Doing business within South African cities has become easier

Deputy Finance Minister Mondli Gungubele. Picture: Supplied.
Deputy Finance Minister Mondli Gungubele. Picture: Supplied.

The ease at which business can be conducted within South African cities has vastly improved.

But the pace at which this transformation has been occurring seems to have slowed down over the last three years.

This revelation was made at the launch of the Doing Business in South Africa 2018 report in Pretoria on Wednesday.

The report analyses business regulations for small and medium domestic enterprises in nine cities:

• Buffalo City;

• Cape Town;

• Ekurhuleni;

• eThekwini;

• Johannesburg;

• Mangaung;

• Msunduzi;

• Nelson Mandela Bay; and

• Tshwane.

The cities are assessed on five “doing business” areas:

• Dealing with construction permits;

• Getting electricity;

• Registering property;

• Enforcing contracts; and

• Trading across borders.

Speaking at the launch, Deputy Finance Minister Mondli Gungubele said “the report provided a baseline from which to measure the progress of South African municipalities, especially metros, in facilitating an investment-friendly environment”.

According to Gungubele, Treasury has long been emphasising the fact that cities are the engines of the South African economy.

“Although cities account for about 2.4% of the land area in the country, about 40% of the total population, and as much as half of all employment occurs with in urban areas. They also account for approximately 56% of all those who pay personal income tax, and 57% of gross value added tax,” said Gungubele.

Based on these statistics, how well our city economies perform is therefore of critical national importance added the deputy minister.

The report found that in the three years since the last study in 2015, Cape Town, eThekwini, Johannesburg, Mangaung and Nelson Mandela Bay have implemented reforms that had improved the conditions for businesses to obtain electricity, as well as made it easier to transfer property.

Mangaung, for example, has implemented automated municipal processes that have halved the time needed to transfer property, from just over seven weeks to three weeks.

As a result, Mangaung has moved from lowest performer in this area in 2015 to best performer now.

Pilar Salgado Otónel, programme manager of the Sub-national Doing Business Unit at the World Bank said “efforts by South African cities to reduce the time, cost and complexity of bureaucratic processes that can hinder private enterprise” had also led to this improved efficiency in conducting business within these cities.

According to Otónel a better collaboration between national and local authorities would also go a long way in expanding the scope of future local reforms and putting in place a regulatory environment that allows businesses and entrepreneurship to flourish, creating much-needed jobs.

He said he hoped that this report would serve as a road map for other cities as well as for reform at a sub-national level.

Although there was a lot to celebrate with South African cities being relatively competitive in most regulatory processes there were still many areas of improvement. Challenges remain, especially in reducing costs and streamlining processes.

“For example, changes making it more difficult to do business, such as local and national fee increases, countered efforts to improve business conditions. All municipalities have raised construction approval fees,” said Otónel.

According to Paul Noumba Um, World Bank country director for South Africa, “this report helps South Africa take its pulse amid efforts to improve conditions for entrepreneurs over the last three years.

“It specifically identifies which initiatives have been successful and where constraints remain. Moreover, the undertaking represents the country’s commitment to strengthening its business climate especially given the new presidential investment agenda,” said Noumba Um.

Juniour Khumalo
City Press
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