100923 Doing Business in South Africa 2015 COMPARING BUSINESS REGULATIONS FOR DOMESTIC FIRMS IN 9 URBAN AREAS AND 4 MAJOR PORTS WITH 188 OTHER ECONOMIES © 2015 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 17 16 15 14 - rectors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creative commons.org/licenses/by/3.0/igo. 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Doing Business in South Africa 2015 COMPARING BUSINESS REGULATIONS FOR DOMESTIC FIRMS IN 9 URBAN AREAS AND 4 MAJOR PORTS WITH 188 OTHER ECONOMIES Doing Business in South Africa 2015 Resources on the Doing Business website Doing Business in South Africa Law library 2015 http://www.doingbusiness.org/ Online collection of laws and regulations SouthAfrica relating to business http://www.doingbusiness.org/law-library Current features News on the Doing Business project Entrepreneurship data http://www.doingbusiness.org Data on business density (number of newly registered companies per 1,000 Rankings working-age people) for 139 economies How economies rank—from 1 to 189 http://www.doingbusiness.org/data http://www.doingbusiness.org/rankings /exploretopics/entrepreneurship Reports Distance to frontier Access to Doing Business reports as well Data benchmarking 189 economies to as subnational and regional reports, the frontier in regulatory practice reform case studies and customized http://www.doingbusiness.org/data economy and regional profiles /distance-to-frontier http://www.doingbusiness.org/reports Information on good practices Methodology Showing where the many good The methodologies and research papers practices identified by Doing Business underlying Doing Business have been adopted http://www.doingbusiness.org/methodology http://www.doingbusiness.org/data /good-practice Research Abstracts of papers on Doing Business Doing Business iPhone app topics and related policy issues Doing Business at a Glance—presenting http://www.doingbusiness.org/research the full report, rankings and highlights for each topic for the iPhone, iPad and Doing Business reforms iPod touch Short summaries of DB2015 business http://www.doingbusiness.org regulation reforms, lists of reforms since /special-features/iphone DB2008 and a ranking simulation tool http://www.doingbusiness.org/reforms Subnational and regional projects Differences in business regulations at the subnational and regional level http://www.doingbusiness.org/ Subnational Doing Business in South Africa 2015 Contents Doing Business in South Africa 2015 is 1 Overview the first subnational report of the Doing Business series in South Africa. It measures 11 About Doing Business and Doing Business in South Africa 2015 business regulations and their enforcement in 9 urban areas and 4 major ports. The cities are compared against each other, and 19 Starting a business with 188 other economies worldwide. 27 Dealing with construction permits Comparisons with other economies are 37 Getting electricity based on the indicators in Doing Business 2015, Going Beyond Efficiency, the twelfth 45 Registering property in a series of annual reports published 53 Enforcing contracts by the World Bank Group. The indicators in Doing Business in South Africa 2015 are 59 Trading across borders also comparable with almost 400 cities from 55 economies benchmarked in other subnational Doing Business studies. All 67 Data notes data and reports are available at www. doingbusiness.org/subnational. 81 City snapshots 87 Indicator snapshots Doing Business investigates the regulations that enhance business activity and those 91 List of procedures that constrain it. Regulations affecting 92 Starting a business 6 stages of the life of a business are 99 Dealing with construction permits measured at the subnational level in 112 Getting electricity South Africa: starting a business, dealing 116 Registering property with construction permits, getting 124 Enforcing contracts electricity, registering property, enforcing contracts and trading across borders. 127 Indicator details These indicators were selected because 128 Enforcing contracts they cover areas of local jurisdiction or 128 Trading across borders practice. The indicators are used to analyze economic outcomes and identify what 129 Acknowledments reforms have worked, where and why. The data in Doing Business in South Africa 2015 are current as of January 2015. This project is implemented by the Global Indicators Group (Development Economics) of the World Bank Group in collaboration with the National Treasury of the Republic of South Africa, the Department of Trade and Industry and the South African Cities Network. The study is co-funded by Switzerland’s State Secretariat for Economic Affairs (SECO) and the National Treasury. Doing Business in South Africa 2015 Overview ƒ South African entrepreneurs face Over the last two decades, South Africa a feature that provides further oppor- different regulatory hurdles depending has made notable strides in moving tunities for growth and development. on where they establish their away from the legacy of its apartheid These remarkable achievements may businesses. This is due to varying local past and in consolidating the institu- have seemed unattainable in the not- regulations and efficiency levels within tions and practices of democracy. The so-distant past, but as Madiba once municipalities and public agencies in political transition and a vast number said, “It always seems impossible until charge of the 6 benchmarked areas of policy reforms have brought not it’s done.” and differences in the interpretation of only economic growth for a privileged national legislation. few, but more opportunities for society Adjusting to a slow-growth global ƒ There is no relationship between at large, including those previously economy post the 2008 crisis has not the size of the city (as measured by excluded. Economic growth has moved been an easy feat for emerging market population) and the rankings, and from a historically erratic trajectory to economies like South Africa. In addi- no single city performs equally well a steady, albeit modest course with an tion, a number of unresolved internal on all indicators. Johannesburg and annual average GDP growth rate of 3% issues continue to impede shared pros- Cape Town, the largest urban centers, in the first post-apartheid decade, to perity. The country still suffers from are the top performers on registering above 5% for 3 consecutive years im- one of the highest income inequalities property and dealing with construction mediately preceding the financial crisis in the world.3 Unemployment remains permits, respectively, while Mangaung, of 2008.1 South Africa is the second stubbornly high—1 in 4 South Africans the second least populous city, leads largest economy in Africa, contributing is without a job. The situation is even the getting electricity and enforcing approximately 15% of the continent’s worse among the youth4—1 in 2 is contracts indicators. GDP.2 It is also much more closely unemployed.5 There are also marked ƒ Local policy makers can achieve integrated with the global economy, regional differences across provinces: tangible improvements by replicating good practices already successfully FIGURE 1.1 Average real annual economic growth rate (%) across provinces: implemented in other cities in 2001 – 2011 South Africa. Small administrative Northern Cape 2.4 improvements not requiring legislative changes can make a difference for a North West 3.1 small or medium-size firm. Mpumalanga 3.2 ƒ Local improvements will not only Limpopo 3.2 advance the standing of one location Free State 3.2 within South Africa, but also make a significant difference on the Eastern Cape 3.5 global scale: If a hypothetical city KwaZulu-Natal 4.0 were to adopt the good practices Western Cape found across the 9 cities in dealing 4.1 with construction permits, getting Gauteng 4.6 electricity and enforcing contracts, it would surpass the average Note: The 9 cities benchmarked in this report belong to the following provinces: Eastern Cape (Buffalo City and Nelson performance of the OECD high-income Mandela Bay), Free State (Mangaung), Gauteng (Ekurhuleni, Johannesburg and Tshwane), KwaZulu-Natal (eThekwini and Msunduzi), and Western Cape (Cape Town). economies in all 3 areas. Source: Statistics South Africa (beta2.statssa.gov.za). 2 DOING BUSINESS IN SOUTH AFRICA 2015 TABLE 1.1 Since 2007/2008, South Africa has made major improvements in 7 Doing Business areas 2007-08 2008-09 2009-10 2011-12 2012-13 2013-14 2014-15 Starting a Eliminated the Implemented a business need to use a new company law legal professional for document submission Registering Reduced property transfer duty and introduced electronic filing Getting credit Gave the borrowers *Required credit the right to access bureaus to remove and challenge their negative credit credit records information on a consumer’s record before April 1, 2014 Enforcing Amended the contracts monetary jurisdiction of lower courts and introduced voluntary mediation Paying taxes Reduced stamp Abolished Abolished stamp Replaced the duty the regional duty secondary tax on establishment companies with a levy and regional dividend tax borne services levy by shareholders Trading across Reduced the time borders and documents to export and import through ongoing customs modernization program Resolving Introduced a new insolvency reorganization process to facilitate rehabilitation of financially distressed companies *Change making it more difficult to do business Source: Doing Business database. only Gauteng, Kwazulu-Natal and country towards eliminating poverty property rights, reduce the cost of solv- Western Cape matched or surpassed and reducing inequality.7 Regulatory ing commercial disputes, increase the the national average GDP growth rate reforms and an enabling business predictability of economic outcomes of 4% over the period of 2001 to 20116 environment have been identified as and provide contractual partners with (figure 1.1). Within cities, the relicts of mechanisms to promote small and core protections against abuse. The the spatial divide between underserved medium-size enterprises as the main objective: transparent regulations de- and more developed areas are yet to job creators and drivers of exports— signed to be efficient, accessible to all be addressed. Service delivery protests according to the plan, 90% of new jobs and simple to implement. are widespread, and labor unrests will be created by small and medium- commonly occur, especially in the min- size enterprises. Over the past decade, South Africa ing sector. has implemented regulatory reforms Doing Business studies business regula- improving 7 areas measured by Doing There is a growing consensus within tions from the perspective of small Business (table 1.1). The Companies South Africa that the economy is func- and medium-size domestic firms. A Act No. 71 significantly lowered the tioning below its potential and that fundamental premise of Doing Business cost of business incorporation and more must be done to promote shared is that economic activity benefits from simplified business registration. In reg- prosperity. The National Development good rules and institutions. These istering property, electronic platforms Plan 2030 is the footprint to guide the include rules that establish and clarify for transfer duty declarations and OVERVIEW 3 This study expands the benchmarking FIGURE 1.2 Doing Business in South Africa 2015 benchmarks 9 major cities and 4 exercise to all metropolitan areas11 maritime ports and the Msunduzi local municipality ZIMBABWE (figure 1.2). The focus is on indicators Tshwane that measure the complexity and cost LIMPOPO MOZAMBIQUE Pretoria of regulatory processes, as well as the BOTSWANA Ekurhuleni Johannesburg Johannesburg Germiston strength of legal institutions affect- A A NG GAUTENG GAUTENG ing 6 stages in the life of a small to NORTH WEST AL SWAZILAND UM medium–size domestic firm: starting MP NAMIBIA a business, dealing with construction FREE STATE KWAZULU-NATAL Mangaung Msunduzi Pietermarizburg permits, getting electricity, registering Bloemfontein LESOTHO NORTHERN CAPE eThekwini property, enforcing contracts and trad- Durban Municipality Municipal seat ing across borders. Trading across bor- EASTERN CAPE ders measures importing or exporting Buffalo City Port WESTERN CAPE East London a container from or to Johannesburg Ngqura This map was produced by the Map Design Unit of The Cape Town Nelson Mandela World Bank. The boundaries, colors, denominations and through the country’s main maritime any other information shown on this map do not imply, Cape Town Port Elizabeth on the part of The World Bank Group, any judgment on ports—Cape Town, Durban, Ngqura GSDPM Map Design Unit the legal status of any territory, or any endorsement or acceptance of such boundaries. and Port Elizabeth. payments were set up and some duties South African exports have suffered The indicators were selected because reduced. Credit information systems since the global financial crisis. And they are governed—at least par- now give borrowers the right to chal- while that is closely linked to external tially—by local jurisdiction. While the lenge their credit records. Court costs factors as well as enterprise and sec- same legal and regulatory framework have been minimized thanks to the tor performance, the burdens faced by applies across locations, its imple- repeal of the revenue stamp. Numerous South Africans when exporting goods mentation varies and local regulations taxes, such as the regional establish- through the country’s major ports can- may be different. This is especially evi- ment levy, the regional services levy, not be ignored—South Africa is among dent across metropolitan municipali- the secondary tax on companies and the 50 most expensive economies to ties, which have exclusive municipal the stamp duty were reduced or abol- export, as expensive as a landlocked executive and legislative authority in ished. The reduction of taxes also low- economy like Paraguay.9 their area of jurisdiction, while local ered the cost to trade across borders. municipalities share this authority In addition, the documents and time with district municipalities. Two of the needed to export and import goods areas measured—dealing with con- were reduced by the ongoing customs WHAT DOES DOING struction permits and getting elec- modernization program. Lastly, a new BUSINESS IN SOUTH tricity—are almost entirely governed reorganization regime has facilitated AFRICA 2015 MEASURE? by municipalities. Across the other 4 the resolution of insolvency. As the largest business city in South areas, differences in implementation Africa, Johannesburg10 represents the of national regulations drive varia- Despite these reforms, South Africa’s country in Doing Business, which annu- tions across locations. global ranking has been slipping. ally compares 189 economies globally. One reason is that other economies However, in a large economy with a have improved at a faster pace. Also, decentralized system of government WHAT ARE THE FINDINGS? there are areas where South Africa comprising 9 provinces, 8 metropolitan is lagging behind, most notably with areas, 44 district municipalities and This study shows that South African respect to getting electricity, trading 226 local municipalities, entrepreneurs entrepreneurs face different local across borders and registering prop- face different local practices and regu- practices depending on where they erty. In a recent investment climate lations depending on where they oper- establish their business. The summary assessment, South African enterprises ate. South Africa’s 1996 Constitution results of the ranked indicators are identified electricity as one of the top granted increased autonomy to all presented in table 1.2. constraints, only surpassed by crime. municipalities. In short, Johannesburg One in 10 entrepreneurs also identified does not tell the full story. A couple of observations stand out. access to land as a constraint.8 First, there is no correlation between the size of the city (as measured by 4 DOING BUSINESS IN SOUTH AFRICA 2015 TABLE 1.2 Doing Business in South Africa 2015: Where is it easier? Municipality Starting a business* Dealing with Getting electricity Registering property Enforcing contracts Municipal seat construction permits Ranking DTF score Ranking DTF score Ranking DTF score Ranking DTF score Ranking DTF score (1-9) (100 = best (1-9) (100 = best (1-9) (100 = best (1-9) (100 = best (1-9) (100 = best result) result) result) result) result) Buffalo City 4 78.67 3 77.50 4 75.32 4 62.84 9 62.54 East London Cape Town 4 78.67 1 78.08 2 81.81 8 59.23 6 67.53 Cape Town Ekurhuleni 1 81.18 4 76.84 5 71.83 3 64.23 4 68.26 Germiston eThekwini 4 78.67 5 76.15 3 75.73 6 62.05 3 69.27 Durban Johannesburg 1 81.18 8 68.52 8 55.74 1 65.82 8 66.14 Johannesburg Mangaung 4 78.67 9 68.22 1 83.88 9 58.41 1 71.04 Bloemfontein Msunduzi 4 78.67 6 74.07 7 63.00 7 59.49 2 70.81 Pietermaritzburg Nelson Mandela Bay 4 78.67 2 78.05 9 53.14 5 62.69 7 66.89 Port Elizabeth Tshwane 1 81.18 7 69.88 6 68.51 2 64.71 5 68.17 Pretoria *On starting a business, each city is ranked either 1 or 4 because the only difference between cities is their proximity to the office of the Compensation Fund (Department of Labor) in Pretoria. Entrepreneurs from Ekurhuleni, Johannesburg and Tshwane conduct the registration of their employees at the Pretoria office and these cities rank equally at the top. In the other cities the process takes longer as the applications are first submitted to the local labor centers, then forwarded to the provincial offices and then to Pretoria. These cities are equally ranked at number 4, just behind the 3 cities ranked at the top. Note: The distance to frontier (DTF) score shows how far on average an economy is at any given point in time from the best performance achieved by any economy on each Doing Business indicator since 2005. The measure is normalized to range between 0 and 100, with 100 representing the frontier of best practices (the higher the score, the better). For details, see the About Doing Business and Doing Business in South Africa 2015 section. Source: Doing Business database. population) and the rankings, and no respectively. Mangaung, the second and implementation power, such as city does equally well in all 5 areas. least populous urban center, leads dealing with construction permits and Johannesburg and Cape Town, the the getting electricity and enforcing getting electricity. Cape Town and largest urban centers, are the top contracts indicators. Some cities are Buffalo City rank in the top half on performers on registering property doing better on indicators where mu- both. On the other hand, Johannesburg, and dealing with construction permits, nicipalities have the most executive Msunduzi and Tshwane rank poorly on these indicators. From a public-policy FIGURE 1.3 A location’s regulatory environment may be more business friendly in point of view, such dispersion or uneven some areas than others—revealing opportunities for improvement performance across the indicators la measured can guide local policymakers rg a nde Cit y wn eni ini sbu nM to areas where improvements are pos- lo o l e ung uzi elso ne ffa eT rhu ekw ann nga und N ay wa Bu Cap Eku eTh Joh Ma Ms B Tsh sible without major legislative changes 1 (figure 1.3). 