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4 The enforcement of licensing laws
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4 The enforcement of licensing laws
This chapter describes the agencies that are responsible for enforcement of licensing laws in each surveyed country, and the powers which they exercise. Particular attention is given to practical problems which have arisen in the enforcement of licensing laws.
4.1.1 Agencies responsible for enforcement of licensing laws, and their powers
The Ministry of Commerce and Industry is the ministry with responsibility to oversee the administration of the most significant statute, the Trade and Liquor Act [Cap 43:02]. However, effective responsibility for the day-to-day enforcement of the act lies with local authorities and the police. In practice, prosecutions for breach of the licensing laws are rare. The main deterrent to enforce compliance is the threat of business closure with confiscation of stock.
4.1.2 Issues in the enforcement of licensing laws
Most cases of enforcement of the licensing laws go unreported in the newspapers, and arouse little controversy (except those that occur in the capital Gaborone which are far more likely to be reported).
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4.2.1 Agencies responsible for enforcement of licensing laws, and their powers
Officers of central and local government ministries and departments responsible for enforcement of the licensing laws are normally designated and authorised to enforce the provisions of the laws in question. Such officers include:
- Inspectors employed by the local authorities (engineering, health, trade licenses, etc)
- Inspectors of the Health and Sanitation department of the Ministry of Health and Quality of Life
- Inspectors of the Department of Fire Services
- Labour Officers of the Ministry of Labour and Industrial Relations
- Police Officers of the Police Department
- Officers of the Department of Environment
- Officers of the Customs Department, and
- Officers of the Ministry of Industry and Commerce
Section 64 of the Local Government Act, 1989, provides that every inspector of the local authority:
- „shall have the powers, privileges and immunities and perform the duties of a police officer in the execution of all summonses and orders issued in relation to any offence against a law relating to a local authority or an offence committed within the limits of the town under any enactment."
- „may seize any article or animal which is the subject of an offence under any enactment relating to a local authority, where the seizure is necessary for the purpose of establishing the offence"
- „may, without warrant, arrest any person for an offence where the person refuses to give his name, or tries to run away, hinders, opposes or molests the inspector"
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- „shall wear such uniform, and carry such staff or other insignia of office as the local authority shall determine"
The Act also provides „where any offender who is so arrested shall be taken forthwith" and furthermore, where the person is not released „he shall be taken as soon as possible before a Magistrate".
Much of the documentation for import/local transactions is supported by references to valid licenses, thus enabling checks by officials of different departments.
4.2.2 Issues in the enforcement of licensing laws
Cases of objections/complaints from neighbours have to be carefully investigated in view of the possibility of personal disputes or mischievousness. The ultimate sanction which can be imposed upon the unlicensed business owner is prosecution in a magistrate’s court. However, court actions are notoriously slow and in the meantime, a business continues to operate (and matters may become more complicated if another family member takes over the business).
4.3.1 Agencies responsible for enforcement of licensing laws, and their powers
Responsibility for the enforcement of the remaining licensing laws lies with the respective line ministries, with the assistance of the Namibian Police. The relevant line ministries are:
- in respect of liquor licensing, the Ministry of Trade and Industry;
- in respect of mining, the Ministry of Mines and Energy;
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- in respect of hotels, the Ministry of Environment and Tourism; and
- in respect of tour operators and taxis, the Ministry of Transport.
Local authorities have responsibility for the enforcement of laws regarding hawking, home occupants, street vending and other entrepreneurs operating within their local jurisdiction. In the event of continuous breach, the Namibian Police is given the mandate to act on the behalf of the local authority, and has extensive powers of investigation.
4.3.2 Issues in the enforcement of licensing laws
The police do not regard the enforcement of licensing laws as a high priority. In order to control woodcarving, the police were thoroughly trained by officials from the Ministry of Environment and Tourism. However, similar training has not been provided by other ministries responsible for the enforcement of licensing laws.
