South Africa is the second richest country in Africa. It’s predicted that the country’s Gross Domestic Product (GDP) will cross the US$345 billion mark by the end of 2022.
Its economy is diversified with a growing and sizable middle class. South Africa’s services and financial sectors have grown rapidly since apartheid.
South Africa is placed at position 84 out of 190 in the ease of doing business ranking by the World Bank
The South African government, through the online Bizportal platform, has made it easier to start a business in the country
Bizportal platform, which was launched in 2019, is a one-stop shop for entrepreneurs to reserve a company name, register a new company, income tax, and withholding taxes
In 2020, South Africa was placed at position 84 out of 190 in the ease of doing business ranking by the World Bank. The country’s cities are working on reforms to improve the ease of doing business.
Government Communication Information System (GCIS) commissioner director-general Phumla Williams said they were working to ensure the country moves into the top 50 World Bank Ease of Doing Business Index.
“A lot has been said about the need for reform to improve South Africa’s ranking on the World Bank’s Ease of Doing Business Index, and substantively improve South Africa’s business environment, along with the need to positively influence investor perception.
In order to ensure that we change South Africa’s ranking in the next Ease of Doing Business Index, we will all need to change. I am therefore extremely pleased that we have all agreed that we must become the change we want to see. We must push forward our agenda boldly and without reservation,” she said at a webinar.
The South African government through the online Bizportal platform has made it easier to start a business in the country. The Companies and Intellectual Properties Commission (CIPC) developed the platform. CIPC’s role is to register companies, co-operatives, and intellectual property rights (trademarks, patents, designs, and copyright).
Bizportal platform, which was launched in 2019, is a one-stop shop for entrepreneurs to reserve a company name, register a new company, income tax, and withholding taxes, including Pay as your Earn (PAYE), Unemployment Insurance Fund (UIF), and Skills Development Levy (SDL).
Initially, it took about 40 days to register a company in South Africa. With the Bizportal platform, it now takes a day, according to the Small Enterprise Development Agency (SEDA).
SEDA indicated that registration costs R175 (US$10.36), which is made up of R50 (US$2.96) for name reservation and R125 (US$7.40) for company registration. Registration for domain names (website addresses) costs R51.75 (US$3.06). The government agency provides business development and support services for small enterprises.
Once a company is registered, the owner or shareholders must ensure that their staff are enrolled in social security in compliance with the Compensation for Occupational Injuries and Diseases Act 130 of 1993 for their health and safety rights while they are working.
During the period of employment, UIF will provide health cover for staff while PAYE will be deducted if an employee earns over R40,000 (US$2370) annually.
New businesses are required to have a bank account. Documents needed while opening an account include a valid identification document for the business owner and anyone else that will be a signatory on the account, a proof of address for the business, which can be a utility bill, or in the case of a sole proprietor, the owner’s address, three months of business statements and proof of CIPC registration.
Companies must also register with the South African Revenue Service (SARS), which administers the country’s tax system and customs service. Once a business owner registers with SARs, he/she will be issued an income tax reference number within 60 days of starting operations. Failure to register with SARS attracts fines and penalties.
A new entity can apply for loans to expand business through the Industrial Development Corporation (IDC). Application is made to the IDC office by submitting a well-researched business plan, stating a compelling case for funding. Funding can also be accessed through the Department of Trade and Industry’s Government Investment Incentives.
With a valid passport or a refugee document, a foreigner is allowed to start a business in South Africa. This is done by obtaining an independent financial permit.
The permit allows an applicant to remain in South Africa on a permanent basis. It is Ideal for high net worth individuals (HNWIs) of any age and nationality wishing to stay in South Africa permanently. Before the issuance of the permit, one must pay R120,000 (US$7106) and have a net worth of R12million (US$710606).