2 3 Second, local improvements will not 4 only advance the standing of one 5 location as compared to another 6 within South Africa; they can make 7 a significant difference on the global 8 scale as illustrated by the distance to 9 frontier (DTF) score. This score shows Indicator with highest ranking the distance between a city’s perfor- mance and the “frontier,” defined as the Indicator with lowest ranking best performance globally across 189 economies. On getting electricity, for Source: Doing Business database. OVERVIEW 5 handles tax registration, while the mainly by how local authorities man- FIGURE 1.4 The gap between the highest Unemployment Insurance Fund and the age the preconstruction clearances and lowest “distance to the frontier score” on getting electricity puts South Compensation Fund manage registra- issued by various municipal depart- African locations worlds apart on a tion for unemployment and disability ments—including utility providers, global scale benefits. On average, starting a private public roads administration and fire Distance to the frontier score (DTF) company in South Africa12 requires 6 and health departments—and by how 100 procedures, 53 days and costs 0.3% many inspections take place during OECD high-income of income per capita. While it is inex- construction. The time to deal with 80 economies average pensive, the average time is almost 6 construction permits varies from 83 83.88 (75th percentile) times longer than in the average OECD days in Cape Town to more than twice 60 high-income economy. The variation as long in Tshwane, depending to a Bottom 25 economies across cities is driven by delays in reg- large extent on the time needed to ob- 53.14 40 (13th istering with the Compensation Fund. tain a building plan approval—in Nelson percentile) The registration is centralized in the Mandela Bay this takes 14 days, while 20 Compensation Fund office in Pretoria, in Johannesburg, Mangaung, Msunduzi although entrepreneurs can submit the and Tshwane it takes 2 months. The 0 registration application to one of the cost of dealing with construction Mangaung Nelson 126 labor centers located across the permits varies from 0.68% of the (highest score) Mandela Bay (lowest score) country, which then forward the ap- warehouse value in Mangaung to more plication by mail. Entrepreneurs from than twice as much in Nelson Mandela Ekurhuleni, Johannesburg and Tshwane Bay, depending on the building permit can choose to submit the application fee, which constitutes on average two- Source: Doing Business database. directly to the Compensation Fund thirds of the total cost. due to their proximity to Pretoria. This example, the distance between the top makes starting a business in these 3 Simplifying the preconstruction clear- and bottom performing locations within cities faster than elsewhere. ances is a key factor in facilitating South Africa is substantial (figure 1.4). the construction permitting process With a DTF score of 83.88, Mangaung CIPC recently transitioned from a in many of the South African cit- performs slightly above the OECD high- paper-based to a fully electronic sys- ies—preconstruction clearances are income average. Meanwhile, the DTF tem. The platform is yet to achieve full required even for low-risk projects score of 53.14 places Nelson Mandela functionality—glitches and bandwidth such as commercial warehouses for Bay in the bottom 25 economies glob- issues have plagued the system creat- the storage of non-hazardous goods. ally. If Nelson Mandela Bay managed ing delays. Over the short term, improv- Reorganizing the approval of building to replicate good practices found else- ing online functionality is a necessary plans is also important, especially for where in South Africa to shorten the step to speed up registration. In the cities where it creates delays. The use delay and to cut the cost of getting an medium- to long-term, the electronic of electronic platforms to connect all electricity connection, it would not only platform could be expanded into a one- relevant approving departments is a move up in the ranking as compared to stop shop that would integrate the 4 well-known good practice globally, its peers, but also move up the global agencies involved in the business start- and Cape Town authorities are already scale. up process, enabling entrepreneurs working on such improvements. to register their companies through a single interface. Getting Electricity Obtaining a new electricity connec- COMPARING REGULATIONS Dealing with construction tion for a business takes on average 5 ACROSS 9 MAJOR URBAN permits procedures, 141 days, and costs 472.8% CENTERS AND 4 PORTS Dealing with construction permits of income per capita. The number of Starting a business takes on average 17 procedures, 111 procedures is at par with OECD high- Starting a business is regulated pur- days and costs 1.03% of the warehouse income economies but the process is suant to the Companies Act No. 71 of value—which is more complex than almost twice as long and much more 2008. The Companies and Intellectual the OECD high-income economies’ expensive—the OECD high-income Property Commission (CIPC) is in average. The number of steps ranges average cost is just 73.2% of income per charge of business registration, the from 15 in Nelson Mandela Bay to 22 in capita. South African Revenue Service (SARS) Mangaung. The differences are driven 6 DOING BUSINESS IN SOUTH AFRICA 2015 The National Energy Regulator over- Registering property across the 9 South African cities sees the electricity, gas and petroleum Registering property takes on aver- measured. This is as efficient but more industries. Electricity distribution is age 8 procedures, 32 days and costs expensive than the OECD high-income shared—60% is handled by munici- 6.3% of the property value. It is more economy average, where the process palities covering mostly urban areas, cumbersome and more expensive takes on average 31.5 procedures, while Eskom, the government-owned than OECD high-income economies, 540 days and costs 21.4% of the claim public utility, supplies the remaining where it takes on average 5 steps, value. Although court efficiency varies, 40%, mostly in smaller municipalities, 24 days and costs 4.2% of property litigants in all locations spend most of rural areas and townships. It is easier value. Registering property is easier in their time waiting for pre-trial hear- to obtain an electricity connection in Johannesburg, where it takes only 23 ings, trials or both. The trial and judg- Cape Town and Mangaung and more days and 7 procedures. By contrast, ment phase lasts an average of almost difficult in Johannesburg and Nelson in Mangaung it takes 52 days and 8 15 months, ranging from just under 12 Mandela Bay. Typically, the process procedures. The delay is largely caused months in Msunduzi to 19 months in to obtain an electricity connection in by the time it takes to obtain the Buffalo City. Enforcing a judgment South Africa includes applying for a rates clearance certificate from the takes from 64 days in Buffalo City connection with the relevant distri- municipality, as required under Section to 83 days in Ekurhuleni, Mangaung, bution utility, receiving an external 118 of the Local Government Municipal Msunduzi and Tshwane. Waiting for inspection and estimate of the cost, Systems Act 32 of 2000. The average the sheriff to attach, remove and sell and having the distribution util- time to obtain a rates clearance cer- an insolvent judgment debtor’s assets ity carry out the connection works. tificates across South Africa is 19 days, takes the greatest share of the time In Cape Town and Mangaung, only 4 but it can vary from 7 days in Nelson needed to enforce a judgment. The procedures are necessary to obtain Mandela Bay and 10 days in Buffalo cost of litigation varies from 29.4% in a new electricity connection, while in City (where conveyancers can request Mangaung to 35.8% in Buffalo City. Buffalo City, Ekurhuleni and Tshwane rates clearance certificates online) to Court costs and enforcement fees the customer has to go through 6 42 days in Mangaung. are the same across locations—with steps. Obtaining a new electricity con- attorney fees being the driver of cost nection is fastest in Buffalo City (66 The time to process transfer deeds at differences between municipalities. days). In Nelson Mandela Bay it takes regional Deeds Registries also varies 5 times longer. Delays are attributed across the country. In Tshwane lodging To make enforcing contracts more ef- to long wait times for the completion and signing of a transfer deed at the ficient, South African authorities could of the external connection works and Pretoria Deeds Registry takes 9 days, increase the use of electronic tools. The lengthy application processes. Costs while the same process takes 14 days South African courts already use a tool are highest in Johannesburg, Cape in Cape Town and eThekwini. The cost known as NOC to collect statistics; Town and Nelson Mandela Bay and hovers around 6.3% of the property however, the tool is limited as it fails lowest in Buffalo City and Ekurhuleni. value across the country. to capture important information, The main drivers of variations in cost such as the number of backlogged or are connection fees and variable cost Making the issuance of rates clear- settled cases, which are important for for material and labor. ances more efficient would reduce monitoring and evaluation purposes. the overall time to register property E-filing is another good international Streamlining connection approvals in cities where the process is longest. practice that could reduce delays and could help expedite the electricity ap- There are already examples of good minimize the risk of document mis- plication process currently taking an practices within the country that could placement and improper allocation of average of 51 days. Also, improving be replicated to handle large volumes case numbers. the transparency of the connection of transactions—Cape Town and process and connection costs could eThekwini have launched electronic Trading across borders reduce transactions costs between platforms that can instantly produce Compared internationally, South applicants and municipalities. Some the outstanding rates balance and au- Africa ranks 100 out of 189 economies municipalities already post extensive tomatically issue the rates clearances. measured by Doing Business 2015 on information on their websites, and oth- the ease of trading across borders. ers could follow suit. Enforcing contracts It is among the top 5 performers in On average, it takes 29 procedures, Sub-Saharan Africa. Exporting through 551 days and costs 32.2% of the claim the 4 measured ports requires 5 docu- value to resolve a commercial dispute ments, takes on average 16 days and OVERVIEW 7 would improve South Africa’s DTF score FIGURE 1.5 How would the adoption of subnational good practices beyond above the OECD high-income economy Johannesburg impact South Africa’s global DTF score in dealing with construction permits, getting electricity and enforcing contracts? average on all 3 indicators (figure 1.5). If a hypothetical city were to streamline Distance to the frontier score (DTF) the number of requirements to obtain an electricity connection to just 4, as South African best practices in Cape Town and Mangaung, provide combined (potential DTF score) 80.05 76.03 86.43 81.83 a connection within 66 days and at a South Africa (Johannesburg) 68.52 62.00 cost of 257.2% of income per capita, as Doing Business 2015 DTF score or below in Buffalo City, South Africa’s global 60.91 or below 71.15 69.82 DTF score would climb by a sizable 31 OECD high income 55.74 economies average 66.14 points on this indicator, placing it close Bottom 25% to Japan and Malaysia and ahead of of 189 economies 46.35 or below Slovenia or Finland. Reducing the re- measured by Doing Business quirements and time to deal with con- struction permits to 15 procedures, as Dealing with in Nelson Mandela Bay, and 83 days, as construction permits in Cape Town—2 months faster than in Getting electricity Johannesburg—and lowering the cost Enforcing to 0.68% of the warehouse value, as contracts in Mangaung, would put South Africa Source: Doing Business database. more than 11 points ahead. In enforcing contracts—an indicator where South African cities fare quite well on aver- costs an average of US$1,968 per streamlining documentation require- age—handling court cases as efficiently 20-foot container. Importing requires ments and increasing port efficiency and as inexpensively as in Msunduzi 6 documents, takes on average 20 could significantly reduce delays. In ad- and Mangaung, respectively, would days and costs US$2,190 per 20-foot dition, introducing a single window for improve the country’s DTF score by 5 container. Long dwell times at the ports trade could make communication more points, placing it among the best 25 and high inland transportation costs effective between SARS, Transnet and economies globally on this indicator.13 are the main obstacles to traders. private operators since now there are separate electronic data platforms The good news is that there is no need Port and terminal handling time differs that serve different purposes. to reinvent the wheel, and tangible across ports, especially for imports, improvements can be achieved by in- ranging from 6 to 9 days. Durban is troducing measures already success- the slowest port, partly because it fully implemented elsewhere in South handles larger volumes of containers LEARNING FROM EACH Africa. Sharing the same national legal and experiences congestion. Inland OTHER and regulatory framework facilitates transportation represents the highest Benchmarking exercises like Doing the replication of good local practices. cost, reflecting the distance between Business inspire governments to reform. Small administrative improvements the ports and Johannesburg. The num- Comparisons of locations within the not requiring major regulatory changes ber of documents necessary to import same country may be even stronger can make a big difference in the life of a and export in South Africa—the same drivers of reform as it is more difficult small or medium-size firm. regardless of which port is used—is for local governments to justify why do- high compared globally. ing business in their city is more burden- Peer-to-peer learning can facilitate some than in the neighboring location. knowledge sharing and provide oppor- Customs and ports have reformed in tunities for local authorities to lobby recent years with the introduction of In South Africa there are good prac- the national government for nation- electronic data interchange systems tices to be found on various indica- wide reforms that push the agenda and online processing of documents. tors across locations. Combining the for the country as a whole. Some Since document preparation and subnational good practices in dealing economies have built a strong track terminal handling cause the largest with construction permits, getting record in peer-to-peer learning and delays when exporting or importing, electricity and enforcing contracts use Doing Business indicators and good 8 DOING BUSINESS IN SOUTH AFRICA 2015 In addition, the Mexican Ministry of FIGURE 1.6 In Mexico, states that strive the most to maintain an active dialogue with their peers have a better business regulatory environment Economy uses Doing Business and other indicators for monitoring and evalu- Distance to the global frontier in the four measured areas (percentage points) ation purposes. The funding vehicle 100 “Fondo PYME” offers subsidies to states Colima and municipalities that implement 90 Aguascaliente regulatory reform projects to improve Guanajuato the investment climate and competi- 80 tiveness. Showing improvement in the State of Mexico 70 Puebla indicators is an integral part of the Tamaulipas Durango terms of references for locations that 60 are seeking funds. 