It takes 43 days on average to register a business in South Africa, placing the country as one of the slowest among emerging economies, the World Bank's latest Doing Business report reveals. The report was released this week.
This is an improvement of three days over last year. Yet in 20 other emerging economies it takes far fewer days (see graph).
A number of African countries outdo South Africa. These include Rwanda (4 days), Egypt (7 days), Algerian (20 days) and even one of the most cumbersome countries to do business in the world, Angola (36 days).
Since 2008 a number of emerging economies have cut the time it takes to register a business. Chile for example has slashed it from 40 days to 5.5 days (see this post) and Russia from 29 days to 10 days (see this post).
Despite this the Minister of Trade and Industry Rob Davies (pictured above) said in the Companies and Intellectual Property Commission’s (CIPC) 2015/16 annual report that the commission had over the past four years cut the number of days it takes to register from more than 25 working days to just four working days by end of March this year.
Some of this has come down to allowing banks to handle name reservations, which can now be done in a day. The last financial year saw a healthy increase in company registrations from 236,673 to 317,498 - most likely because of this change.
Last month CIPC acting commissioner Rory Voller told Business Day that automation has helped speed up the process, although the high volume of applications sometimes resulted in computer timeouts. Better systems would therefore help.
Yet while the CIPC has been beset by problems of recent in its bid to modernise, the bottlenecks are to be found elsewhere - at the Department of Labour.
Seven steps, three agencies
The World Bank outlines the seven steps it takes to register a business in South Africa. After completing a name reservation (one day) one then has to register the company at the CIPC online. This takes on average 10 days, says the World Bank.
Thereafter one can register for the various tax types at the SA Revenue Service (Sars) within one day. If one registers for value-added tax (VAT) this will take a further seven days.
The real time waster it seems, is the Department of Labour. Employers must wait on average 30 days to register for the Workmens Compensation Fund. Registrations for the Unemployment Insurance Fund (UIF) - which can be done at the same time - take five days.
Clearly then the hold up is more with the Department of Labour than with Sars or with the CIPC (even though the commission needs to bolster its capacity and systems still).
South Africa should stop tinkering with making the business process speedier. A single portal where all the registrations steps can be handled might help.
Timm is a South African who writes on small business. Download the latest Doing Business report here. Follow Small Business Insight on Twitter at @Smallbinsight and on Facebook.
Stephen Timm is a