Presented by Herman Toerien

Member of the Ward Committee for

Ward 22
 Green Paper on home businesses

Introduction
Taking into consideration government policy as stated in the White Paper on Local
Government, the White Paper on Small Business Development, the Constitution and
other legislation…

Rulings by the Constitutional Court and other courts…

Practical considerations such as unemployment and

Historic considerations

It is hereby attempted to formulate a concept policy for the handling of home businesses.

In March 2000 the then chair person of the Bloemfontein Transitional Council, Mr. Moss
Mogamise, said in council that the present policy by which business in traditional white
areas and traditional black areas differ, and that this discriminatory policy will soon be
changed to be the same in all areas. In a following media interview he indicated that this
also applies to home businesses, and that this kind of discrimination can not be removed
overnight. He said this would happen within two years. The two-year period is drawing
to a close, and the not-fulfillment of this has certain legal consequences.

The Mangaung Local Municipality’s approach should not entirely be directed by the
threat of legal consequences, but rather in terms of its duty to the well being of all
inhabitants. In this regard the Constitutional court had been extremely helpful, as for e.g.
in the Kayalami ruling.

One need also take into consideration the policies of the major parties represented in
council:

- Re the Newlands soccer debacle, the ANC took the approach that the local
government applied racial discriminatory policies to expect from soccer to apply for a
permit to stage a test of a sport not listed on the zoning of the area. A similar
approach was followed by the ANC in the matter where the DA controlled local
government of George took legal action against people who have a butchery on their
small holding, and the owners wife was apparently racially assaulted by white people
when complaining to the ANC.
- The DA includes the National Party, later NNP, which adopted a policy of
deregulation, which culminated in the present version of the Businesses Act and the
White Paper on Urbanisation 1986. Another important, and relevant indicator, was
the recommendation of the Venter Commission in 1982 that all limitations on title
 deeds should be scrapped. The then Free State provincial council reported back via
the White Paper on Urbanisation that the recommendations of the Venter
Commission had been implemented. This had apparently not happened, and the
limitations are still applied. The title deeds in Langenhovenpark still states that no
Black person may stay in the area overnight. This matter had been referred to the
local branch of the Human Rights Commission on 25 May 2001.

Legal overview
The last statement indicates that the legal framework applied by this municipality is
archaic in nature. This overview is in no means comprehensive, and simply touches on
outstanding points.

- Towards the white communities, provincial ordinance 9 of 1969 is applied. This is

currently being challenged in court
- Towards the black communities, a section of one of the apartheid corner stone acts,
Act 4 of 1984, is being applied. The municipality claims that this section had not been
repealed with the rest of the act. The contrary becomes evident from the ruling of
Judge Mulinsky ( Municipality, City of Port Elizabeth v Rudman and Another), who
stated however that the regulations issued in term of this Act, is still applicable. The
matter thus shifts to a political level, where Council needs to make a decision on the
political will to apply regulations (if they exist in the Free State) originating from an
Apartheid law. (The Act is also not listed in the laws, which apply in the White Paper
on Urbanisation – the White “counterpart”, Ordinance 9 of 1969, is mentioned
however. (It is doubtful whether the law makers ever intended the said ordinance was
intended to be the White counterpart of Act 4 of 1984, as is the practical implication
of the municipality’s approach. Neither Act 4 of 1984 or any forthcoming regulations
are mentioned as being applicable in the White Paper on Local Government, 1998.
The statement of a municipal employer to the press that different laws apply to white
and black because in the “black culture” neighbors do not mind so many people
visiting and being noisy, therefore could clearly have no legal basis.

An interesting aspect is that the municipality does not apply the universal principle of
“predominantly used”, or, “primarily used” and “primary use” as mentioned by Judge
Mulinsky. The implication is that no distinction is being drawn between a person having
a home business causing a nuisance, and a person selling for e.g. insurance / Golden
Products from home. A danger is that if the council looses a court case, the matter
becomes complicated as no prior distinction had been drawn, and it will be extremely
difficult to prevent a situation of “all doors being legally thrown open.

It is therefore very necessary that clear distinctions being drawn, taking universal
practices into consideration, between home business, so that an apple not is charged
under laws meant for pears, as the case is currently.

The final policy should therefore be fare, and universal accepted. To be out of line with
universal practices, especially as different rules apply in predominantly white and
predominantly black areas, the municipality will have a never ending task of prosecuting
people who did not know they were committing a “crime”. In most cases the “crime”
being to try and earn a living in a dignified and legal manner.
(The municipal officers claim that the distinction between communities is being drawn
according to the applicable town layout scheme. This is obviously not the case, as Lourier
Park falls under the same layout scheme as Heuwelsig, yet the laws are being applied as
in Mangaung. The same goes for the informal areas East of the old Dewetsdorp Road,
which falls, together with Heidedal, under the Bloemfontein Layout scheme, yet the same
rules apply as in Freedom Square, part of the Mangaung layout scheme).

Launching the campaign for the introduction of Ward Committees for Mangaung, the
Premier, Ms Winkie Direko, said we must achieve a non-racial community. Indefinitely
upholding practices, which boil down to racial discrimination, as stated by Mr.
Mogamise, will not result in a non-racial society.

The PE case clearly puts the distinction drawn between white and black home businesses
in the ambit of constitutional judgment. “Transgressors” are however charged in the
Magistrates Court under “statutory law”; effectively making the constitutional ideals, as
stated by the Premier, irrelevant as few people can afford taking matters to the High
Court.