50 Baja California There is no blueprint for how to grow Morelos and prosper. In fact, the South African 40 Mexico City government’s main policy documents 0 1 2 3 4 5 6 7 8 clearly recognize this challenge and Number of states contacted choose to target competitiveness Note: The correlation between the distance to frontier and the number of states that were contacted by other states through a wide range of interventions, is 0.53 and the relationship is significant at 1%. Source: Doing Business database —obtained in November 2013 during consultative meetings with authorities from including promoting a better business Mexican states. environment, recognizing that com- plying with regulations brings more practices as a framework for discus- makers of the state of Colima paid a benefits than costs. The plans also sion. Such is the case in Mexico, where visit to Sinaloa, where they learned identify major cities as vehicles of eco- the Federal Commission for Regulatory about how to issue land use authoriza- nomic growth and small and medium- Improvement COFEMER organizes tions electronically. Soon Colima set up size firms as central job creators.14 It is biannually a regulatory conference, a similar system on its own website. estimated that small and medium-size allowing every state to share its experi- Not surprisingly, data shows that the firms produce 52 to 57% of GDP and ence with regulatory improvements. better-performing states are those provide 61% of employment.15 Peer learning also takes place when that make the most efforts to maintain local policy makers visit neighboring a dialogue with their peers (figure 1.6). The findings of this study provide an states and cities. For example, policy opportunity for national and local policy makers to substantively address a number of impediments to the invest- FIGURE 1.7 Combined regulatory reforms are likely to have greater effects on new ment climate that have plagued the business registration than isolated ones country over decades. Some potential improvements can be made at minimal Distance to frontier score for indicators measuring the complexity and cost in terms of budget resources (ta- cost of regulatory processes ble 1.3). For example, organizing staff Distance to frontier score for indicators and workflow like in the Magistrates’ measuring the strength of legal institutions Court in eThekwini can help improve the efficiency of court proceedings. Overall distance to frontier score Many of the opportunities to improve 0 0.1 0.2 0.3 0.4 0.5 administrative processes emanate Increase in new firm density associated with from expanding or improving electronic 10-point increase in distance to frontier score systems. Interoperable systems could also facilitate the exchange of infor- Note: New firm density is defined as the number of newly registered limited liability companies per 1,000 working-age people (ages 15-64). Indicators measuring the strength of legal institutions are those on getting credit, protecting mation across government agencies. minority investors, enforcing contracts and resolving insolvency. Indicators measuring the complexity and cost For such an electronic upgrade to be of regulatory processes are those on starting a business, dealing with construction permits, getting electricity, registering property, paying taxes and trading across borders. The analysis uses data from 2003-13 for all economies effective on a large scale, investments covered by Doing Business. in broadband capacity and ensuring Source: Divanbeigi, Raian, and Rita Ramalho. 2014. “Business Regulations and Growth.” Draft paper, Doing Business Unit, World Bank Group, Washington, DC. internet accessibility to all would be necessary preconditions. OVERVIEW 9 TABLE 1.3 Recommendations to improve the ease of doing business across South At a time of tight budgets, slower Africa economic growth and high unemploy- ment, reforms making it easier to do RECOMMENDATIONS RELEVANT MINISTRIES/ AGENCIES* business make more sense than ever, Starting a business because they help create jobs and ²ƀMėÊƀƃĆÊƀ9aƀĶĩĚĊĩÊƀŎ̏ƃâĶŦĥƀâƖĚĚƭƀĶŎÊŦƃĊĶĩĚ ²ƀĶĥŎĩĊÊŬƀĩÀƀ9ĩƃÊĚĚʳƃƖĚƀaŦĶŎÊŦƃƭƀĶĥĥĊŬŬĊĶĩ boost growth at a relatively afford- ²ƀMėÊƀŦÊöĊŬƃŦƃĊĶĩƀƦĊƃĆƀƃĆÊƀĶĥŎÊĩŬƃĊĶĩƀ/ƖĩÀƀ ²ƀhĶƖƃĆƀâŦĊ³ĩƀcÊƥÊĩƖÊƀhÊŦƥĊ³Ê more efficient by simplifying the company risk able cost. Also, while it is difficult for ²ƀĶĥŎÊĩŬƃĊĶĩƀ/ƖĩÀƀŐÊŎŦƃĥÊĩƃƀĶâƀGªĶŦő classification system and delegating the process to provincial or local labor centers ²ƀsĩÊĥŎĚĶƭĥÊĩƃƀ9ĩŬƖŦĩ³Êƀ/ƖĩÀƀŐÊŎŦƃĥÊĩƃƀĶâƀGªĶŦő a country to control external factors ²ƀSƥÊŦƀƃĆÊƀĥÊÀĊƖĥƀƃÊŦĥ½ƀÀÊƥÊĚĶŎƀƀĶĩÊĉŬƃĶŎƀŬĆĶŎƀ and other variables affecting the overall integrating all relevant agencies context for policy implementation, Dealing with construction permits improving the rules that underpin the ²ƀÀĶŎƃƀƀŦĊŬėĉªŬÊÀƀŎŎŦĶ³ĆƀƃĶƀĥƖĩĊ³ĊŎĚƀ ²ƀMƖĩĊ³ĊŎĚƀnĶƦĩƀȁĩĩĊĩö quality of the investment climate faced ŎŦʳĶĩŬƃŦƖ³ƃĊĶĩƀ³ĚʏŦĩ³ÊŬƀŐʼö¼ƀâŦĶĥƀƖƃĊĚĊƃƭƀ ²ƀMƖĩĊ³ĊŎĚƀƖĊĚÀĊĩöƀĶĩƃŦĶĚƀ providers, public roads administration and fire and by the business community can help ĆʏĚƃĆƀÀÊŎŦƃĥÊĩƃŬőƀĩÀƀĊĩŬŎʳƃĊĶĩŬ ²ƀMƖĩĊ³ĊŎĚƀƖĊĚÀĊĩöƀ9ĩŬŎʳƃĶŦƃÊ an economy become more resilient to ²ƀ"ŬƃªĚĊŬĆƀƀĶĩÊĉŬƃĶŎƀŬĆĶŎƀâĶŦƀĥƖĩĊ³ĊŎĚƀ ²ƀ0ÊĶöŦŎĆĊ³ƀ9ĩâĶŦĥƃĊĶĩƀhƭŬƃÊĥƀÊŎŦƃĥÊĩƃ preconstruction clearances and building approvals external shocks. Successful regula- ²ƀ/ĊŦÊƀĩÀƀcÊŬ³ƖÊƀhÊŦƥĊ³ÊŬ ²ƀcÊĶŦöĩĊƸÊƀƃĆÊƀŎŎŦĶƥĚƀĶâƀªƖĊĚÀĊĩöƀŎ̏ĩŬƀĶŦƀƖŬÊƀ ²ƀsƃĊĚĊƃƭƀŎŦĶƥĊÀÊŦŬ tory reform programs tend to take a electronic platforms comprehensive approach that targets ²ƀÊŎŦƃĥÊĩƃƀĶâƀ6ƖĥĩƀhÊƃƃĚÊĥÊĩƃŬƀ ²ƀMÊŦöÊƀŎĶŬƃ³ĶĥŎĚÊƃĊĶĩƀĊĩŬŎʳƃĊĶĩŬƀĩÀƀƃĆÊƀĊŬŬƖĩ³Êƀ improvements across multiple areas of of the occupancy certificate ²ƀÊŎŦƃĥÊĩƃƀĶâƀGªĶŦƀ ²ƀ9ĩƃŦĶÀƖ³ÊƀĕĶĊĩƃƀŦÊŬŎĶĩŬĊªĊĚĊƃƭƀƦĊƃĆƀŎŦĊƥƃÊƀªƖĊĚÀĊĩöƀ ²ƀÊŎŦƃĥÊĩƃƀĶâƀcƖŦĚƀÊƥÊĚĶŎĥÊĩƃƀĩÀƀGĩÀƀcÊâĶŦĥ the investment climate. Analyzing time professionals in the permitting process ²ƀNƃĊĶĩĚƀ0ÊĶĉŬŎƃĊĚƀ9ĩâĶŦĥƃĊĶĩ series of Doing Business data shows the ²ƀMėÊƀƃĆÊƀŎÊŦĥĊƃƃĊĩöƀŎŦĶ³ÊŬŬƀĥĶŦÊƀƃŦĩŬŎŦÊĩƃ effectiveness of cumulative reforms: an improvement in the overall DTF score is Getting electricity linked to a significant increase in new ²ƀhƃŦʏĥĚĊĩÊƀŎŎŦĶƥĚƀŎŦĶ³ÊŬŬÊŬƀªƭƀĊĥŎŦĶƥĊĩöƀĊĩƃÊŦĩĚƀ ²ƀMƖĩĊ³ĊŎĚƀÊĚʳƃŦĊ³ĊƃƭƀÀÊŎŦƃĥÊĩƃŬ firm density (figure 1.7). municipal communication and workflows ²ƀ"ŬėĶĥ ²ƀĚĚÊƥĊƃÊƀƃĆÊƀªƖŦÀÊĩƀĶâƀŬʳƖŦĊƃƭƀÀÊŎĶŬĊƃŬ ²ƀNƃĊĶĩĚƀ"ĩÊŦöƭƀcÊöƖ̏ƃĶŦƀĶâƀhĶƖƃĆƀâŦĊ³ƀ ²ƀ9ĥŎŦĶƥÊƀƃĆÊƀƃŦĩŬŎŦÊĩ³ƭƀĶâƀƃĆÊƀ³ĶĩĩʳƃĊĶĩƀŎŦĶ³ÊŬŬƀ and connection costs ²ƀÊŎŦƃĥÊĩƃƀĶâƀ"ĩÊŦöƭ Registering property NOTES ²ƀÀĶŎƃƀƃĆÊƀÊĚʳƃŦĶĩĊ³ƀĊŬŬƖĩ³ÊƀĶâƀŦƃÊŬƀ³ĚʏŦĩ³Êƀ ²ƀÊÊÀŬƀcÊöĊŬƃŦĊÊŬ 1. World Bank. 2014. World Development certificates across the country or even consider Indicators. Washington, DC: World Bank ²ƀMƖĩĊ³ĊŎĚĊƃĊÊŬ replacing them altogether with online payment Group. confirmation ²ƀÊŎŦƃĥÊĩƃƀĶâƀcƖŦĚƀÊƥÊĚĶŎĥÊĩƃƀĩÀƀGĩÀƀcÊâĶŦĥƀ 2. GDP calculations are in current US$. World ²ƀhÊƃƀÊãʳƃĊƥÊƀŬÊŦƥĊ³ÊƀÀÊĚĊƥÊŦƭƀƃĊĥÊƀĚĊĥĊƃŬƀâĶŦƀƃĆÊƀÀÊÊÀŬƀ ²ƀhĶƖƃĆƀâŦĊ³ĩƀcÊƥÊĩƖÊƀhÊŦƥĊ³ÊŬ Bank. 2014. World Development Indicators. ŦÊöĊŬƃŦĊÊŬƀĩÀſĶŦƀĊĩƃŦĶÀƖ³ÊƀâŬƃĉƃŦ³ėƀŎŎŦĶƥĚŬ Washington, DC: World Bank Group. ²ƀÊƥÊĚĶŎƀĩƀĊĩƃÊöŦƃÊÀƀŦÊöĊŬƃŦƭƀŬƭŬƃÊĥƀâĶŦƀÊĚʳƃŦĶĩĊ³ƀ 3. According to World Bank estimates, South registration Africa’s Gini coefficient is 0.65. Enforcing contracts 4. 15 to 24 years of age. 5. World Bank. 2014. World Development ²ƀsŬÊƀ³ĶƖŦƃƀŬƃƃĊŬƃĊ³ŬƀâĶŦƀŎÊŦâĶŦĥĩ³ÊƀĥĶĩĊƃĶŦĊĩöƀĩÀƀ ²ƀMöĊŬƃŦƃÊŬŤƀĶƖŦƃŬ Indicators. Washington, DC: World Bank introduce case management for commercial cases ²ƀÊŎŦƃĥÊĩƃƀĶâƀCƖŬƃĊ³ÊƀĩÀƀĶĩŬƃĊƃƖƃĊĶĩĚƀÊƥÊĚĶŎĥÊĩƃ Group. ²ƀ9ĩƃŦĶÀƖ³ÊƀÊĉæĚĊĩöƀĩÀƀƖƃĶĥƃÊƀ³ĶƖŦƃƀŎŦĶ³ÊŬŬÊŬƀ 6. Excluding the economic contraction in 2009 ²ƀ9ĩƃŦĶÀƖ³ÊƀŬŎʳĊĚĊƸÊÀƀ³ĶĥĥÊŦ³ĊĚƀ³ĶƖŦƃŬƀĶŦƀ³ĶƖŦƃƀ due to the global financial crisis. sections in locations with large caseloads 7. National Planning Commission, the Trading across borders Presidency of the Republic of South Africa. 2012. Our Future—Make it Work: ²ƀcÊÀƖ³ÊƀĩÀƀŬƃŦʏĥĚĊĩÊƀÀĶ³ƖĥÊĩƃƃĊĶĩƀŦÊśƖĊŦÊĥÊĩƃŬ ²ƀhĶƖƃĆƀâŦĊ³ĩƀcÊƥÊĩƖÊƀhÊŦƥĊ³Ê National Development Plan 2030. Pretoria, ²ƀ9ÀÊĩƃĊâƭƀėÊƭƀªĶƃƃĚÊĩʳėŬƀ³ĶĩŬƃŦĊĩĊĩöƀŎĶŦƃƀÊä³ĊÊĩ³ƭƀ ²ƀnŦĩŬĩÊƃƀNƃĊĶĩĚƀaĶŦƃŬƀƖƃĆĶŦĊƃƭ and apply adequate measures to address them South Africa. ²ƀnŦĩŬĩÊƃƀaĶŦƃƀnÊŦĥĊĩĚŬ 8. World Bank. 2011. Improving the Business ²ƀĶĩŬĊÀÊŦƀŦÊÀƖ³ĊĩöƀŎĶŦƃƀƃŦĊãŬ Environment for Growth and Job Creation in ²ƀ9ĩƃŦĶÀƖ³ÊƀĩƀÊĚʳƃŦĶĩĊ³ƀŬĊĩöĚÊƀƦĊĩÀĶƦƀâĶŦƀƃŦÀÊ South Africa: The Second Investment Climate ²ƀaŦĶĥĶƃÊƀŦÊöĊĶĩĚƀĊĩƃÊöŦƃĊĶĩƀƃĆŦĶƖöĆƀªĶŦÀÊŦƀ cooperation agreements Assessment. Washington, DC: World Bank Group. *The list includes the main ministries and departments but additional departments or ministries might be implicated. 9. As measured by Doing Business. Note: All recommendations are detailed in the “What can be improved?” section of each chapter. 10. The 2015 data for Johannesburg for starting a business and dealing with construction permits have been revised and updated since the publication of the Doing Business 2015: Going Beyond Efficiency global report. 11. Buffalo City, Cape Town, Ekurhuleni, eThekwini, Johannesburg, Mangaung, Nelson Mandela Bay and Tshwane. 10 DOING BUSINESS IN SOUTH AFRICA 2015 12. The average applies to the 9 cities measured in this report. 13. The improvements would be less dramatic for registering property, while there would be no improvements for starting a business. 14. The National Treasury of the Republic of South Africa has launched a Cities Support Program (CSP), a 5-year national program of investment and technical assistance that aims at supporting the 8 largest urban municipalities in (a) strengthening the capacity of cities to improve the delivery of human settlements and public transport functions; (b) strengthening their core spatial planning functions; (c) strengthening governance, including financial management and social management; and (d) improving environmental outcomes by, among other things, mainstreaming climate resilience measures. All of these initiatives are underpinned and informed by a need to strengthen economic development and growth. This report was initiated to support the CSP in working with these 8 cities to improve their business environment and increase competitiveness. 15. Abor, Joshua, and Peter Quartey. May 2010. “Issues in SME Development in Ghana and South Africa.” International Research Journal of Finance & Economics 39: 218. Doing Business in South Africa 2015 About Doing Business and Doing Business in South Africa 2015 Economic activity requires sensible Doing Business was designed with 2 ƒ Doing Business measures business rules that encourage firm start-up and main types of users in mind: policy regulations that affect domestic small growth and avoid creating distortions makers and researchers.1 Doing Business and medium-size firms in 11 areas in the marketplace. Doing Business is a tool that governments can use to across 189 economies. Doing Business measures the rules and regulations design sound policies for the creation in South Africa 2015 covers 6 of these that can help the private sector of firms and jobs. But this tool should areas: starting a business, dealing thrive—because without a dynamic not be used in isolation. Doing Business with construction permits, getting private sector, no economy can provide provides a rich opportunity for bench- electricity, registering property, a good, and sustainable, standard marking by capturing key dimensions enforcing contracts, and trading across borders. of living for people. Doing Business of regulatory regimes. Nevertheless, promotes rules that establish and the Doing Business data are limited in ƒ Doing Business and Doing Business in clarify property rights, minimize the scope and should be complemented South Africa 2015 do not capture other cost of resolving disputes, increase the with other sources of information. aspects of the business environment, predictability of economic interactions such as security, market size, and provide contractual partners with Doing Business is also an important macroeconomic stability and the core protections against abuse. source of information for researchers. prevalence of bribery and corruption. It provides a unique data set that en- ƒ The Doing Business methodology The Doing Business data highlight the ables analysis aimed at better under- is based on standardized case important role of the government and standing the role of business regulation scenarios in the largest business city government policies in the day-to-day in economic development. of each economy. Subnational Doing life of domestic small and medium-size Business studies expand the Doing firms. The objective is to encourage Business analysis beyond this largest regulations that are designed to be ef- business city to measure variations in ficient, accessible to all who use them WHAT DOES DOING regulations or in the implementation of and simple in their implementation. BUSINESS AND DOING national laws across locations within Where regulation is burdensome and BUSINESS IN SOUTH AFRICA an economy or a region. competition limited, success tends to 2015 MEASURE? ƒ Doing Business in South Africa 2015 depend on whom one knows. But where Doing Business captures several im- relies on the following main sources regulation is efficient, transparent and portant dimensions of the regulatory of information: the relevant laws implemented in a simple way, it be- environment as it applies to local firms. and regulations, private sector comes easier for aspiring entrepreneurs Doing Business provides 2 main types of respondents, government officials, to compete on an equal footing and to indicators: those that broadly measure court officials and World Bank Group innovate and expand. In this sense Doing the complexity and cost of regula- staff. Business values good rules as a key to tory processes and those that measure ƒ Governments use Doing Business as social inclusion. Enabling growth—and the strength of legal institutions. a source of objective data providing ensuring that all people, regardless of Indicators of the first type (starting unique insights into good practices income level, can participate in its ben- a business, dealing with construction worldwide. Many Doing Business efits—requires an environment where permits, getting electricity, registering indicators are “actionable”—though new entrants with drive and good ideas property, paying taxes and trading depending on the context, they may can get started in business and where across borders) promote efficiency in not always be “action-worthy.” good firms can invest and grow, thereby transactions handled by the govern- creating more jobs. ment, such as in the process to register 12 DOING BUSINESS IN SOUTH AFRICA 2015 a transfer of property. The second set national laws across locations within Since 2005 subnational reports have of indicators (getting credit, protecting an economy (as in Italy or Colombia) covered 367 cities in 55 economies, minority investors, enforcing contracts or a region (as in South East Europe including Brazil, China, India, Indonesia, and resolving insolvency) show limited or Central America). Projects are Morocco and Pakistan. In 2014 sub- variability across cities in the same undertaken at the request of and in national studies were completed in economy since they mainly draw from collaboration with governments. Mexico, Nigeria and more recently in national laws with general applicability. the Central America region. Data collected by subnational reports The choice of Doing Business indicators over the past 2 years show that there Subnational reports are available on the has been guided by economic research can be substantial variation within Doing Business website at http://www. and firm-level data, particularly data an economy. In Mexico in 2013, for doingbusiness.org/subnational. from the World Bank Enterprise example, transferring property took as Surveys.2 These surveys provide data few as 2 days in Colima and as many highlighting the main obstacles to busi- as 74 in Mexico City. Indeed, within the ness activity as reported by entrepre- same economy one can find cities that TWO AGGREGATE neurs in more than 120 economies. The perform as well as economies ranking MEASURES design of the Doing Business indicators in the top 20 on the ease of register- Doing Business presents data both for has also been informed by theoretical ing property and cities that perform individual indicators and for 2 aggre- insights gleaned from extensive re- as poorly as economies ranking in the gate measures—the distance to fron- search and the literature on the role of bottom 40 on that indicator. tier metric and ease of doing business institutions in enabling economic de- ranking—to provide different perspec- velopment. In addition, the background The subnational Doing Business studies tives on the data. The ease of doing papers developing the methodology create disaggregated data on business business ranking compares economies for each of the Doing Business indicator regulations. But they go beyond a data with one another; the distance to sets have established the importance collection exercise. They have proved frontier score benchmarks economies of the rules and regulations that Doing to be strong motivators for regulatory with respect to regulatory best prac- Business measures for such economic reform at the city level: tices, showing the absolute distance outcomes as trade volumes, foreign di- ƒ The data produced are compa- to the best performance on each Doing rect investment, market capitalization rable across locations within the Business indicator. When compared in stock exchanges and private credit economy and internationally, across years, the distance to frontier as a percentage of GDP.3 enabling locations to benchmark score shows how much the regulatory their results both locally and glob- environment for local entrepreneurs in Doing Business in South Africa 2015 is the ally. Comparisons of locations that an economy has changed over time in first subnational Doing Business report are within the same economy and absolute terms, while the ease of doing in the country and as such it captures therefore share the same legal and business rankings show how much the several important dimensions of the regulatory framework can be re- regulatory environment has changed regulatory environment as they apply vealing: local officials find it hard to relative to that in other economies. to local firms in 9 South African cities: explain why doing business is more Buffalo City, Cape Town, Ekurhuleni, difficult in their jurisdiction than in a The distance to frontier measure eThekwini, Johannesburg, Mangaung, neighboring one. aids in assessing the absolute level Msunduzi, Nelson Mandela Bay and ƒ Pointing out good practices that of regulatory performance and how Tshwane.4 It provides quantitative exist in some locations but not oth- it improves over time. This measure measures of regulations in 6 business ers within an economy helps policy shows the distance of each economy areas: starting a business, dealing with makers recognize the potential for to the “frontier,” which represents the construction permits, getting electric- replicating these good practices. best performance observed on each of ity, registering property, enforcing This can prompt discussions of the indicators across all economies in contracts, and trading across borders. regulatory reform across different the Doing Business sample since 2005 levels of government, providing op- or the third year in which data were The subnational Doing Business stud- portunities for local governments collected for the indicator. This allows ies expand the Doing Business analysis and agencies to learn from one users both to see the gap between a beyond the largest business city of an another and resulting in local own- particular economy’s performance economy. They measure variation in ership and capacity building. and the best performance at any point regulations or in the implementation of in time and to assess the absolute ABOUT DOING BUSINESS AND DOING BUSINESS IN SOUTH AFRICA 2015 13 change in the economy’s regulatory substantially, across topics, indicat- time, it has a distance to frontier score environment over time as measured ing that strong performance by an of 44.97 for dealing with construction by Doing Business. This measure