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1.4 Methodology

The World Bank has a unique methodology where it counts the number of steps that an entrepreneur would take to register a business, how long it takes for each step, what are the costs and most importantly this has to be verified by a Professional. The World Bank team conducts the survey with a Chartered Accountant or a Lawyer. The methodology appears to be flawed in that it requests the Government to make changes so that it is easy for an entrepreneur but interviews a person who used to make money out of the entrepreneur! The Professionals’ answers then represents the country score and ranking.

Be that as it may, South Africa has made it amazingly simple to register a business online with no documentation and even open a business bank account. Not many countries have such an innovative solution.

In order to compare apples to apples, the World Bank has a standardised case study that it used in its benchmark survey. South Africa is a hybrid country with first world and third world economies. For some of us, we have all the niceties of a first world country with multiple houses, businesses, cars, electronics, Wi-fi, access to credit and just a few kilometres away there exists the third world with abject poverty, lack of running water, no electricity, and no hope for a job.

Why is this important? The World Bank measures the percentage take-up of the reforms (in this case, the BizPortal). Now considering the vast third world economy that we have, South Africa will be disadvantaged in the scoring and ranking.

The World Bank measures the life-cycle of a SME for Starting a Business. What this means is that it looks at any steps that need to be done before registering a business, the actual registration of the business and then anything that needs to be done thereafter (post registration). Typically, this means running or operating the business once it has been registered.

FLOW

A procedure is any interaction of the company founder with external parties, for example, government agencies, lawyers, auditors or notaries. Interactions between company founders or between company officers and their employees are not considered separate procedures. Both pre- and post-incorporation procedures that are required for an entrepreneur to legally operate a business (including procedures required after the company incorporation) are recorded. If female entrepreneurs have to comply with additional requirements compared to male entrepreneurs, such additional requirements are included in the list of procedures and are marked as “applies to women only”.

Time is recorded in calendar days, not working days. The time span for each procedure starts with the first filing of the application or request and ends once the company has received the final document, such as the company registration certificate or tax number (for example, it includes the time to make an appointment with a notary or any waiting time once the documents are filed). It is assumed that the entrepreneur has had no prior contact with any of the officials. Procedures that can be fully completed online and in less than 1 day are counted as half a day.

Costs include only official fees and taxes. If possible, please indicate the relevant fee schedule or calculation formula (for example, as a percentage of the company’s capital). Fees for professional services (such as those of notaries, lawyers or accountants) are included only if the company is required by law to use such services or if the use of professional services are solicited by the majority of entrepreneurs. Paid-in minimum capital requirement is the amount that an entrepreneur is required to deposit in a bank or with a notary prior to or within 3 months of company registration.