4.4.1 Agencies responsible for enforcement of licensing laws, and their powers
Local authorities have legal powers to enforce the licensing laws. A local authority may, after giving the license holder a reasonable opportunity to be heard, withdraw or suspend a business license at any time on the grounds that:
- The business premises do not comply with requirements relating to town planning, safety or health, etc;
- The license holder failed to produce the license to the licensing authority within 14 days after the receipt of a written request for purposes of endorsement to the license;
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- Any foodstuff sold or any of the business apparatus, equipment, etc, do not comply with public health requirements;
- The licensing authority is satisfied that, if application for the license had been made at that particular time, the application could have been refused by virtue of the applicant being deemed not suitable to carry on the business concerned.
However, whilst local authorities are the agencies empowered to withdraw or suspend a business license, it is the police that are responsible on a day to day basis for the enforcement of licensing laws. In this regard, Riley reports that:
„the majority of encounters with government officials regarding regulation were with the South African police, municipal police, and homeland police, which strongly suggests that police, as opposed to the officials charged with enforcing taxation, labour, health, and other business regulations, actually regulate the daily activities of many small-scale black businesses in South Africa" (Riley, 1993, p. 29).
Reasons for encounters with police varied from the absence of a license in the case of retail micro enterprises to enforcement of traffic laws in the case of taxis.
4.4.2 Issues in the enforcement of licensing laws
The following issues are identified by Moore and Davie:
- The Businesses Act allows licensing authorities to decide who is or is not suitable to be granted a license and to disqualify applicants with criminal records;
- Some laws permit only one supplier, thus contributing to the creation of monopolies;
- A few laws empower authorities to discourage competition.
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- There is concern about whether the authorities should be given such discretionary powers, which may encourage corruption and the exploitation of vulnerable small businesses, especially those applying for a license to start a business. In addition, authorities may use their discretion to deliberately exclude others, such as foreigners, from conducting business (Moore and Davie, 1997, p. 1).
4.5.1 Agencies responsible for enforcement of licensing laws, and their powers
The relevant licensing authorities and the police are responsible for the enforcement of the various licensing laws. The licensing autorities have power to seize, revoke and/or suspend trading licenses. A person who is found to be trading without a licence is usually asked by the police to close his or her business whilst a licence is obtained. A person who refuses to do so may be fined by a court and his/her business stock may be confiscated.
4.5.2 Issues in the enforcement of licensing laws
The main issues are bureaucratic delays and a lack of transparency (see above at 1.5.2).
4.6.1 Agencies responsible for enforcement of licensing laws, and their powers
The authorities responsible for enforcement of the licensing laws include City Councils, Municipal Councils, Township Councils, District Councils or/and any such Authority as the
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Minister of Local Government may by statutory instrument prescribe as the Licensing Authority of that area. During execution of their enforcement duties, the local authorities are represented by either civic or regular police officers, trade and health inspectors, or any employee authorised in writing by the Licensing Authority. More recently, due to the prevalence of fires in multi-storey buildings, inspectors from the Fire Department have been added to this group.
Other licensing regulations are enforced by specialised supervisory bodies, such as:
- Licenses issued under the National Parks and Game Management Act are enforced by the Department of National Parks and Wildlife Services;
- Licenses issued under the Banking and Financial Services Act are enforced by the Central Bank (the Bank of Zambia);
- Tourism Licenses issued under the Tourism Act are enforced by the Zambia National Tourism Board;
- Fishing Licenses issued under the Fisheries Act are enforced by the Department of Fisheries.
The Trades Licensing Act [Cap.393 of 1994 of the Laws of Zambia] provides that any person who trades or carries on a business as a manufacturer other than in accordance with the provisions of this Act „shall be guilty of an offence." The penalty for this offence is normally a fine. In order to prevent or minimise abuse of the provisions of the Trades Licensing Law, the Act incorporates certain requirements by which licensees must abide. These include:
- The obligation that a licensee display his/her license at all times in a prominent place at the licensed premises;
- Licensed premises are subject to inspection to verify compliance with the provisions of the Act;
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- Every twelve months, a license must be renewed subject to compliance with all the provisions of the Act by the licensee.