shows economy in one area of regulation permits. Variation in performance not only how economies are ordered on can coexist with weak performance across the indicator sets is not at all their performance on the indicators but in another. A quick way to assess the unusual. It reflects differences in the also how far apart they are. variability of an economy’s regulatory degree of priority that government performance is to look at its distance authorities give to particular areas of Doing Business in South Africa 2015 to frontier scores across topics. business regulation reform and in the includes rankings of the 9 cities mea- Croatia, for example, has an overall ability of different government agen- sured on 5 topics: starting a business, distance to frontier score of 66.53. Its cies to deliver tangible results in their dealing with construction permits, distance to frontier score is 85.43 for area of responsibility. getting electricity, registering property starting a business, while at the same and enforcing contracts. The rankings presented are based on the distance to TABLE 2.1 What is the frontier in regulatory practice in the areas measured the frontier score. There are no rankings by Doing Business in South Africa 2015? for the trading across borders topic. The Worst distance to frontier score captures the Topic and indicator Who sets the frontier Frontier performance gap between a city’s performance and Starting a business a measure of best practices across the aŦĶ³ÊÀƖŦÊŬƀŐĩƖĥªÊŦőƀ ƀĩÀųƀNÊƦƀŠÊĚĩÀƀ 1 18 a areas covered by the report. For start- nĊĥÊƀŐÀƭŬőƀ ƀNÊƦƀŠÊĚĩÀƀ ƀƿ¼çƀ 100 b ing a business, for example, Canada ĶŬƃƀŐœƀĶâƀĊĩ³ĶĥÊƀŎÊŦƀ³ŎĊƃőƀ ƀhĚĶƥÊĩĊƀ 0 200 b and New Zealand have the smallest MĊĩĊĥƖĥƀ³ŎĊƃĚƀŐœƀĶâƀĊĩ³ĶĥÊƀŎÊŦƀ³ŎĊƃőƀ Australia; Colombia c 0 400 b number of procedures required (1) and Dealing with construction permits New Zealand the shortest time to fulfill aŦĶ³ÊÀƖŦÊŬƀŐĩƖĥªÊŦőƀ ƀ6ĶĩöƀEĶĩöƀhc½ƀĆĊĩƀ ç 30 a them (0.5 days). Slovenia has the low- nĊĥÊƀŐÀƭŬőƀ ƀhĊĩöŎĶŦÊƀ 26 373 b est cost (0.0% of income per capita), and Australia, Colombia and 110 other ĶŬƃƀŐœƀĶâƀƦŦÊĆĶƖŬÊƀƥĚƖÊőƀ Qatar 0 20 b economies have no paid-in minimum Getting electricity capital requirement (table 2.1). For each aŦĶ³ÊÀƖŦÊŬƀŐĩƖĥªÊŦőƀ ƀ0ÊŦĥĩƭųƀEĶŦʏ½ƀcÊŎ¼d 3 9a a topic covered, Doing Business uses a nĊĥÊƀŐÀƭŬőƀ ƀEĶŦʏ½ƀcÊŎ¼ƀ 18 248b b simple averaging approach for weight- ĶŬƃƀŐœƀĶâƀĊĩ³ĶĥÊƀŎÊŦƀ³ŎĊƃőƀ ƀCŎĩƀ 0 8,100b b ing component indicators, calculating Registering property rankings and determining the distance aŦĶ³ÊÀƖŦÊŬƀŐĩƖĥªÊŦőƀ 0ÊĶŦöĊųƀNĶŦƦƭųƀaĶŦƃƖöĚųƀ 1 13 a hƦÊÀÊĩƀ to frontier score. To test the robustness of this approach, other approaches nĊĥÊƀŐÀƭŬőƀ 0ÊĶŦöĊųƀNÊƦƀŠÊĚĩÀųƀaĶŦƃƖöĚƀ 1 210 b were explored, including using principal ĶŬƃƀŐœƀĶâƀŎŦĶŎÊŦƃƭƀƥĚƖÊőƀ ƀhƖÀĊƀŦªĊƀ 0 ŀç b components and unobserved compo- Enforcing contracts nents.5 These turn out to yield results aŦĶ³ÊÀƖŦÊŬƀŐĩƖĥªÊŦőƀ ƀhĊĩöŎĶŦÊƀ 21 çƈ a nearly identical to those of simple nĊĥÊƀŐÀƭŬőƀ ƀhĊĩöŎĶŦÊƀ 120 1,340 b averaging. In the absence of a strong ĶŬƃƀŐœƀĶâƀ³ĚĊĥƀƥĚƖÊő ƀĆƖƃĩ ƿ¼ŀ 89 b theoretical framework that assigns Trading across borders different weights to the topics covered Ķ³ƖĥÊĩƃŬƀƃĶƀÊƫŎĶŦƃƀŐĩƖĥªÊŦőƀ ƀ/Ŧĩ³Êųƀ9ŦÊ̏ĩÀƀ 2 11 a for the 189 economies worldwide, the nĊĥÊƀƃĶƀÊƫŎĶŦƃƀŐÀƭŬőƀ ƀÊĩĥŦėųƀ"ŬƃĶĩĊųƀhĊĩöŎĶŦÊƀ 6 çï b simplest method is used: weighting all ĶŬƃƀƃĶƀÊƫŎĶŦƃƀŐshÇƀŎÊŦƀ³ĶĩƃĊĩÊŦőƀ ƀnĊĥĶŦĉGÊŬƃÊƀ 410 ƀç½ƿƿƿƀb topics equally and, within each topic, deflated giving equal weight to each of the topic Ķ³ƖĥÊĩƃŬƀƃĶƀĊĥŎĶŦƃƀŐĩƖĥªÊŦőƀ ƀ/Ŧĩ³Êųƀ9ŦÊ̏ĩÀƀ 2 ŀç a components. nĊĥÊƀƃĶƀĊĥŎĶŦƃƀŐÀƭŬőƀ ƀhĊĩöŎĶŦÊƀ 4 66 b ĶŬƃƀƃĶƀĊĥŎĶŦƃƀŐshÇƀŎÊŦƀ³ĶĩƃĊĩÊŦőƀ ƀhĊĩöŎĶŦÊƀ ƈźÒ¼ï 6,000 b deflated Each topic covered by Doing Business relates to a different aspect of the a. Worst performance refers to the 99th percentile among all economies. b. Worst performance refers to the 95th percentile among all economies. business regulatory environment. c. One hundred and ten other economies also have a minimum capital of 0. The distance to frontier scores and d. In eleven other economies it also takes only 3 procedures to get an electricity connection. Source: Doing Business database. rankings of each economy vary, often 14 DOING BUSINESS IN SOUTH AFRICA 2015 components—yield a ranking nearly FIGURE 2.1 How are distance to the frontier scores calculated for indicators? An identical to the simple average used example by Doing Business.6 Thus Doing Business A time-and-motion topic: dealing with construction permits uses the simplest method: within each Distance to frontier topic, giving equal weight to each of the score for procedures topic components. 100 Regulatory frontier Best performance A city’s distance to frontier score is in- (frontier): 80 5 procedures dicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. All distance to 60 frontier calculations are based on a maximum of 5 decimals. However, indi- cator ranking calculations and the ease 40 of doing business ranking calculations are based on 2 decimals. Worst performance 20 (99th percentile): 30 procedures WHAT DOES DOING 0 BUSINESS IN SOUTH AFRICA 0 5 10 15 20 Procedures (number) 25 30 2015 NOT MEASURE? Doing Business does not cover many important policy areas, and even Source: Doing Business database. within the areas it covers its scope is narrow (table 2.2). Doing Business does Calculation of the distance to In the same formulation, to mitigate not measure the full range of factors, frontier score the effects of extreme outliers in the policies and institutions that affect the In the present report, calculating the distributions of the rescaled data for quality of an economy’s business en- distance to frontier score for each city most component indicators (very few vironment or its national competitive- involves 2 main steps. First, individual economies need 700 days to complete ness. It does not, for example, capture component indicators are normalized the procedures to start a business, but aspects of security, the prevalence of to a common unit where each of the many need 9 days), the worst perfor- bribery and corruption, market size, component indicators y is rescaled mance is calculated after the removal macroeconomic stability, the state using the linear transformation (worst of outliers. The definition of outliers of the financial system or the level of − y)/(worst − frontier). In this formula- is based on the distribution for each training and skills of the labor force. tion the frontier represents the best component indicator. To simplify the performance on the indicator across process, 2 rules were defined: the 95th Even within the relatively small set of all world economies since 2005 or the percentile is used for the indicators indicators included in Doing Business, third year after data for the indicator with the most dispersed distributions the focus is deliberately narrow. The were collected for the first time. (including time, cost and minimum trading across borders indicators, for capital), and the 99th percentile is used example, capture the documents, time for number of procedures (figure 2.1). and cost required for the logistical TABLE 2.2 What Doing Business does process of exporting and importing not cover Second, for all cities in Doing Business in containerized goods by seaport, but Examples of areas not covered South Africa 2015, the obtained scores they do not measure the cost of the sea hʳƖŦĊƃƭ are presented for each measured and transport or of tariffs or capture any ranked topic: starting a business, aspects relating to international trade aŦÊƥĚÊĩ³ÊƀĶâƀªŦĊªÊŦƭƀĩÀƀ³ĶŦŦƖŎƃĊĶĩ dealing with construction permits, reg- agreements. Thus through these indi- MŦėÊƃƀŬĊƸÊ istering property, getting electricity, cators Doing Business provides a nar- M³ŦĶʳĶĩĶĥĊ³ƀŬƃªĊĚĊƃƭ row perspective on the infrastructure and enforcing contracts. More com- hƃƃÊƀĶâƀƃĆÊƀæĩĩ³ĊĚƀŬƭŬƃÊĥ plex aggregation methods—such as challenges that firms face, particu- GÊƥÊĚƀĶâƀƃŦĊĩĊĩöƀĩÀƀŬėĊĚĚŬƀĶâƀƃĆÊƀ̏ªĶŦƀâĶŦ³Ê principal components and unobserved larly in the developing world. It does not ABOUT DOING BUSINESS AND DOING BUSINESS IN SOUTH AFRICA 2015 15 address the extent to which inadequate should be understood when using the a limited liability company or its legal roads, rail, ports and communications data (table 2.3). equivalent. The considerations in defin- may add to firms’ costs and undermine ing this assumption are twofold. First, competitiveness (except to the extent A key consideration for the Doing private limited liability companies are, that the trading across borders indica- Business indicators is that they should empirically, the most prevalent busi- tors indirectly measure the quality of ensure comparability of the data ness form for firms with more than one ports and roads). Similarly, the starting across a global set of economies. The owner in many economies around the a business indicator does not cover all indicators are therefore developed world. Second, this choice reflects the aspects of commercial legislation. around standardized case scenarios focus of Doing Business on expanding with specific assumptions. Doing opportunities for entrepreneurship: Doing Business does not attempt to Business recognizes the limitations of investors are encouraged to venture measure all costs and benefits of a the standardized case scenarios and into business when potential losses are particular law or regulation to society assumptions. But while such assump- limited to their capital participation. as a whole. Measuring business laws tions come at the expense of generality, and regulations provides one input into they also help ensure the comparability Another assumption underlying the the debate on the regulatory burden of data. For this reason it is common Doing Business indicators is that en- associated with achieving regulatory to see limiting assumptions of this trepreneurs have knowledge of and objectives. These objectives can differ kind in economic indicators. Inflation comply with applicable regulations. across economies. Doing Business pro- statistics, for example, are often based In practice, entrepreneurs may not vides a starting point for this discus- on prices of a set of consumer goods know what needs to be done or how sion and should be used in conjunction in a few urban areas, since collecting to comply and may lose considerable with other data sources. nationally representative price data at time trying to find out. Alternatively, high frequencies would be prohibitively they may deliberately avoid compli- costly in many countries. GDP esti- ance altogether—by not registering mates are also subject to a number of for social security, for example. Where WHAT ARE THE limiting assumptions, which have not regulation is particularly onerous, firms STRENGTHS AND prevented their widespread use. may opt for bribery and other informal LIMITATIONS OF THE arrangements intended to bypass the METHODOLOGY? Some Doing Business topics include rules—an aspect that helps explain The Doing Business methodology was complex areas, and so it is important differences between the de jure data designed to be an easily replicable way that the standardized cases are care- provided by Doing Business and the de to benchmark business regulation. It fully defined. For example, the stan- facto insights offered by World Bank has advantages and limitations that dardized case scenario usually involves Enterprise Surveys. In economies with particularly burdensome regulation, levels of informality tend to be higher. TABLE 2.3 Advantages and limitations of the Doing Business methodology Compared with their formal sector Feature Advantages Limitations counterparts, firms in the informal sŬÊƀĶâƀŬƃĩÀŦÀĊƸÊÀƀ MėÊŬƀƃĆÊƀÀƃƀ³ĶĥŎŦªĚÊƀ³ŦĶŬŬƀ Reduces the scope of the data and sector typically grow more slowly, have case scenarios economies and the methodology means that only regulatory reforms transparent in the areas measured can be poorer access to credit and employ systematically tracked fewer workers—and these workers /Ķ³ƖŬƀĶĩƀ̏ŦöÊŬƃƀ MėÊŬƀƃĆÊƀÀƃƀ³ĶĚĚʳƃĊĶĩƀĥĩöʏªĚÊƀ Reduces the representativeness of remain outside the protections of business citya Ő³ĶŬƃĉÊãʳƃĊƥÊőƀĩÀƀƃĆÊƀÀƃƀ the data for an economy if there are comparable ŬĊöĩĊ泏ĩƃƀÀĊãÊŦÊĩ³ÊŬƀ³ŦĶŬŬƀĚĶ³ƃĊĶĩŬ labor law.7 Firms in the informal sector are also less likely to pay taxes. Doing /Ķ³ƖŬƀĶĩƀÀĶĥÊŬƃĊ³ƀĩÀƀ EÊÊŎŬƀƃĆÊƀƃƃÊĩƃĊĶĩƀĶĩƀƦĆÊŦÊƀ /ĊĚŬƀƃĶƀŦÊíʳƃƀŦʏĚĊƃƭƀâĶŦƀƃĆÊƀĊĩâĶŦĥĚƀ formal sector regulations are relevant and firms are sector—important where that is Business measures one set of factors most productive—the formal sector large—or for foreign firms where they that help explain the occurrence of ⏳ÊƀƀÀĊãÊŦÊĩƃƀŬÊƃƀĶâƀ³ĶĩŬƃŦĊĩƃŬ informality and give policy makers Reliance on expert Ensures that the data reflect the Results in indicators that do not respondents knowledge of those with the most measure the variation in experiences insights into potential areas of regula- experience in conducting the types of among entrepreneurs tory reform. transactions measured /Ķ³ƖŬƀĶĩƀƃĆÊƀ̏Ʀ MėÊŬƀƃĆÊƀĊĩÀĊ³ƃĶŦŬƀš³ƃĊĶĩªĚÊŢÙ /ĊĚŬƀƃĶƀŦÊíʳƃƀƃĆÊƀŦʏĚĊƃƭƀƃƏƃƀƦĆÊŦÊƀ Rules and regulations fall under the because the law is what policy makers systematic compliance with the law is can change lacking, regulatory changes may not direct control of policy makers—and achieve the full desired results they are often where policy makers a. Subnational Doing Business goes beyond the largest business city within a country or region. 16 DOING BUSINESS IN SOUTH AFRICA 2015 start when intending to change the set of the cost component (where fee significant and routine experience in of incentives under which businesses schedules are lacking) are based on the transaction. When time estimates operate. Doing Business not only shows actual practice rather than the law on differ, further interactions with respon- where problems exist in the regulatory the books. This introduces a degree of dents are pursued to converge on one framework; it also points to specific judgment. When sources indicate dif- estimate or a narrow range that re- regulations or regulatory procedures ferent estimates, the time indicators flects the majority of applicable cases. that may lend themselves to reform. reported in Doing Business represent And its quantitative measures of busi- the median values of several respons- Doing Business does not survey firms ness regulations enable research on es given under the assumptions of the for 2 main reasons. The first relates how specific regulations affect firm standardized case. to the frequency with which firms behavior and economic outcomes. engage in the transactions captured by Doing Business in South Africa the indicators, which is generally low. 2015 respondents For example, a firm goes through the Over 400 professionals participated start-up process once in its existence, HOW ARE THE DATA in the study providing the data that while an incorporation lawyer may COLLECTED? inform the 6 Doing Business indicators. carry out 10 such transactions each The Doing Business data are based on The subnational Doing Business web- month. The incorporation lawyers and domestic laws and regulations as well site and the acknowledgement section other experts providing information as administrative requirements. The of this report list the names and cre- to Doing Business are therefore better data are collected through several dentials of those respondents wishing able to assess the process of starting rounds of interaction with expert re- to be acknowledged. Respondents are a business than individual firms. They spondents (both private sector prac- professionals who routinely administer also have access to the latest regula- titioners and government and public or advise on the legal and regulatory tions and practices, while a firm may agencies operating at the central and/ requirements in the specific areas cov- have faced a different set of rules when or local level)—through face to face ered by Doing Business in South Africa incorporating years before. The second interviews, responses to question- 2015, selected on the basis of their reason is that Doing Business mostly naires, conference calls and written expertise in these areas. Because of gathers legal information, which firms correspondence. Doing Business relies the focus on legal and regulatory ar- are unlikely to be fully familiar with. on several main sources of information: rangements, most of the respondents the relevant laws and regulations, pri- are legal professionals such as lawyers Governments and World Bank vate sector respondents, government or notaries. Freight forwarders, archi- Group staff officials, magistrates and World Bank tects, engineers, electrical contrac- After the analysis of laws and regula- Group staff. For a detailed explanation tors, and other professionals answer tions and after conducting follow-up of the Doing Business methodology, see the surveys related to trading across interviews with Doing Business in the Data Notes. borders, construction permits, and South Africa 2015 respondents, the getting electricity. Local government Subnational Doing Business team shared Relevant laws and regulations officials, representatives of national the preliminary findings of the report Doing Business in South Africa 2015 agencies, and court officials also pro- with governments and public agencies indicators are based on laws and vided information that is incorporated operating both at the central and local regulations. Besides participating in into the indicators. level. Through this process govern- interviews or filling out written ques- ment authorities had the opportunity tionnaires, Doing Business in South The Doing Business in South Africa 2015 to comment on the preliminary data, Africa respondents provided references approach was to work with profes- both through meetings with World Bank to the relevant laws, regulations and sionals who regularly undertake the Group staff and in writing. Having public fee schedules, which were collected and transactions involved. Following the officials discuss and comment on the analyzed by the Doing Business in South standard methodological approach preliminary results has proven to be an Africa team. for time-and-motion studies, Doing important activity not only to improve Business breaks down each process the quality of the report, but also to For the rest of the data the team or transaction, such as starting a enhance the dialogue between the local conducts extensive consultations business or registering a property, governments and