South Africa is an enterprising and entrepreneurial nation… which is why it’s interesting that it can be so tough to do business here.
Of all new businesses started in South Africa, nine out of ten of them will close their doors within the first two years. Government grants are talked up but are thin on the ground, B-BBEE requirements are onerous and keep changing, and then there’s the red tape.
Bureaucracy has been South Africa’s Achilles’ heel in the corporate sector for a long time, and figures show that it’s hamstrung us in the past. In the 2009 World Bank’s annual ‘Ease of Doing Business’ survey, South Africa was at a not-great-but-comfortable 32nd in the world out of almost 200 nations. But by 2014, just five years later, that figure had slipped to 43rd in the world.
And in 2019? We are now at a nail-biting (and embarrassing) 82nd place out of 190 countries.
So, what’s a business owner to do? Cut and run for easier, greener pastures?
Actually, hanging tight might be a better solution, because it looks as though doing business is about to get far less complicated. Fast!
Orders from the top
When Cyril Ramaphosa became president of South Africa, the corporate sector cheered. Not just because of the alternative, but because of the significant fact that, for the first time in our democratic history as a nation, the man in charge was a seasoned entrepreneur first and a politician second. For example, while previous South African presidents have mentioned ‘boosting business’ in vague terms, President Ramaphosa has been uniquely articulate about his focus.
He said in his most recent SONA speech that government is:
“urgently working on a set of priority reforms to improve the ease of doing business by consolidating and streamlining regulatory processes, automating permit and other applications, and reducing the cost of compliance.”
“The World Bank’s annual Doing Business Report currently ranks South Africa 82 out of 190 countries. We have set ourselves the target of being among the top 50 global performers within the next three years,” he said again during his second SONA in June – the first mention of the World Bank survey ever by a president during SONA.
These pronouncements are starting to bear fruit. Marginal rallying of SA’s business confidence scores (after decreasing slightly again in July and August) shows that the private sector is willing to change its mind about SA’s business growth prospects, which can only be good news. And during the year, the ‘ease of starting a business’ aspect of South Africa’s World Bank ratings has improved by 1.25 percentage points.
This may seem like a small change, but it’s certainly a start in the right direction! And it is a welcome sign to local businesses that things are getting better and not worse for entrepreneurs here in SA.
We can be positive about our future – things are about to get better!