While finance minister Enoch Godongwana is likely to focus on ‘big ticket’ issues in energy, transport, and water – there should also be a renewed focus on reducing red tape across South Africa’s business sector, says Angelika Goliger, EY Africa’s chief economist.
“While these reforms are critical and long overdue, there are also numerous smaller regulations and processes that make it that much harder for businesses to operate in South Africa,” she said.
Goliger said that while the impact of individual regulations may not be sufficiently headline-grabbing, easing them could substantially improve business.
“In fact, they could actually result in net savings to the fiscus in many instances,” Goliger said. “The best-known example here is the scrapping of the requirement to renew your driver’s license every five years. There are many other such types of quick-wins possible across various industries.”
She added that at the same time, the government must be wary of taking significant steps forward in one area only to take steps backwards in another.
“There needs to be improved coordination in government to ensure that new regulations and policies at a national and local level are not overly onerous, nor have negative unintended consequences.”
Other quick wins
Goliger said that South Africa would also benefit from fewer ‘protectionist’ laws and easing merger and acquisition rules for the country’s local businesses.
While South Africa’s local production capacity needs to increase, Goliger said that protectionist policies could raise the cost of doing business and hamper the success of the ambitious regional trade aspirations as part of AfCFTA (African Continental Free Trade Area).
“As the largest global trading country in Africa, insulating ourselves will be to the detriment of our, and the continent’s, prosperity.”
Similarly, the constraints on mergers and acquisitions placed by the Competition Commission could hamper the dynamism of companies in South Africa, she said.
“For South Africa’s economic recovery, it is critical that the government shifts its mindset towards a more citizen-centric approach and have regular engagements with the private sector.
“While momentum in the structural reform agenda cannot be lost, smaller regulatory reforms should not be forgotten, as collectively these can make a big impact on improving business confidence in the country,” Goliger concluded.
Changes for driver licences
The Organisation Undoing Tax Abuse (Outa) has previously called on transport minister Fikile Mbalula to consider changing the driver’s license renewal process from five to 10 years.
In a proposal document published at the end of 2020, the civil society group said that this change would benefit both government and private users.
Outa proposed the following to the minister of transport:
- That an extension for driver’s license renewal be applied from 5 to 10 years;
- The extension from 5 to 10 years applies between the ages of 18 to 65 years;
- That more efficient online application processes for driver licence renewals precede the actual renewal to allow for more effective service delivery and flow between appointment, eye test and licence delivery;
- Multiple methods for driver licence renewals are made available through test centres and reputable service providers, i.e. stronger collaboration with neutral, third-party organisations such as the Automobile Association of South Africa (AA);
- That current restrictions applicable to Professional Driver’s Permits either remain the same or are possibly extended as well, but that this decision is based on more extensive research and the inclusion of input from bussing and tourism role players.