the World Bank Group with multiple contributors to minimize into separate steps to ensure a better at the subnational level. measurement error. For some indica- estimate of time. The time estimate for tors, the time component and part each step is given by practitioners with ABOUT DOING BUSINESS AND DOING BUSINESS IN SOUTH AFRICA 2015 17 Republic of Congo, the Republic of FIGURE 2.2—How governments use Doing Business as a policy tool Congo, Côte d’Ivoire, Guinea, Kenya, Liberia, Malawi, Mali, Nigeria, Rwanda, Sierra Leone, Togo and Zambia. And in Latin America: Chile, Colombia, Governments learn Costa Rica, the Dominican Republic, from one another Guatemala, Mexico, Panama and Peru. Governments use about good practices Doing Business as a in the areas measured by Doing Business. tool to stimulate One reason behind the use of Doing regulatory Business indicators by governments improvements as part of broader reform is that many of these indicators can programs. be considered “actionable,” measuring Reform committees use Doing Business aspects over which governments have indicators to help direct control. For example, govern- inform programs to improve the business ments can reduce (or even eliminate) environment. the minimum capital requirement for new firms. They can invest in company and property registries to increase the efficiency of these public agencies. They can improve the efficiency of tax administration by adopting the latest technologies to facilitate the prepara- tion, filing and payment of taxes by Successful business regulation reforms businesses. And they can undertake court reforms to shorten delays in the enforcement of contracts. On the other hand, some Doing Business indicators capture costs that involve private In addition, reform committees within sector participants, such as lawyers, HOW DO GOVERNMENTS governments frequently use the Doing notaries, architects, electricians or USE THE DATA? Business indicators as one input to freight forwarders—costs over which Over the past decade governments inform their programs for improving governments may have little influence have increasingly focused on reform- the business environment. More than in the short run. ing business regulation as one way 50 economies have formed such com- of maintaining competitiveness in an mittees—typically at the interministe- While many Doing Business indicators increasingly globalized economy. Doing rial level or reporting directly to the are actionable, this does not neces- Business provides one source of action- president or the prime minister—to sarily mean that they are always able, objective data that give useful ensure the coordination of efforts “action-worthy” in a particular context.9 insights into good practices worldwide. across agencies. In East and South Asia Business regulation reforms are one Indeed, since 2003 governments have they include Indonesia, the Republic of element of a strategy aimed at improv- implemented more than 600 regula- Korea, Malaysia, the Philippines and ing competitiveness and establishing tory reforms that have been informed Sri Lanka. In the Middle East and North a solid foundation for sustainable eco- by Doing Business.8 Africa: Algeria, Kuwait, Morocco, Saudi nomic growth. There are many other Arabia and the United Arab Emirates. important goals to pursue—such as ef- One venue for sharing success stories In Europe and Central Asia: Azerbaijan, fective management of public finances, in business regulation reform is peer- Croatia, the Czech Republic, Georgia, adequate attention to education and to-peer learning events—workshops Kazakhstan, Kosovo, the Kyrgyz training, adoption of the latest technol- where officials from different govern- Republic, the former Yugoslav Republic ogies to boost economic productivity ments across a region or even across of Macedonia, Moldova, Montenegro, and the quality of public services, and the globe meet to discuss the chal- Poland, the Russian Federation, appropriate regard for air and water lenges of regulatory reform and to Tajikistan, Ukraine, the United Kingdom quality to safeguard people’s health. share their experiences (figure 2.2). and Uzbekistan. In Sub-Saharan Africa: Governments have to decide what set Botswana, Burundi, the Central African of priorities best fits the needs they Republic, the Comoros, the Democratic 18 DOING BUSINESS IN SOUTH AFRICA 2015 face. To say that governments should Tawara. 2011. Can Disaggregated Indicators Identify Governance Reform Priorities? Policy work toward a sensible set of rules for Research Working Paper 5254, World Bank, private sector activity does not sug- Washington, DC). gest that doing so should come at the expense of other worthy economic and social goals. NOTES 1. The focus of the Doing Business indicators remains the regulatory regime faced by domestic firms engaging in economic activity in the largest business city of an economy. Doing Business was not initially designed to inform decisions by foreign investors, though investors may in practice find the data useful as a proxy for the quality of the national investment climate. Analysis done in the World Bank Group’s Global Indicators Group has shown that countries that have sensible rules for domestic economic activity also tend to have good rules for the activities of foreign subsidiaries engaged in the local economy. 2. For more on the World Bank Enterprise Surveys, see the website at http://www. enterprisesurveys.org. 3. These papers are available on the Doing Business website at http://www. doingbusiness.org/methodology. 4. Each city’s seat is used as a proxy for each indicator area benchmarked in the report (e.g. Durban is used as proxy for eThekwini). 5. A technical note on the different aggregation and weighting methods is available on the Doing Business website at http://www. doingbusiness.org/methodology. 6. Djankov, Simeon, Darshini Manraj, Caralee McLiesh and Rita Ramalho. (2005). Doing Business Indicators: Why Aggregate, and How to Do It. World Bank, Washington, DC. Principal components and unobserved components methods yield a ranking nearly identical to that from the simple average method because both these methods assign roughly equal weights to the topics, since the pairwise correlations among indicators do not differ much. An alternative to the simple average method is to give different weights to the topics, depending on which are considered of more or less importance in the context of a specific economy. 7. Schneider, Friedrich. 2005. The Informal Sector in 145 Countries. Department of Economics, University Linz, Linz; La Porta, Rafael and Andrei Shleifer. 2008. The Unofficial Economy and Economic Development. Tuck School of Business Working Papers 2009-57, Dartmouth College, Hanover. 8. These are reforms for which Doing Business is aware that information provided by the Doing Business report was used in shaping the reform agenda. 9. One study using Doing Business indicators illustrates the difficulties in using highly disaggregated indicators to identify reform priorities (Kraay, Aart, and Norikazu Doing Business in South Africa 2015 Starting a business Small and medium-size enterprises are (CIPC) launched a new version of the ƒ Starting a private company in the backbone of an economy. In South online registration platform. Now the South Africa is easier in Tshwane, Africa they represent approximately whole company registration process Johannesburg and Ekurhuleni, where it 91% of formal businesses and employ can be completed electronically. takes 6 procedures, 46 days and costs 61% of the country’s workforce.1 It is Additionally, during the second quarter 0.3% of income per capita. essential, therefore, to develop an ef- of 2014, the South Africa Revenue ƒ While the cost of starting a business ficient regulatory framework for these Service (SARS) implemented a “Single is low compared globally, the delay enterprises. Empirical evidence has Registration” process, substantially is almost 6 times longer than in the shown that facilitating formal business cutting registration times for differ- average OECD high-income economy. start-up can lead to higher company ent taxes. Although major steps have ƒ Registering the company and the entry rates and job creation. A study been taken to make the process more employees with the Compensation from 2011 associated the implementa- efficient, the time it takes to open a Fund is the lengthiest procedure and tion of a one-stop shop reform in Mexico business in South Africa is still slow it takes, on average, 70% of the total with a 5% increase in new businesses compared to the average OECD high- time to start a business. and a 2.2% increase in employment.2 income economy. ƒ Entrepreneurs from all different A simplification of the business licens- provinces must go through national ing process in Peru nearly quintupled agencies to complete the registration business registrations between the as well as the postregistration year preceding and the year following WHAT DOES STARTING A procedures. Municipalities become the reform, when 8,517 new companies BUSINESS MEASURE? involved only in specific cases when a were registered.3 Doing Business data measures the business license is required. number of procedures, time, cost and In South Africa important steps were paid-in minimum capital required for taken during 2014 to facilitate the small and medium-size limited liability start-up process for entrepreneurs. companies to formally operate (figure In September the Companies and 3.1). To make the data comparable Intellectual Property Commission across 189 economies, Doing Business FIGURE 3.1 What are the time, cost, paid-in minimum capital and number of procedures to get a local limited liability company up and running? Cost (% of income per capita) Formal operation Paid-in $ Number of minimum procedures capital Entrepreneur Time Preregistration Registration, Postregistration (days) incorporation 20 DOING BUSINESS IN SOUTH AFRICA 2015 FIGURE 3.2 Starting a business in South Africa is cheap but time-consuming Procedures Time Cost (number) (days) (% of income per capita) 0 0 0 New Zealand (global best) New Zealand (global best) Australia United Kingdom ALL 9 CITIES Chile, Malaysia Australia, Chile 1 Mexico, United Kingdom OECD New Zealand (global best) Rwanda BRIC 10 Malaysia OECD 10 2 Namibia 20 3 Australia, Malaysia Mexico 20 4 30 Kenya EAP OECD 5 30 EAP BRIC 40 6 Mexico, United Kingdom ALL 9 CITIES EKURHULENI JOHANNESBURG 40 7 TSHWANE Chile 50 Kenya EAP South Africa average 8 Rwanda 6 CITIES 50 60 Rwanda 9 Namibia BRIC 10 70 60 Kenya, Namibia Note: OECD is the OECD high-income economies average; EAP is the East Asia and the Pacific average; BRIC is the average of Brazil, Russian Federation, India and China. Source: Doing Business database. uses a case study featuring a stan- postregistration requirements—open- opens a bank account. The next interac- dardized business that is 100% domes- ing a bank account, registering the tions are with SARS—first the registra- tically owned, has a start-up capital company for various taxes and regis- tion for income and withholding taxes, equivalent to 10 times income per tering employees for occupational inju- and then for VAT. The last steps are with capita, engages in general industrial ries compensation and unemployment the Department of Labor—registering or commercial activities and employs insurance—are initiated or completed the business with the Compensation between 10 and 50 people within the locally, with the result that it is 10 days Fund and the Unemployment Insurance first month of operation. faster to start a business in Ekurhuleni, Fund (figure 3.3). Johannesburg and Tshwane than in the 6 other cities benchmarked in South Businesses engaged in general indus- Africa (table 3.1). While the start-up trial or commercial activities do not HOW DOES STARTING A cost is low compared globally, the delay need a separate municipal approval to BUSINESS WORK IN SOUTH is almost 6 times longer than in the operate. Only businesses that supply AFRICA? average OECD high-income economy meals or perishable foodstuffs, or pro- Starting a business in South Africa is (figure 3.2). vide certain types of health facilities or regulated by the Companies Act No.71 entertainment, are required to obtain a of 2008.4 Across South Africa 6 pro- The first step in starting a business municipal license.6 Although the licens- cedures that take on average 53 days is reserving a company name, while ing process is also regulated at the and cost 0.3% of income per capita are simultaneously registering the business national level, it is implemented by the required. The requirements and the with the CIPC.5 Once the company reg- respective municipalities (box 3.2). cost are identical in all cities. However, istration is completed, the entrepreneur STARTING A BUSINESS 21 TABLE 3.1 Starting a business across South African cities FIGURE 3.3 Starting a business in South Africa involves the same 6 Paid-in minimum procedures across the country Distance Cost capital Municipality to frontier Procedures Time (% of income (% of income Preregistration Municipal seat Rank (score) (number) (days) per capita) per capita) Reserve a company name and register Ekurhuleni 1 81.18 6 46 0.3 0 with the Companies and Intellectual Germiston Property Commission (CIPC) Johannesburg 1 81.18 6 46 0.3 0 Johannesburg Registration Tshwane 1 81.18 6 46 0.3 0 Pretoria Open a bank account Buffalo City 4 78.67 6 56 0.3 0 East London Register with the South Africa Revenue Cape Town Service for income and withholding taxes 4 78.67 6 56 0.3 0 Cape Town eThekwini 4 78.67 6 56 0.3 0 Register with the Compensation Fund Durban Mangaung 4 78.67 6 56 0.3 0 Register with the South Africa Bloemfontein Revenue Service (SARS) for VAT Msunduzi 4 78.67 6 56 0.3 0 Pietermaritzburg Register with the Unemployment Nelson Mandela Bay Insurance Fund (UIF) 4 78.67 6 56 0.3 0 Port Elizabeth Note: Rankings are based on the average distance to frontier (DTF) score of procedures, time, cost and paid-in Simultaneous with previous procedure minimum capital associated with starting a business. The DTF measure is normalized to range between 0 and 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the About Doing Business and Doing Business in South Africa 2015 section. Source: Doing Business database Source: Doing Business database. The first step—reserving a company equipped with modern touch screen the different databases into one. Thus, name and registering the business with technology and biometric fingerprint once an entrepreneur is registered for the CIPC—takes approximately 14 days identification. Furthermore, thanks to income tax, registering for withholding to complete. The applicant has to first a collaboration agreement between taxes or VAT becomes simpler as most register as a customer on the CIPC web- the First National Bank (FNB) and the of the details are already in the system. site and transfer ZAR175 (ZAR50 for CIPC, entrepreneurs may now choose name reservation and ZAR125 for regis- to register their company through the Once registered with the CIPC, the new tration). After a couple of days, the ap- bank7 at the same time they open a business is automatically registered plicant’s account will be credited, allow- bank account—thereby merging 2 as a taxpayer with SARS. However, ing him or her to complete the required requirements into 1 procedure (figure the entrepreneur still needs to visit the steps online. Finally, the applicant will 3.4).8 Uptake is still low, with 2% of closest SARS branch to complete the e-mail the signed registration forms and registrations completed using this registration process for income tax, certified ID copies of the directors via method.9 e-mail. Once registration is complete, FIGURE 3.4 Four different ways to the CIPC will send a confirmation e-mail During the second quarter of 2014, register with the CIPC to the applicant, and the applicant can SARS implemented an important (% of total number of applications for business registration) log in to the website and download the reform known as “Single Registration.” registration certificate (box 3.1). Previously, it could take up to 3 weeks Self-service terminals Bank (FNB) to register the company for each of the 2 Today, the CIPC platform receives ap- 3 types of taxes: income tax, withhold- Manually proximately 80% of the total number 8 10 (by mail) ing taxes (including pay-as-you-earn of registration applications. In addition (PAYE), UIF, and skills development levy to the online platform, a number of (SDL)), and VAT. In each case, the reg- Online platform physical registration points are avail- istration process was completely inde- 80 able to incorporate a company. Those pendent, and the taxpayer information include 3 service centers—located in was stored in different databases. As Cape Town, Johannesburg and Pretoria a result, the applicant had to provide Note: The figure breaks down the total number of appli- —where applicants can complete the the same details multiple times. The cations for the month of October, 2014 (approximately 25,000). process using self-service terminals “Single Registration” reform merged Source: Interviews with CIPC representatives in November 2014. 