis on the principle of restitution.
Redistribution is a political, not a legal, concept, and is premised on the kind of central planning according to neat little formulas that has no place in a free society.
Restitution, on the other hand, is a very old jurisprudential concept that is well-rooted. Where someone can prove that a piece of property rightly belongs to them in particular, they must receive that property back, or take some other form of compensation if they choose.
This is a matter of justice, not petty politicking and dishing out random property to random friends of the state as one sees under the paradigm of redistribution.
Civil Liberty
The final area of reform we addressed this week was that of civil liberty, which is intimately tied up with criminal law.
Earlier this year, the FMF launched its Section 12 Initiative, which looked specifically at freedom under law and how over-criminalisation and out of control violent crime both threaten this freedom. We are putting our proposed reforms to government once more.
South Africa requires a large degree of additional certainty in criminal law, because much ordinary, peaceful conduct is criminalised in legislation and regulations that normal people don’t even know exists.
The municipal bylaw for informal trading in Johannesburg, for example, criminalises contravening any provision of the bylaw, which includes a prohibition on a street trader sleeping at his stall, or leaving some of his property at the stall. The trader could be imprisoned for up to three months and share a cell with real criminals.
In this respect, the FMF has proposed the adoption of a single, comprehensive Criminal Code, to ensure that all South Africans are always able to determine whether what they are doing could land them in prison.
Secondly, South Africa requires a large degree of decriminalisation, to ensure our criminal justice institutions do not have their attention distracted by victimless crimes. This allows them to focus on violent crime and crimes where there is real, tangible harm.
The deaths that caused the uproar for the spaza shop crackdown should be investigated and those guilty of criminal negligence should be made examples of, rather than going after traders trying to eke out of a living by sleeping in their own shops.
The FMF has also called for widespread decentralisation of policing, which dovetails neatly with our first recommendations regarding federalisation.
In our view, the other spheres of government, being provinces and municipalities, must play a far bigger role in combating crime than they currently do. But more than that, communities and commercial enterprises must also be allowed and empowered to take tangible steps toward securing South Africa against predation.
Reform off the table?
At every turn, the GNU appears to be signalling that substantive reform is off the table, and that “ANC-ing harder and better” is the chosen route. This is disappointing given the immense opportunity the loss of the ANC’s majority in Parliament represents to South Africa.
Ultimately, it appears, leaders with more grit and determination to see to it that the charted policy course to prosperity is followed would need to be identified and elevated within the reformist parties of the GNU. Until that happens, South Africans appear to still be on their own.
[Image: [Image: Discott, https://commons.wikimedia.org/w/index.php?curid=26446785]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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