In the recently released World Bank report, Doing Business 2014, South Africa ranked 41st for ease of doing business, out of the 189 economies that were surveyed. There are still improvements needed to cut through the red tape and reduce regulatory complexity for SMEs to thrive in the country.
The World Bank report investigates the regulations that enhance business activity and those that constrain it. Once again, although the South African business environment is prospering in certain aspects, a few key areas need to be streamlined in order to ensure that SMEs thrive in the country, according to Nazeem Martin, MD of Business Partners Limited.
The country ranked 64 with regards to starting a business, down from 56 the previous year, and 28 with regards to obtaining credit, dropping four places from 24.
“The drop in ranking for starting a business highlights the challenges and red tape that business owners need to overcome when starting a business. While headways have been made in this area, including the new guidelines by the Department of Trade and Industry (the dti) to reduce municipal red tape for small businesses, it is key that we continue to reduce regulatory complexity in order to drive SME activity in the economy.”
Encouragingly, South Africa was ranked in 28th position when it comes to obtaining credit. “This is positive, as finance is often necessary to stimulate business growth and development. There is also a general misconception amongst small business owners that the lack of local entrepreneurs in the South African economy is the direct result of a lack of access to capital. The problem is not a lack of access to capital, but is ultimately the result of an awareness gap between financing institutions and aspiring entrepreneurs.”
The Doing Business Report 2014 findings, as well as other recently released data reports, highlight the need for businesses operating within South Africa to make use of data analysis to make better and informed business decisions, says Andrew Fulton from SA analytics consultancy Eighty20.
“In the tough economic climate which SMEs operate in, businesses need all the help that they can get, and data which can assist with planning business strategies can be very valuable. Businesses can make use of this readily supplied data to make decisions going forward, and can assist in determining the needs and trends within a business’s target market.
“For example, the Doing Business Report 2014 reveals that it takes on average 19 days to register a new firm in South Africa, which is roughly a week longer than it takes in higher-income countries. Businesses need to be aware of local statistics and data which can potentially impact a business’s growth going forward”, concludes Fulton.
Click here to access the full Doing Business Report 2014.
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