How long it takes to set up a business in Joburg, Cape Town and other major cities

The World Bank has published its second Doing Business in South Africa report, showing which cities make it easiest for businesses to move in, set up, and be connected.

The report is an update on the data from the 2015 report, which also shows how things have changed in the country’s main business hubs over the past three years.

Over that period, five locations implemented reforms making it easier to conduct business, the group said. Most reforms focused on getting electricity, with one related to registering property.

“The pace of reforms has been slow, but the successful reforms are notable for their significant impact,” the World Bank said.

According to the report, the ease of doing business across nine economic hubs in the country is varied, with no one location rising head-and-shoulders above the rest.

Cape Town leads on two indicators and Mangaung on two others.

“However, none of the nine urban areas performs equally well across all indicators. That leaves room for all locations to learn from each other’s good practices,” it said.

ƒFor example, while the City of Cape Town offers the easiest route for a business to build a warehouse and get it connected to water and sewerage – when it comes to getting properties registered and enforcing contracts, it performs worse than most other places.

Similar contrasting patterns are seen among the other regions.

The table below outlines the cities’ performances across the different business tests.

Compared globally, South African locations’ performance on the quality indices lags on most indicators. Because regulatory quality depends greatly on national instruments and actors, the central government can play a key role in improving local business conditions, the bank said.

“Good practices can be found in South Africa. As locations continue to engage in peer learning and take on new regulatory reforms, projects that address certain issues across indicators—such as internal coordination within the municipalities—will improve the prospect that reforms will bear fruit.”

Dealing with construction permits

Across the nine South African locations measured, the construction permitting process requires 18 procedures on average, takes 125 days and costs 2.2% of the warehouse value.

This performance is faster than the average for OECD high-income economies but requires nearly six more procedures and is 40% more expensive.

Cape Town is the place where it is easiest to build a warehouse and connect it to water and sewerage, while Tshwane is the most difficult.

Getting electricity

Connecting a business to the grid in South Africa requires only a handful of procedures, but it takes on average 114.2 days and costs 391.5% of income per capita, making this step longer and costlier than in comparable economies.

Getting electricity is easiest in Cape Town, where it takes four procedures and 91 days and costs 597.2% of income per capita.

It is more difficult and almost as expensive in Nelson Mandela Bay, where it takes six procedures and 190 days and costs 523.8% of income per capita.

Registering property

Across South Africa, transferring property requires seven to nine steps. Seven steps are common to all locations, and variations stem from local requirements.

Mangaung is the easiest place to transfer property and Msunduzi is the most difficult.

National fee increases—including a nearly 50% increase in the transfer duty for the property in the Doing Business case study—have made property registration more burdensome in most locations and limited the scope of potential improvement.

Enforcing contracts

Enforcing a contract continues to be easier in Mangaung and Msunduzi and more difficult in Johannesburg and Buffalo City.

The duration of the trial and judgment phase and the cost of attorneys’ legal services are the main sources of variation across locations.

The average duration of the trial phase (435.1 days) remains unchanged since 2015. Cutting delays at this phase is still South Africa’s biggest challenge to achieve levels of efficiency comparable to other populous, upper-middle-income economies like Malaysia, where it takes 270 days.

Read: No amount of fresh capital will save South African SOEs – it’s time for a change in business models: Nene

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How long it takes to set up a business in Joburg, Cape Town and other major cities