In the end it is not a matter of whether the Council can do enough judicial acrobatics so
as to uphold through legal actions apartheid relics, but whether council has the political
will to move to a non racial society.

Pragmatic issues
The present system applied, where whites have to apply for permission, and blacks not,
are not only legally unsound – Judge Melunsky rules in favor of the PE Council on the
grounds that both black and white need to apply – but also pragmatically ridiculous. This
opens the door for bribery and put officials under extreme pressure on using discretion as
to where to draw the line.

For a white to own a home business, a position he is mostly forced into because he lost
his employment, it means he has to apply to have certain limitations lifted on his title
deeds (which according to the White Paper on Urbanisation had already been abolished
by 1986 flowing from the Venter Commission recommendations). This costs a person,
just financially hard hit approximately R2 000. This is on condition he can get the
permissions from the bondholder. After the Newlands soccer debacle it seems as though
at least some banks are reluctant to get involved in practices described by government as
racial. If the bank does not respond, the enterprise can not move forward irrespective of
merit.

After this cost had been laid out, the white person needs to get permission from neighbors
within a certain radius from his home. After this, he needs to get permission from
council, also meaning cost.
Nome of the above apply to black people.

The extent to which judge Mulinsky applied affirmative action principles to legalize
distinction between the way whites and blacks are handled, is limited to less stringent
applications on permissible surfaces used. This also applies to the area of the Mangaung
Local Municipality – whites may use no more than 25% of the surface of their homes, or
50 square meters, which are the lesser, and blacks can use up to 50% of the surface of
their homes. As mentioned, in the PE-case, both black and white need to apply, here only
white need to apply, having cost implications and therefore clearly runs outside the ambit
of affirmative action.

This is somewhat ironically, as the application of apartheid laws place blacks at an

advantage, yet, the White paper on Local Government” finds that …”Financial shortfalls
were built into local government for black areas. Apartheid regulations barred most retail
and industrial developments in black areas. This limited the tax base and forced residents
and retailers to spend most of their money in white areas. Municipalities in black areas
were therefore deprived of all the means to meet the needs of local residents”.

(It seems in practice that once a white person does get permission, the 25% or 50 square
meters are not strictly enforced. Georgiou Trust use far more that 50 square meters, and
so also Dries Myburgh Photographers, to name but two examples without knowing
whether they actually have permission or not).

It is no secret that crime in South Africa s rife and that crime such as house breaking
influence property markets. In Langenhovenpark, with many home businesses, crime was
the lowest for any area in Bloemfontein, despite crime contributing factors such as the
nearby crime suffering small holding areas, easy access to passing by criminals etc. Since
the municipality clamped down on home businesses in this area, crime statistics had gone
up. This is not scientifically analyzed, but inhabitants consulted state that they are glad
that there are home businesses from where an eye could be kept on what is going on.

The present policy also does not take technology into account, especially electronic
technology. This changes the complex of business, and any White Paper should take this
into consideration. By trying to apply archaic laws and principles, the city will find that
progressive firms feel strangled, and will rather shift elements to other areas where the
are less restricted.

(Unemployment is not the only reason why people start home businesses. Some-one
might need to take care of an aged parent, the person can be temporarily disabled to reach
a conventional place of work etc. In my own case our youngest child has a rare mental
disability, with best treatment being maximal parental care). Especially where temporary
situations exist, it makes little sense in entering into complex legal applications and cost.
Economic aspects
Complaints from people such as Clr. Jan van der Merwe and business people that home
businesses kill business in the CBD, is not scientifically supported. All home businesses
combined could not have a simular impact on the CBD as the Hyperama for e.g. In fact,
in recent media reports it was sated that the Southern suburbs of Bloemfontein were self
reliant in terms of shopping needs. Fact is that most home businesses buy their supplies
from the CBD, and therefore rather stimulating the CBD. Suburban shopping centers, on
the other hand, mostly obtain supplies directly from Gauteng.

Some of Bloemfontein’s most noteworthy businesses started as home businesses, such as

Mode, Bloempapier and HDL. The security firm, BDR, originated in a Pretoria home. By
killing of home businesses future large contributors to the city’s economy could have
been killed.

From recent reports in the Business Bulletin it appears as though the Mangaung Local
Municipality’s policy for business, especially small business development, is not in line
with that of the national government. Whilst the Department of Trade and Industry
develops macro, medium, small and micro business, the Municipality draws the line with
small business. It is a fact that the creation of employment opportunities in the micro
sector is much cheaper than in the larger sectors.

It is not the intention here to rewrite the White Paper on Local Government, but in
drawing up a white paper for home businesses in the judicial area of the Mangaung Local
Municipality, note should be taken of the following: “Small and large businesses rely on
the actions of local government in a number of ways. They are also subject to a number
of municipal regulations. A review and simplification of municipal procedures and
regulations can have a significant impact on the local economy”.

Recommendations
That Council appoint a task team to compile a White Paper on Home Businesses, with
focus on eradicating racial discrimination, supporting the economy especially as far as
combating of unemployment is concerned, the development of entrepreneurship is
stimulated and property values are not brought in jeopardy.

That this task team give ample opportunity to individuals and interest groups to make
submissions or give evidence on aspects such as existing, but forgotten laws.

The task team consult with provincial and national government so as to avert
implementing contradictory laws – such as a provincial government component
(Economic development) stimulating the creation home businesses, and the municipal
authorities prosecuting the owners, as is now the case.