JOHANNESBURG – Starting a business anywhere is challenging. Starting one in South Africa sometimes doesn’t even seem viable, especially considering the latest Global Entrepreneurship Monitor (GEM) for 2012.
According to this study, early stage entrepreneurial activity took a 20% knock in one year, dropping to only 7.3% in 2012.The study also showed that less that 14% of South Africans plan to start a business in the following three years. This is 13% below the global average of efficiency-driven economies category that South Africa falls into.
One of the barriers to entrepreneurial activity is the regulatory requirements and bureaucratic red tape to register your business and get all the paperwork in place. In a move to try and eliminate some of these hurdles, the Department of Trade and Industry’s (dti’s) Companies and Intellectual Property Commission (CIPC) and FNB has collaborated so that you now can open a business banking account and register your company in one go – electronically.
The automated approach allows entrepreneurs who wish to open a business bank account the opportunity to register their companies through the FNB online facility at no additional charge, other than the CIPC’s prescribed fee of R125.
Astrid Ludin, CIPC commissioner, stated said that a “responsive and willing partner” was found in FNB, after having approached the entire financial services industry. She indicated that the CIPC also spoke to Absa, Standard Bank and Nedbank and that the latter showed interest in perhaps offering the service. An information document at the launch showed that so far, the total applications processed through the collaboration stood at 466, with the bulk coming from Greater Gauteng.
The process, however, does not include the attachment of a name to the company, but Ludin said that you could do business simply with the registration number that you receive after the registration process. You will then have to apply separately to the CIPC for a name change (seeing as the registration number will be taken as your company name) with an extra cost of R300 – R50 for the name reservation and R250 for the change. “We have recommended that the fee of R250 be waived for the first time anyone applies for a name change. It is probably a slightly longer process, but we will streamline it internally,” she said.
With the new partnership, that took 18 months to come to fruition, registration of a company will take around 24 hours, with added time built in for FNB to do fraud checks on the individuals applying for the registration. The name-change process is much longer with the goal of 20 days for turnaround.
Cutting red tape
Speaking at the launch in response to a question on the draft Business Licencing Bill, Dti Minister Rob Davies said that the department sees red tape as unnecessary, costly regulation. The bill will require companies to register in their respective municipalities, adding onto the regulatory burden.
“The bill has now gone back for further consultation. We want to cut any aspect of red tape while at the same time we do see that there is a significant challenge with regards to illegally operating businesses in this country and we need to add that additional requirement,” he said. He emphasised the necessity for registering a business, to ensure that there is limited liability as the company becomes a separate entity.
Davies said he is aware that there are still some issues and challenges with regards to business registration and start-up in South Africa. This includes the change to a Memorandum of Incorporation where there was a two-year transition period coming to a close, resulting in a backlog to process the slew of applications at the end of the period. “About 50 000 applications came through this year in April,” he said.
He added that the process to notify the CIPC when there is a change in directors is currently also taking longer than the 30-day goal, with it now taking approximately 49 days for those changes to reflect.
Davies is not worried about what the innovation would mean for intermediaries, stating that the dti is not about “creating employment for people in red tape”. He said that it is not a justification for being inefficient if there are service providers only providing that service due to inefficiency in the system.