22 DOING BUSINESS IN SOUTH AFRICA 2015 BOX 3.1 Reforming business registration in South Africa—a decade in the making FIGURE 3.5 Registering with the Compensation Fund takes more than The former company registrar, known as Companies and Intellectual Property two-thirds of the total time to start a Registration Office (CIPRO), was established in 2002 and was located in business across South Africa Pretoria. The existence of a single point of registration, coupled with the com- (% of total time to start a business) plex registration process, made the hiring of an agent or intermediary essential. Even today, with numerous registration points in place and a simplified regis- tration process, nearly 70% of transactions are completed by intermediaries.a Registration with the Compensation Fund Hiring the services of lawyers or accountants increase registration costs— 70% Registration Registration from ZAR175 (US$20) to between ZAR600 (US$69) and ZAR1,500 (US$172), with SARS with the CIPC depending on the package of services purchased. for VAT 19 26 It was not until 2006/07 that the idea took hold that no one should have to travel “more than 100 kilometers” to reach a CIPRO office. Thanks to partner- ship agreements signed with economic development agenciesb in each of the 9 17 4 Other Registration provinces and the South Africa Post Office (SAPO), applicants could choose to with the either get support from the CIPRO partner in filing the application at no addi- Unemployment tional cost, or directly submit the completed paperwork and pay the registra- Insurance Fund tion fees at any of the post offices throughout the country. When the Companies and Intellectual Property Commission (CIPC)c became operational in 2011, it inherited a weak administrative system from CIPRO, Note: Registration for VAT, registration with the UIF, and registration with the CF are done simultaneously. including backlogs and an overwhelmed call center—2 major problems expe- Source: Doing Business database. rienced by entrepreneurs. Although an electronic platform had been in place since 2008, it was not possible to complete the whole registration process The last 2 requirements are registering online. Registration forms still had to be sent by postal service or personally new employees with unemployment delivered to Pretoria. Frequent postal strikes made mail services unreliable, af- fecting waiting times and sometimes making it necessary to send documents insurance and compensation for occu- more than once. pational injuries with the Department of Labor. The absence of an electronic Over the last 3 years, CIPC has been undergoing an important modernization system to submit, process or track process, transitioning from a paper-based registry to an electronic registry. In applications, as well as an inefficient March 2014, new online transacting services were introduced, including new customer service, make these two registration and name reservation systems, new director and member change systems, and a new enquiry logging system. A new version of the online por- steps the most cumbersome in the tal was launched in September 2014. For the first time, the portal allows that whole business registration process. supporting documents be uploaded or sent in parallel via e-mail. However, the sudden increase in electronically received documents—and the fact that CIPC Registering the company and the em- started to scan and index paper applications—temporarily overloaded the sys- ployees with the Compensation Fund tem and created backlogs in different areas. takes on average 70% of the total time a. Media Statement issued by CIPC on July 23, 2013. “CIPC Migrating to Global Standards to Reduce Costs for all to start a business (figure 3.5). The South Africans.” registration is centralized, although b. Provincial Departments of Economic Development in different provinces and the Small Enterprise Development Agency among others. entrepreneurs can submit the registra- c. The Companies Act, No.71 of 2008 provided for the migration of the Companies and Intellectual Property tion application to one of the 126 labor Registration Office (CIPRO) and the Office of Company and Intellectual Property Enforcement (OCIPE) into a new agency with additional administrative functions known as the Companies and Intellectual Property centers located across the country. Commission. After an application is submitted, it is forwarded by mail to the Provincial withholding taxes (PAYE, the UIF and activity and turnover. The entrepreneur Office of the Department of Labor and the SDL) and in a separate procedure must make an appointment for an from there to the only Compensation for VAT.10 Registration for income taxes interview with a SARS representative Fund office located in Pretoria, which and withholding taxes takes just 1 day at the closest SARS branch. After the is where the actual registration takes across the country. VAT registration is interview, the VAT registration itself place. Entrepreneurs from Ekurhuleni, more complex and in general can take takes 1 to 2 days, but the whole pro- Johannesburg or Tshwane can choose up to 3 weeks depending on the risk cess for a business catagorized with to submit the application directly to level assigned to the business and the a medium level of risk can take from the Compensation Fund due to their location of the SARS branch. The risk 1 week in Cape Town, Msunduzi and proximity to the office. In these 3 cities, is categorized into low, medium or high Tshwane to 2 weeks in eThekwini or the process takes 30 days as opposed depending on 2 major factors: business Nelson Mandela Bay.11 to 40 days elsewhere. STARTING A BUSINESS 23 BOX 3.2 The role of municipalities in opening a grocery store WHAT CAN BE IMPROVED? Depending on the business activity, an entrepreneur may need to obtain a Make the CIPC online platform business license issued by the municipality. This is the case for commercial fully operational businesses selling perishable foodstuffs, for example.a The licensing process is Glitches and bottlenecks in the system regulated nationally by Business Act 71 of 1991 but implemented at the local have plagued the online registration level. A number of municipal departments are involved in the process to en- process and led to backlogs. This is sure that the applicant complies with requirements related to town planning, partly due to the transition from a and the safety and health of the public. paper-based to an electronic system. In Msunduzi or Tshwane the applicant must first obtain an approval from All paper-based applications and sup- Town Planning before submitting the application to the licensing authority. porting documents have to be digitized In all other benchmarked municipalities, the business license applicant in- (scanned), which is time consuming teracts exclusively with the designated licensing authority. In Cape Town or for the CIPC staff. In addition, internal Mangaung, for example, entrepreneurs interact only with the Environmental procedures for document storage have Health Department (EHD) (see figure below). also created delays. The CIPC recently How does the licensing process for a grocery store work in Mangaung? enabled uploading of supporting docu- ments directly on the online platform Town 1. The entrepreneur applies to or sending them via e-mail. As a result, Planning the EHD and pays the fees. the CIPC staff had to download and index the documents from e-mail and Fire Prevention 2. The EHD distributes the application upload them into the database. Lastly, Environmental Department to all the departments involved. Health Department the platform has continually received (EHD) 3. The departments involved conduct new upgrades, which have created Traffic Department the necessary inspections and send glitches and bandwidth issues and their comments back to the EHD. caused further delays. 4. The EHD evaluates the inputs Building received, writes the final report and Control As a consequence, registration still notifies the entrepreneur. takes longer than what the CIPC as- The licensing authority of the municipality—usually the Department of pires—processing applications within Economic Development or the Environmental Health Department—acts as a 3 days. Also, the fact that some ap- one-stop shop.b Once an application is submitted, the licensing authority for- plicants still opt to use the manual wards it to the other departments involved in the approval process to conduct application process, despite the fact the necessary inspections and provide comments.c Finally, after the licensing that the postal service is not always authority receives and evaluates the feedback, the entrepreneur is notified. reliable, might indicate possible lack of Efficient sharing of information becomes especially important due to the dif- confidence in the online system. A simi- ferent departments involved. In most cities, the whole process is paper-based, lar problem plagued the Mexican online and the application travels physically from one department to another until it registration system tuempresa.gob.mx returns to the licensing authority. This makes it difficult to track applications in 2012. When a new version of the and increases the chance of misplacement. In Cape Town, on the other hand, online portal was launched, the system the licensing authority is connected electronically with the other depart- was down for over a month. A year ments involved. Here, the Environmental Health Department receives all the later, the percentage of new businesses comments from the Zone Planning, the Building Control, the Health Section registered through this channel was and the Fire Services electronically—making the process more efficient, reli- still below 3% and it has not recovered able and transparent. Better data integrity and security, as well as the ability since. On the other hand, economies to track applications and lower document management and archiving costs, like Chile and Rwanda have success- are some of the benefits of an electronic system. fully implemented similar platforms in Obtaining a business license for a grocery store takes from 3 weeks in the recent past. As a result, registra- Tshwane or Buffalo City to more than 40 days in Msunduzi or Ekurhuleni. tion times have been cut exponentially. Costs also vary widely and range from ZAR86 (US$10) in Nelson Mandela Bay to ZAR950 (US$109) in Buffalo City (see figure below). The CIPC online platform has certainly been improved and become more user- CONTINUED ON NEXT PAGE friendly over time. Moving forward, 24 DOING BUSINESS IN SOUTH AFRICA 2015 would not travel across the country, CONTINUED FROM PREVIOUS PAGE which in turn would minimize the risk of Time and cost to obtain a business license in South African cities—fastest in misplacement and reduce turnaround Buffalo City and Tshwane, cheapest in Nelson Mandela Bay times. The registration with the UIF is already decentralized and can be done 60 locally after submitting the application 950 1000 to the local labor offices. 800 40 45 45 The whole process is paper-based. 40 570 600 During the last 6 months, the 35 Compensation Fund, with nearly 100 425 30 30 30 20 427 400 staff working in Pretoria, received 200 377 21 21 approximately 19,000 applications.12 271 200 Following up multiple times with the 86 205 Time agency is generally necessary, and Cost (days) according to anecdotal evidence, cus- zi ni ni y e (ZAR) du hule on y ow n rg wi un g Cit an els a Ba bu ek ga tomer service is often unresponsive. sun ur N l p eT n es T h an ffa lo Ts hw M Ek e Ca n e nd ha M Bu Enabling an electronic platform to Ma Jo allow online registration could cut the Note: Data provided by public sector representatives. turnaround of the Compensation Fund Source: Doing Business database. procedure by 36 days on average. By law, the applicant should be notified within a 21-day period whether the application is approved, unless an extended period is mutually agreed upon; otherwise, it is understood that the application is automatically denied. This Over the medium term, develop time limit can be problematic in municipalities with limited resources as they a fully integrated online one- are unable to handle the process expeditiously. According to anecdotal evi- stop shop dence, in order to respect the 21-day time limit, some licensing authorities end Today, entrepreneurs must interact up approving applications and even issuing licenses before having received with 4 different government agencies comments and/or approvals from all the municipal departments involved. In when starting a business: the CIPC, Nelson Mandela Bay, for instance, the Environmental Health Section can ap- SARS, the UIF and the Compensation prove an application within 10 days, but receiving approval from the Town Fund. Integrating different services Planning can take up to 6 months. with a single ID number under one a. The businesses for which a license is required are listed in schedule 1 of Business Act 71 of 1991. single interface would not only save b. In Msunduzi and Tshwane, Town Planning does not participate in the one-stop shop. time and resources, but it would also c. The names of the departments involved differ slightly from municipality to municipality, but their purpose is the same. They inspect the safety of the building, the safety or health of the goods sold and compliance with make procedural requirements more zoning regulations. transparent. In fact, as most agencies require much of the same data, design- ing a single electronic form to provide to achieve higher efficiency, the Make registration with the the required information only once bandwidth issues have to be resolved. Compensation Fund more would be helpful. Having a well-functioning platform free efficient of glitches would certainly reduce the Although applications to the The CIPC and SARS are already linked time applicants spend on it. During this Compensation Fund can be submitted electronically. However, entrepreneurs transitional period, efficient customer at any of the 126 local labor centers still interact with SARS to complete care to provide guidance to applicants across the country, all applications the registration for different taxes. is also critical. This could ensure that must then be forwarded to the On the other hand, the Compensation the enquiry system works well, lead- Compensation Fund office in Pretoria. Fund and the UIF have no direct access ing to better quality of the submitted There, the rate will depend on the risk to the CIPC database. To develop an documents and ultimately to lower assigned to the company according to online one-stop shop, appropriate data turnaround times. its activity. Simplifying the complex exchange among the agencies involved risk classification system could make should be secured. The entrepreneur it easier to delegate the Compensation would navigate only through one in- Fund registration to the local labor cen- terface without having to provide the ters or provincial offices. Applications same information multiple times, and STARTING A BUSINESS 25 once the information is submitted, it from a Regulatory Reform in Peru.” In International Differences in Entrepreneurship, would be shared with all the relevant eds. Lerner Josh and Antoinette Schoar, agencies electronically. In Mauritius, for 159-79. University of Chicago Press. instance, once an entrepreneur submits According to the study, the reform reduced the median municipal licensing time from a registration application, the informa- 40 to 16 days and lowered the cost from tion is stored in a central database to US$212 to US$124. which all the relevant agencies have 4. The law came into force on May 1, 2011. 5. Under the Act of 2008, name reservation access, allowing them to retrieve the is no longer mandatory before registering needed information. The Social Security a company. If a proposed name is rejected, Ministry, for example, downloads infor- the company may still be registered. In this case, the registration number becomes the mation from the central server on a company name. daily basis. Once the information is in 6. Business Act 71 of 1991. the server, 50 local Social Security of- 7. Registration costs are the same regardless of the method used to register. The bank fices can produce reports showing busi- does not charge additional fees. ness located in a specific area. On the 8. Effective since August 2013. New other hand, evidence shows that stor- collaboration agreements are in the process of being signed with ABSA, Standard Bank ing the same kind of data in multiple and NED Bank but are not yet operational. databases, as in Egypt, has resulted in 9. In October 2014, 500 out of 25,000 inconsistencies and in additional costs. registration applications were received through the FNB. Source: Interviews with the Norway successfully moved from a CIPC representatives in November 2014. business registration process adminis- 10. VAT registration is voluntary for companies tered by 97 courts to an electronic one- with a turnover above ZAR50,000 (US$5,744) and mandatory for companies stop shop, cutting the number of days with a turnover exceeding ZAR1 million to register a business exponentially.13 (US$114,875). The turnover of the Creating a collaborative environment company measured by Doing Business is ZAR6,259,000 (US$719,000). across agencies involved was key to 11. This is a time estimate for a company of the success of the reform. The Tax the characteristics of the Doing Business Authorities, the Labor Services, the case study (categorized with a medium level of risk). See Data notes section for more Register of Business Enterprises and details. Statistics Norway signed a legal agree- 12. The information was obtained over ment obligating them not only to use a interviews with the Compensation Fund representatives in November 2014. single identification number but also to 13. From up to 1 year before the centralization share basic company information.14 took place to 7 days for paper filled applications and 1 day for electronically filled applications in 2010. Recent examples show how online 14. World Bank Group. 2011. Business business registration platforms make Registration Reform Case Study: Norway. the process faster, cheaper and more Washington, DC: Investment Climate Department, World Bank Group. transparent. Denmark and New Zealand also provide modern single electronic interfaces for entrepreneurs. NOTES 1. Abor, Joshua, and Peter Quartey. May 2010. “Issues in SME Development in Ghana and South Africa.” International Research Journal of Finance and Economics, Issue 39, pp. 218- 228. 2. Bruhn, Miriam. 2011. “License to Sell: The Effect of Business Registration Reform on Entrepreneurial Activity in Mexico.” Review of Economic and Statistics 93 (1): 382-86. 3. Mullainathan, Sendhil and Philipp Schnabl. 