SA cities improving business environment

Wednesday, September 19, 2018

South African cities are making significant strides in improving the ease of doing business, a report by the World Bank Group has found.

The report, Doing Business in South Africa 2018, was released by the World Bank this week at an event at the National Treasury.

The report is the second edition of the subnational Doing Business series in South Africa. The first edition was published in 2015. The reports are produced by the World Bank Group at the request of National Treasury, as part of the Cities Support Programme.

Cities studied were Buffalo City, Cape Town, Ekurhuleni, eThekwini, Johannesburg, Mangaung, Msunduzi, Nelson Mandela Bay and Tshwane.

“They are assessed on five Doing Business areas: Dealing with Construction Permits, Getting Electricity, Registering Property, Enforcing Contracts and Trading Across Borders. In the area of Trading Across Borders, the report measures four of South Africa’s maritime ports - Cape Town, Durban, Ngqura, and Port Elizabeth,” the World Bank Group said in a statement.

The report notes that even though there were marked improvements, the pace of reforms were slow in the last three years. Cape Town, eThekwini, Johannesburg, Mangaung and Nelson Mandela Bay metros had implemented reforms.

Four of the reforms improved the conditions for businesses to obtain electricity while another made it easier to transfer property, the report found.

“Although reforms have been few, where they were implemented, the results have been striking. Mangaung, for example, 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,” the report notes.

“Efforts by South African locations to reduce the time, cost and complexity of bureaucratic processes that can hinder private enterprise are a welcome step in the right direction,” said Pilar Salgado Otónel, Program Manager of the Subnational Doing Business Unit at the World Bank. He added that this could be improved by better collaboration between national and local authorities.

This, he said, would 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.

The report finds that no metro did equally well across all areas measured and all had different strengths.

“Overall South African locations are relatively competitive in the time needed to complete regulatory processes in three areas. They perform on par with or close to most high-income economies in time to obtain construction approvals, transfer property and enforce contracts,” the report found. However, challenges remain, especially in reducing costs and streamlining processes.

The report notes that the National Treasury is supporting Invest SA’s lead in working with the relevant national and provincial departments and government agencies to simplify and speed up the processes involved in starting a business. The Department was also assisting in the registering of property, dealing with construction permits, and trading across borders.

"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. Given the new presidential investment agenda, the time is ripe to use these results to promote smart regulation in favour of business,” said Paul Noumba Um, World Bank Country Director for South Africa.

Speaking at the event, Deputy Finance Minister Mondli Gungubele welcomed the report, saying city governments need to properly understand how to use the levers they have to promote local economic activity.

“These levers are effective local service delivery, fast and effective spatial planning, land use management and building controls, and responsiveness to the needs of local business,” he said, adding that the metro’s performance directly affects economic growth and development in the cities. –