Liquor businesses are one of the few avenues of entrepreneurial activities still present in townships and villages across the country. However, these businesses are burdened by regulations that leave them vulnerable to potential abuse by law enforcement authorities, ultimately hindering economic activity in the areas where they are located.
The history of alcohol sales in black areas in South Africa is filled with racial discrimination, from strict prohibition to state-approved beer houses. Although it is interesting, this history is not the focus of our discussion. Rather, we will focus on the modern-day regulatory hurdles that these businesses are faced with.
The suppression and overregulation of alcohol in black areas in the past led to the creation of easily accessible businesses, such as taverns located inside townships and village residential homes. These businesses operated on the same premises as the residence of the owner, usually, which was, and in some cases still is, an illegal activity.
Stringent legislative regime
The stringent legislative regime, particularly concerning liquor licenses granted by municipalities, poses challenges for prospective liquor operators. Zoning regulations in different areas of a municipality determine permissible activities, with residential areas often prohibiting liquor sales or any other business as part of their by-laws.
Entrepreneurs operating liquor businesses in residential areas face high compliance costs and zoning challenges. It must be stated that the noise levels and other externalities of a liquor business do present a challenge for neighbours of that business.
Problems like the harm that may be caused by liquor business patrons to property, or the absence of peace and quiet in one’s own home due to high noise levels, are the reasons municipalities establish regulations concerning where businesses should operate and under which conditions.
Thus, inasmuch as deregulation is necessary in any industry, it must be balanced with the valid concerns of the possible or actual harm caused by businesses: liquor businesses in this case.
Not all inherently bad
While deregulation may be beneficial, not all regulations are inherently bad. The key consideration should be whether a law infringes on the rights of others. As laws limit property owners on what they may or may not do, zoning regulations by their nature are an inhibition of property rights. This makes zoning an injustice if the property owner is not engaging in any harmful activities: harmful to the property rights of others, that is.
Ideally, every instance of harm ought to be interrogated on a case-by-case basis in a forum where the offended and offending parties can make their case. This would give latitude to the exercise of property rights by various owners while ensuring that in instances where there is a dispute about harm done by the exercise of those rights, there is recourse.
Since reality is not always ideal, zoning regulations exist as a law of general application. Using the liquor business in townships as an example, the inhibitions to property owners stemming from instruments like zoning are well-intentioned given the externalities of such a business. Yet, those good intentions must be balanced with the realization that those businesses are not only sources of livelihood for the owners’ families but are also an important cog in the broader South African economic machine.
Opportunities
Legal mechanisms, such as the Standard Draft By-Law For Township Economies, offer opportunities for municipalities to adjust land use regulations to accommodate businesses operating in residential areas. The Standard Draft By-Law was passed by the Minister of Co-operative Governance and Traditional Affairs, as part of his powers granted by the Local Government: Municipal Systems Act of 2000, following the controversy surrounding spaza shops in townships last year.
Although the standard draft by-law was an instance of the state passing more regulations, it did also enable something that should be lauded. Section 4 (1) (b) of the by-law allows for the conversion of areas in townships that have been zoned for residence only to become areas that can legally have residences and businesses too. Converting solely residential townships into mixed-use areas could stimulate economic activity and reduce compliance burdens for entrepreneurs.
While it nonetheless limits property rights, zoning can be restructured to promote individual liberty. Municipalities have the potential to enhance residents’ prosperity by revising zoning regulations to create a more business-friendly environment.
With millions of unemployed citizens in South Africa, municipalities play a crucial role in fostering economic activity. By revising zoning regulations to attract local investment in township residential areas, municipalities can contribute to economic growth and prevent our march down the road to serfdom.
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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