2010. “Does Less Market Entry Regulation Generate More Entrepreneurs? Evidence Doing Business in South Africa 2015 Dealing with construction permits The South African population grew The construction industry constitutes ƒ Dealing with construction permits by almost 30% from 40.58 million in 3.5% of South Africa’s GDP7 and em- is easier in Cape Town and Nelson 19961 to 52.52 million in 2014.2 The ploys 5% of the workforce.8 Making it Mandela Bay and more difficult in population growth occurred mainly easy to deal with construction permit- Johannesburg and Mangaung. in urban areas. In 2013, the share of ting procedures allows the construction ƒ Obtaining all permits to build a South Africans living in cities reached industry to expand—more construc- warehouse and connect it to water 53%—and continues growing at the tion workers are employed and more and sewerage is faster and cheaper rate of 0.5% every year.3 materials and services are purchased in South Africa than in the average from local suppliers.9 Research shows OECD high-income economy. However, Population growth and rapid urbaniza- that in Australia, every million dollars it involves an unusually high number tion bring both opportunities and chal- spent on construction generates 2.9 of procedures—17 on average—3 more lenges: planning authorities need to million dollars in output across the than the global average across 189 ensure that urban areas are expanding economy as a whole, giving rise to 9 economies. in accordance with construction and jobs directly related to a construction ƒ The number of steps required safety regulations while not unduly project, as well as 37 additional jobs in range from 15 procedures in Nelson complicating construction permitting the local economy.10 Mandela Bay to 22 in Mangaung. The procedures. Twenty-two percent of differences arise from the number of South African households already live preconstruction clearances required in informal dwellings.4 On the other and from the inspections carried out hand, the construction sector suffers WHAT DOES DEALING WITH during the construction phase. an average of 300 fatalities per year.5 CONSTRUCTION PERMITS ƒ Complying with all requirements takes MEASURE? 83 days in Cape Town, less than half Sound regulation of construction To measure the ease of dealing with the time required in Tshwane. Time helps protect the public from faulty construction permits, Doing Business variations across cities are driven building practices. Besides enhancing records the procedures, time and cost mainly by the delay in the issuance public safety, well-functioning build- required for a small or medium-size of the building plans approval: the ing permitting and inspection sys- business to obtain the approvals process takes only 2 weeks in Nelson tems also strengthen property rights needed to build a simple commercial Mandela Bay, while it can drag out and contribute to the process of warehouse and connect it to water and to about 2 months in Johannesburg, capital formation. But if procedures sewerage (figure 4.1). That includes all Mangaung, Msunduzi and Tshwane. are too complicated or costly, build- the inspections and certificates needed ƒ The cost of dealing with construction ers may decide to proceed without a before, during and after construction permits varies from 0.68% of the permit.6 Denmark, Germany and New of the warehouse. To make the data warehouse value in Mangaung to more Zealand are examples of economies comparable across 189 economies, than twice as much in Nelson Mandela that regulate the construction per- it is assumed that the warehouse is Bay. The main driver of variations in mitting process with relatively few in the periurban area of the largest cost is the building permit fee, which requirements, yet regulations in these business city, that it is not in a special is established by municipal authorities economies are considered prudent economic or industrial zone and that it and constitutes on average two-thirds and the buildings safe. will be used for general storage of non- of the total cost. hazardous materials such as books. 28 DOING BUSINESS IN SOUTH AFRICA 2015 FIGURE 4.1 What are the time, cost and number of procedures required to comply FIGURE 4.2 Eight main stages of the with formalities to build a warehouse? construction permitting process in Cost South Africa (% of warehouse value) Before construction Completed Obtaining preconstruction warehouse clearances Number of procedures Obtaining building plan approval A business in the construction Notifying the Building Control and the industry Time Department of Labour about P Preconstruction Construction Postconstruction (days) and utilities commencement of construction work During construction dealing with construction permits in HOW DOES CONSTRUCTION South Africa involves an unusually high Receiving inspections to confirm PERMITTING WORK IN compliance of the construction number of steps—17 in total—most of with the approved plans SOUTH AFRICA? which are technical in nature and short The National Building Regulations in duration, such as on-site inspections. and Building Standards Act (No. 103 The global average number of require- After construction of 1977) sets the regulatory and legal ments across 189 economies is 13.9, Obtaining water and sewage connections framework for the construction indus- while the OECD high-income economy try, defining requirements and setting average is 11.9. In Hong Kong SAR time limits.11 The Act does not regulate (China), the best performing economy Notifying the Building Control about costs—these are established at the lo- according to Doing Business 2015, deal- completion of construction works cal level by municipal bylaws. ing with construction permits requires (submitting certificates of compliances) 5 procedures (figure 4.3). This is due to Typically, the process includes the the existence of a one-stop shop for Receiving final inspections to following stages: (1) obtaining pre- building licenses, as well as the use of confirm compliance of the construction construction clearances; (2) obtaining combined inspections by the relevant with the approved plans the building plan approval from the authorities, ensuring that safety stan- municipality; (3) informing the munici- dards are high despite the low number pal Building Control and the provincial of procedures. Obtaining an occupancy certificate Department of Labor of the start of construction work; (4) passing inspec- It is easier to get a building permit to tions during construction; (5) connect- build a warehouse and connect it to Source: Doing Business database. ing the building to water and sewerage; water and sewerage in Cape Town and (6) submitting a notification of comple- Nelson Mandela Bay and more difficult tion to the municipal Building Control; in Johannesburg and Mangaung (table from 15 in Nelson Mandela Bay to 22 in (7) passing 2 final inspections—one by 4.1). In Cape Town dealing with con- Mangaung. the Building Control and one by the Fire struction permits can be accomplished Department; and (8) obtaining the oc- in 16 steps that last 83 days and Depending on the city, 4 to 8 require- cupancy certificate (figure 4.2). cost 1.06% of the warehouse value. In ments need to be fulfilled before Mangaung the same process requires construction commences. The variance Across South Africa, dealing with 22 procedures, 109 days, and costs depends on how the municipality man- construction permits takes 110.8 days 0.68% of the warehouse value. ages the preconstruction clearances is- at a cost equivalent to 1.03% of the sued by several municipal authorities— warehouse value. This is faster and The implementation of the 8 stages including utility providers, the public less expensive than the average OECD differs depending on the city, resulting roads administration, and the fire and high-income economy (149.5 days and in an unequal number of steps, ranging the health departments. In Buffalo 1.7% of the warehouse value). However, City, Cape Town, Ekurhuleni, eThekwini, DEALING WITH CONSTRUCTION PERMITS 29 FIGURE 4.3 Dealing with construction permits across South African cities involves an unusually high number of requirements compared globally Procedures Time Cost (number) (days) (% warehouse value) 0 0 0 MANGAUNG Hong Kong SAR, China (global best) MSUNDUZI Australia, Namibia EKURHULENI South Africa Chile Kingdom average United Malaysia 5 CITIES 50 OECD 2 NELSON MANDELA BAY Hong Kong EAP 5 SAR, China (global best) Hong Kong SAR, China (global best) Malaysia CAPE TOWN Rwanda BUFFALO CITY Mexico NELSON MANDELA BAY Kenya 100 EKURHULENI 4 United Kingdom ETHEKWINI, MANGAUNG Rwanda United Kingdom South Africa 10 Australia MSUNDUZI Australia, Namibia, Rwanda average Namibia Mexico Kenya OECD EAP Chile 150 JOHANNESBURG 6 Malaysia OECD Chile TSHWANE EAP 15 NELSON MANDELA BAY 5 CITIES 200 8 South Africa average MSUNDUZI JOHANNESBURG Kenya 20 BRIC 250 10 BRIC Mexico MANGAUNG BRIC 25 300 12 Note: OECD is the OECD high-income economies average; EAP is the East Asia and the Pacific average; BRIC is the average of Brazil, Russian Federation, India and China. Source: Doing Business database. Nelson Mandela Bay, Msunduzi and During the construction, 5 to 9 ad- engineer be responsible for inspecting Tshwane, the application for precon- ministrative requirements must be the building. struction clearances is circulated met depending on the city—including internally within the municipality, and notification of the completion of the During construction, the variance in all clearances are granted simultane- work and the delivery of a certificate requirements across cities is driven ously.12 In Mangaung and Johannesburg of compliance with plumbing—and by the number of site inspections. on the other hand, the applicant must most importantly, several municipal The National Building Regulations Act personally visit the different cor- inspections (figure 4.4). The number mandates 2 municipal inspections— responding departments to obtain of administrative requirements is inspection of the foundation level and each clearance—adding 3 to 4 steps unusually high compared globally. In inspection of the water drainage sys- to the preconstruction phase.13 Once Colombia, France, Kenya, Malaysia, tem—while the Occupational Health the building plan approval is granted, Turkey or United Kingdom, for example, and Safety Act (OHASA) related to the applicant submits the 2 manda- no procedure is required during the Constructions Regulations mandates 1 tory notifications of commencement construction phase for this kind of proj- inspection by the Department of Labor of work to the Building Control and to ect. These economies ensure the safety to ensure compliance with site safety the Department of Labor, allowing the of the construction by requiring either conditions. Also, the Act stipulates that construction work to start. that a private firm or a supervising municipal building controls can inspect the site at any other stage of the 30 DOING BUSINESS IN SOUTH AFRICA 2015 construction works.14 In practice, with TABLE 4.1 Where is dealing with construction permits easy—and where not? the exception of Nelson Mandela Bay Distance and Johannesburg, municipal building to the Municipality frontier Procedures Time Cost controls performs 1 to 2 additional Municipal seat Rank (score) (number) (days) (% of warehouse value) inspections at defined construction Cape Town 1 78.08 16 83 1.06 stages, such as first floor slab, wall Cape Town plates or damp proofing. Developers Nelson Mandela Bay 2 78.05 15 88 1.60 Port Elizabeth must inform the building control when Buffalo City 3 77.50 16 88 1 .1 3 a specific phase is completed, and an East London inspector visits the site. In Mangaung, Ekurhuleni 4 76.84 16 98 0.95 inspections are carried out randomly Germiston once a month.15 Under certain circum- eThekwini 5 76.15 16 104 1.01 Durban stances, in all municipalities the build- Msunduzi 6 74.07 17 117 0 .7 1 ing inspector may perform additional Pietermaritzburg random inspections, which typically oc- Tshwane 7 69.88 16 169 1.03 curs in complex construction projects. Pretoria Johannesburg 8 68.52 19 141 1.06 Johannesburg After construction, the applicant Mangaung 9 68.22 22 109 0.68 submits a notification of completion Bloemfontein of the work and the certificates of Note: Rankings are based on the average distance to frontier (DTF score of procedures, time and cost associated with compliance with electrical, structural, dealing with construction permits. The DTF measure is normalized to range between 0 and 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the About Doing Business and glazing, roof and plumbing work to the Doing Business in South Africa 2015 section. municipality. The certificates of com- Source: Doing Business database. pliance are proof that the installations are safe and that the products and FIGURE 4.4 Inspections during construction mark the differences in the number of procedures across cities and between South Africa and the world materials used comply with the South African National Standards.16 Water Germany 8 and sewerage connections involve 3 Georgia 8 Municipal inspection additional procedures. The occupancy during construction certificate is issued after the final United Kingdom 9 inspections by the Fire Department Australia 10 and the Building Control. Chile 13 It takes just 83 days to obtain con- Nelson Mandela Bay 15 struction permits in Cape Town and 88 days in Buffalo City and Nelson Tshwane 16 Mandela Bay—4 and 3 weeks faster eThekwini 16 than the South African average. In Johannesburg and Tshwane it takes Ekurhuleni 16 between 4 and a half to 5 and a half Cape Town 16 months. The two main drivers of vari- Buffalo City 16 ance in time across locations are the preconstruction clearances and the South Africa average 17 building plan approval (figure 4.5). Msunduzi 17 In Cape Town, Buffalo City and Johannesburg 19 Ekurhuleni, obtaining the preconstruc- tion clearances and building permit Mangaung 22 approval requires 52, 55 and 57 days respectively, about half the time Before During After Connection construction construction construction to utilities needed in Johannesburg (119 days) and Procedures Tshwane (120 days). Source: Doing Business database. DEALING WITH CONSTRUCTION PERMITS 31 FIGURE 4.5 Preconstruction clearances and building plan approvals are the main drivers of variance in time across locations Time to obtain all necessary preconstruction clearances to apply Time to obtain a building Total time to deal with for a building plan approval (days) plan approval (days) construction permits (days) Mangaung 5 Nelson 14 Cape Town Mandela Bay 83 Cape Town 7 Ekurhuleni 30 Buffalo City 88 Msunduzi 16 Buffalo City 33 Nelson Mandela Bay 88 Buffalo City 22 eThekwini 36 Ekurhuleni 98 Ekurhuleni 27 Cape Town 45 eThekwini 104 eThekwini 30 Johannesburg 60 Mangaung 109 Nelson 60 Mandela Bay 40 Mangaung Msunduzi 117 Johannesburg 59 Msunduzi 60 Johannesburg 141 Tshwane 60 Tshwane 60 Tshwane 169 South Africa South Africa South Africa average average average Source: Doing Business database. In Nelson Mandela Bay, obtaining a further review. If the project is referred file is reviewed and “recommended for building plan approval from the mu- for minor issues, the applicant has the approval” by a plan examiner whose nicipality for a commercial warehouse possibility to resubmit the application primary role is to ensure technical requires 14 days. For the same type as soon as the issues are addressed. In compliance with the building regula- of construction, in Johannesburg, other cities, the review process is quite tions. The team leader gives the final Mangaung, Msunduzi and Tshwane it different. For instance, in eThekwini the approval on behalf of the local author- takes 60 days, the maximum allowed approval of building plans takes 36 ity. A decision notice is e-mailed to the under the National Building Regulations days once the application costs have applicant, who has 90 days to collect and Building Standards Act.17 The time been paid. The application file is as- the approval letter or make changes in difference partly depends on how mu- signed a reference number and a main case of referral. nicipal Building Controls circulate the administrative point of contact. The files internally. file is then forwarded to a team leader To issue an occupancy certificate the responsible for circulating it to other Building Control checks whether the In some municipalities, standing com- departments to provide comments. new construction is built according to missions meet regularly to approve Once the comments are received, the the approved plans. The time to obtain applications and immediately inform the applicant of their decision; in other locations, more time is needed FIGURE 4.6 It is less than half as expensive to deal with construction permits in to circulate the files. In Nelson Mandela Mangaung and Msunduzi than in Nelson Mandela Bay 1.60 Bay, for example, the Building Control % of warehouse value convenes and chairs application review South Africa average 1.03 meetings on a weekly basis. All appli- cations received by the middle of each 1.01 1.03 1.06 1.06 1.13 0.95 week are reviewed the following week. The meetings are attended by repre- 0.68 0.71 sentatives from the various municipal departments that must comment on the plans.18 Once the application review meetings are concluded, the Building g zi ni ni e y y un du ule kw i an urg To wn Cit Ba Control meets with the applicant to nga un rh he hw esb e alo ela Ma Ms Ek u eT Ts a nn ap uff an d h C B provide feedback on the project and Jo nM lso inform the applicant whether the ap- Ne plication is approved or referred for Source: Doing Business database. 