Under the Trades Licensing Act, the enforcement agents have been given various powers to ensure compliance with the regulations. The Licensing Authority has the power:
- To withhold a license on account of non-compliance with the provisions of the Trades Licensing Act by the applicant;
- To investigate matters related to a particular license and to summon any person to give evidence in respect of a particular license; and
- To close any business premises or/and confiscate the goods of any business that contravenes the provisions of the law.
In addition, the Minister has the power to revoke any license issued if the holder;
- " obtained the license by fraud or deliberate or negligent submission of false or misleading documents; or
- contravenes the terms or provisions of the license." (Trades Licensing Act Cap. 393, Part 4, section 24)
4.6.2 Issues in the enforcement of licensing laws
Although the powers of enforcement agents are clearly stated in the Act, there has been limited enforcement of licensing laws in Zambia. Many businesses are contravening the law without incurring any penalty. A number of reasons have been cited for this laxity in enforcement of the licensing laws:
- Limited resources: most local authorities in Zambia are practically insolvent and operate with inadequate and poorly-qualified staff;
- Political interference: the newspapers carry many stories of interference by politicians in the affairs of the Councils
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- Corruption: the country consultant’s discussions with both Council employees and business operators revealed that unscrupulous people either demand or offer a bride so that non-compliance with licensing laws can be overlooked.
particularly in relation to the enforcement of licensing laws. A classic example is that of the street vendors. The Councils attempted a long time ago to move street vendors to designated trading places but whenever the vendors protested, politicians came to their rescue. The vendors were even nicknamed the ‘Office of the President’.
4.7.1 Agencies responsible for enforcement of licensing laws, and their powers
Licensing laws in Zimbabwe are administered by various ministries such as the Ministry of Local Government and Rural Development, the Ministry of Public Service Labour and Social Welfare, the Ministry of Health and Child Welfare etc. Most of the licensing laws are enforced by the Zimbabwe Republic Police. In urban areas, the municipal police are also empowered to help in the enforcement of licensing regulations by assisting the Zimbabwe Republic Police. Public health licensing laws are enforced by public health inspectors or environmental health inspectors (in the rural areas). Factory licensing is enforced by inspectors from the relevant ministry.
The police are vested with the power to arrest, confiscate wares and fine offenders in respect of licensing laws such as illegal vending, trading in prohibited areas and the sale of liquor in unlicensed premises. Local authorities have the authority to withdraw licences in matters relating to public health. Factory inspectors also withhold the issuance of licences in cases where
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conditions are not fulfilled, but they do not have the power to arrest.
4.7.2 Issues in the enforcement of licensing laws
In exercising their responsibility to enforce the licensing laws, the agencies encounter a number of problems:
- The incidents of non-compliance have expanded tremendously due to the current widespread economic hardship affecting the country;
- A shortage of personnel and inadequate transport;
- Political interference: from time to time, the enforcement agencies are placed in an invidious position and must decide whether to obey a political directive or the provisions of the law; and
- In times of economic hardship, corruption is probably more prevalent.
In most countries, local authorities are the agencies with prime responsibility for the enforcement of those licensing laws which affect the SME community. Local autorities typically request police assistance in handling individual cases of law enforcement. Court prosecutions for breach of the licensing laws are uncommon, but the authorities generally have other means of ensuring compliance, such as the threat of business closure with confiscation of stock.
Two countries appear to have experienced significant problems in the enforcement of licensing laws:
- Tanzania, where complaints about delays in considering license applications and corruption are common; and
- Zambia, where local authorities have lacked sufficient staff to enforce the licensing laws, and political interference has
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been widely reported (eg in recent campaigns by city councils against street vendors operating in non-designated areas, the street vendors were nick-named ‘the office of the President’ because of their success in mobilising political support). Corruption is also regularly reported.
© Friedrich Ebert Stiftung | technical support | net edition fes-library | November 2000