32 DOING BUSINESS IN SOUTH AFRICA 2015 for low-risk projects, such as com- FIGURE 4.7 On average, over 60% of the total cost to deal with construction permits is mercial warehouses for the storage needed to obtain the building plan approval (% of the total cost) of non-hazardous goods. Authorities should develop a risk classification for buildings and adopt risk-based rules for each building category. Complex and risky structures should be subject Other 80 76 to stricter standards than simpler con- 73 struction projects. Simplifying and/or 62 62 removing clearances for low-risk build- 58 58 ings would allow the clearing agencies 55 51 to prioritize resources and focus them 44 on higher risk projects, such as high ris- es or factories. Colombia, New Zealand Building plan approval fee and United Kingdom are among the economies that have introduced risk-based approvals, eliminating the need for preconstruction approvals by ng e zi rg ni e ni y y n multiple agencies. In 2006 the Republic au wan du bu ule rag kwi Cit Ba ow ang Ts h sun n e s u rh ave h e a lo dela p eT of Korea introduced a fast-track pro- M n k ca eT ff n Ca M ha E fri Bu Ma Jo cedure for small construction projects. t hA ls on u Ne So Between 2004 and 2009 applications Source: Doing Business database. for building permits in Seoul jumped from 1,521 to 3,895. this certificate varies from 1 day in instance authorities in Tshwane charge The National Building Regulations Act Johannesburg to more than 3 weeks in ZAR12.6 (US$1.45) per square meter. In leaves building inspectors a high degree Mangaung, although theoretically the Nelson Mandela Bay the fee is derived of discretion. South Africa could look to law imposes a ceiling of 14 days.19 by multiplying the total surface area economies that adopted risk-based in- by ZAR3,233 (US$371) and multiplying spection systems. Risk-based inspec- The cost of dealing with construction the result by 0.9%. tions allow planning authorities to con- permits varies from 0.68% of the ware- centrate manpower on riskier projects, house value in Mangaung to 0.71% in Another source of variation across such as high rises or complex struc- Msunduzi, to more than twice as much cities is the cost associated with con- tures, without compromising safety.20 in Nelson Mandela Bay (figure 4.6). In necting to water and sewerage sys- The effectiveness of risk-based regula- Nelson Mandela Bay the process is more tems. The cost ranges from ZAR6,734 tion depends on several factors, includ- expensive but the least complex, with 15 (US$774) in Cape Town to ZAR13,386 ing a comprehensive classification of requirements. Conversely, in Mangaung (US$1,538) in Johannesburg. On aver- risks for building categories, typically the same process is less expensive but age, obtaining water and sewage con- defined by size, construction method more complex, with 22 requirements. nections constitutes one-third of the and final use. The classification and total cost. assessment of buildings are important The building plan approval comprises steps when determining the frequency on average two-thirds of the total of inspections. Because not all build- cost and is the main driver for cost ings are similar in terms of risk levels, variance (figure 4.7). Each local au- WHAT CAN BE IMPROVED? the ability to understand the risks as- thority establishes its own rates and Adopt a risk-based approach sociated with different types of build- methods for calculating the building to preconstruction clearances ings is essential. A good case in point plan approval fee. Obtaining a build- and inspections is the European Standard EN 1990. ing plan approval in Mangaung costs Across South Africa it is common in This standard sets 3 “consequence ZAR9,364 (US$1,076), four times less law or practice that preconstruction classes,” as determined by the risks to than in Nelson Mandela Bay, where clearances—from utility providers, users, as well as social and economic the cost is ZAR37,844 (US$4,347). the public roads administration, the consequences. Each consequence class Elsewhere, the building plan approval fire and health departments and fees depend on the building size—for sometimes others—are required even DEALING WITH CONSTRUCTION PERMITS 33 includes recommended interactions process. In Mangaung, even though en- shop during certain hours or days of the with building authorities. trepreneurs are required to separately week can be a viable alternative. visit 4 municipal departments, getting A further example comes from New the preconstruction clearances takes Reorganize the approval of Zealand, where the system relies on a just 5 days. Nevertheless, in larger building plans or use electronic project-specific risk assessment car- municipalities this model does not work platforms ried out by the building designer. A risk as efficiently. In Johannesburg, for ex- Across South Africa, the approval of profile is matched by project-specific ample, where personal visits to the vari- building plans is the most cumbersome risk management strategies. National ous departments are also necessary, procedure in terms of both time and standards provide broad guidance on getting preconstruction clearances cost. Processes vary among cities. In risk thresholds and categories. The takes almost 2 months. Nelson Mandela Bay—where standing designer develops a risk profile and commissions meet regularly to approve risk-management strategy for each In Cape Town, where a one-stop shop applications—obtaining the building individual project, and, subsequently, exists for preconstruction clearances, it plan approval is faster than in munici- the local building authority examines takes 7 days to obtain the clearances, palities where the file is circulated from it for quality. Building authorities which is much faster than the South one department to another. Other cities in New Zealand therefore carry out African average. This is a good practice should consider following the example minimal traditional inspections. They that municipalities dealing with large of Nelson Mandela Bay. do conduct some checks and audits, volumes of applications could follow. but usually these are selective, ex post, Technology can also help in cutting de- and focus on the technical verifications The process of getting building plan lays. Currently, building plan approval and the methodology applied by the approvals works similarly in all cities applications are processed manually builder. To be effective and not present and takes on average one month and a in most South African cities. As part a threat to safety, these types of mea- half, in addition to the time needed for of a broader digitalization initiative, sures must be carefully implemented. preconstruction clearances. Normally, the City of Cape Town started imple- The liability and the competence of the building control authority circu- menting a Development Application the building designer must be strictly lates internally the building plans and Management System (DAMS), which identified by law. Strong professional obtains approvals from the relevant entails two distinctive phases. The certifications and solid insurance sys- municipal departments. first phase started in April 2014 and tems are prerequisites for successful has been rolled out across the 8 dis- and safe ex-post verification initiatives. One-stop shops improve the organiza- trict offices of the city’s Planning and tion of the review process, not neces- Building Development Management Establish one-stop shop for sarily by reducing the number of checks Department. Applications are digitally preconstruction clearances needed, but by better coordinating circulated simultaneously to all rel- and building approvals across agencies and by establishing evant departments—such as Water With the exception of Johannesburg a single point of entry with the ap- and Sanitation, Electricity Services, and Mangaung, in all other South plicant. To be effective, one-stop shops City Health, Transport for Cape Town, African cities, one municipal depart- must have access under one roof to Fire and Rescue and Environmental ment—typically the building control technical know-how and informational Resource Management—for their input. authority—circulates internally the ap- tools, such as master urban plans, Now public officials can collaborate plication files and gathers preconstruc- zoning maps and ministerial guidelines. in formulating their final responses tion clearances from the other relevant Furthermore, one-stop shops must by viewing each other’s comments. departments. This reduces personal have one representative who interacts The second phase—expected to be interactions between the applicant with applicants to collect the necessary implemented by April 2015—will enable and the municipalities. However, it still documents. The documents should homeowners, property developers and takes on average 1 month to obtain the then be circulated internally to repre- professionals to submit building plans preconstruction clearances. The pro- sentatives of the relevant departments. and land use applications electroni- cess in some municipalities is so long If it is difficult to have a permanent rep- cally. The electronic system will have that according to anecdotal evidence, resentative from each department in 2 modules, one for approval and one applicants prefer to personally visit the the one-stop shop, a part-time system for inspections. Following Cape Town’s respective departments in the hope where representatives from the dif- example, computerization should be that a personal visit will speed up the ferent agencies come to the one-stop 34 DOING BUSINESS IN SOUTH AFRICA 2015 accelerated and implemented across FIGURE 4.8 Involving private sector professionals in the regulatory control chain other cities and regions in South Africa. Other good practices can be found 4. 1. 2. 3. Code outside the country. In Singapore, for Review of Plans ´ Issuance of Permits ´ Site Inspections ´ Compliance Certificate bigger industrial projects, qualified professionals can submit structural Austria Certified Private Municipality Certified Private (Notification) Engineer Engineer plans through an online platform that allows authorities to check efficiently Colombia Certified Private Certified Private Municipality Municipality Engineer Engineer if structural plans are correct and pre- New Zealand Accredited Agency Accredited Agency Accredited Agency Accredited Agency pared with high safety standards.21 In (Public or Private (Public or Private (Public or Private (Public or Private Sub-Saharan Africa, the City Council of Entity) Entity) Entity) Entity) Nairobi recently started to implement Source: World Bank, 2013. Investment Climate Department. Good Practices for Construction Regulation and Enforcement its Electronic Construction Permit Reform Guidelines for Reformers. Washington, DC: World Bank Group. system to allow property developers, architects and the city council staff to take on average 11 days. The inspec- structural integrity and fire safety, conduct their business online. tions are prerequisites for the issuance South African authorities could also of the occupancy certificate and ensure consider providing qualified engineers Automating the construction permit- that the building conforms to appli- with the authority to self-certify that ting process from scratch can be cable regulations. the building can be occupied. Austria, a daunting task. Such overhaul is Mauritius, Morocco and Norway, for typically linked to larger regulatory Separate inspections not only cause example, have such systems in place. reforms and e-government programs. delays but also create the risk of The occupancy certificate would be Core staff have to be trained to oper- different agencies interpreting rules effective immediately after its filing. ate and maintain electronic systems. inconsistently. Setting up a combined Once all the required documents are Last but not least, the right techno- final inspection in one visit would save properly filed, municipalities grant the logical infrastructure and high levels time and hassle for developers. A step occupancy certificates immediately. of internet penetration are important further would be adopting a system Random, ex-post inspections are per- prerequisites. where construction becomes immedi- formed to ensure that the construction ately operative once the final inspection is in compliance. The ex-post controls A step further would be the implemen- shows that the project does not present guarantee the same level of safety and tation of a Geographic Information irregularities and complies with the ap- the process is faster. System (GIS).22 In order to be fully proved building plans. This method has functional, the GIS should be linked been implemented in some economies. Introduce joint responsibility to a detailed master plan of the city. In Canada, for example, if all required of the permitting process with This would allow applicants to overlay inspections have been carried out and private building professionals the project plans with the zoning, the building is deemed substantially With building codes becoming more planning and utility requirements cap- complete and fit for occupancy, the complex and with sustained increases in tured in the GIS system. For low-risk certificate of occupancy is issued on construction across the world, the trend constructions, this system can also the spot, avoiding additional interac- of sharing the workload for regulatory allow automatic preapprovals of the tions for the builder. Singapore has an control functions, and hence leveraging parts of the projects that regard utility integrated online system through which expertise, has led to a growing involve- connections and compliance with the builders can request the final inspection ment of the private sector. In many planning requirements. and the occupancy certificate without economies a more systematic use of pri- delay. In Portugal the Municipality of vate building professionals for permits Combine the two final Lisbon adopted a tracking system and inspections has helped to remove inspections and issue the that is automatically updated once the bottlenecks associated with resource- occupancy certificate on the final inspection has taken place. The constrained public building authorities. spot certificate of occupancy is available The two postconstruction inspections immediately after the final inspection. Good-practice economies have all intro- by the municipal Fire Department and duced some private sector solutions at the municipal Building Control and the For construction projects involv- the different stages of the process, with issuance of the occupancy certificate ing low or limited risks in terms of the goal of increasing efficiency and DEALING WITH CONSTRUCTION PERMITS 35 providing consistent, high-quality ser- that provide such information online FIGURE 4.9 Easier access to application vices and delivery. Reforms in Austria, or via brochures, applications are requirements for building permits Colombia and New Zealand have led is associated with faster approval processed more quickly and building to increased cooperation with private processes plan approvals granted in less time sector engineers at different stages of Average time to deal with (figure 4.9). Policies promoting access the permitting and inspection process construction permits (days) to information cannot on their own (figure 4.8). Austria and Germany use increase the accountability of officials qualified professionals to review plans 199 and actively counteract corrupt prac- and to inspect sites. Austria, Australia, tices. But easier access to information 177 Canada, Germany, Japan, New Zealand, needed to comply with regulatory Singapore and United Kingdom make requirements is associated with lower private inspectors responsible for transactions costs, lower levels of per- ensuring buildings’ safety and thus ceived corruption, and stronger voice responsible for conducting the required and accountability mechanisms. inspections based on the type of build- ing. Norway has gone one step further, Exhaustive guidelines should cover creating a system of self-confirmation information about key steps, the agen- pursuant to which the project’s designer cies involved, the documents required is responsible for confirming compliance for each approval, the names of certifi- with building codes. Liability is closely cates, permits and approvals required, linked to the qualifications of the build- Economies where Economies where as well as corresponding timeframes ing practitioners, verified through a cen- application application and fees. tralized registration system of qualified requirements requirements are easily accessible are not easily accessible building firms. In fact, moving toward Note: Relationship is significant at the 5% level practitioner-focused enforcement of after controlling for income per capita. Application NOTES building controls requires developing ro- requirements for building permits are considered easily accessible if they can be obtained through the website 1. 1996 South African Census. bust professional qualification systems of the building authority or another agency or through public notices, without a need for an appointment with 2. World Bank Data. Accessed January 2015. and professional supervision. http://data.worldbank.org/. an official. The data sample includes 159 economies. Source: Doing Business database. 3. World Bank Data. Accessed January 2015. Make the permitting process http://data.worldbank.org/. 4. 2011 South African Census. more transparent 5. Federated Employer’s Mutual Assurance In many South African cities, building Company Data. Accessed January 2015. plan approval applications are rejected to assess the completeness of applica- http://www.fema.co.za/. tions. Separating formal and substan- 6. Moullier, Thomas. 2009. Reforming Building because of minor errors. Providing Permits: Why Is It Important and What Can checklists of necessary preconditions tial checks makes the process more IFC Really Do? Washington, DC: International saves the applicants and the approving efficient. Checking if all documents Finance Corporation. have been duly provided is faster than 7. Statistic South Africa. 2014. Gross Domestic authorities time. In South Africa the Product Annual Estimates 2004-2013, websites of the municipalities of Cape scrutinizing the content of the applica- Regional Estimates 2004-2013. Third Quarter Town23 and eThekwini24 are examples of tion. Nevertheless, this can save valu- 2014. Pretoria: Stats SA. able time to the applicant. To be effec- 8. Statistic South Africa. 2014. Quarterly portals providing detailed information Employment Statistics (QES), September 2014. on the requirements needed to obtain tive, the time limit should work based Pretoria: Stats SA. permits. These municipalities also make on the silence-is-consent principle for 9. It should be noted that the construction low-risk projects. Authorities that fail sector in South Africa has seen a application forms available online. substantial rise in capital investment, Moreover, in Cape Town several dedi- to respect the established timeframe making construction one of the sectors with cated hotlines providing information on would be fined. the highest capital-labor ratio. Recent data from the South African Reserve Bank shows services related to construction permits that capital investment in the construction (water and sanitation, road and waste) Facilitating public access to informa- sector grew at a faster pace than exist. Other cities could ensure that their tion strengthens governance, fosters employment gains. https://www.resbank. accountability and improves transpar- co.za/Lists/News%20and%20Publications/ technical regulatory requirements are Attachments/6649/02Quarterly%20 clear and publically available. ency. Evidences show that the avail- Economic%20Review.pdf. ability of basic regulatory information 10. Australian Bureau of Statistics. 2002. Year is associated with lower costs, better Book Australia. Canberra: Australian Bureau An additional measure to simplify of Statistics. preconstruction clearances would be regulatory quality and greater overall 11. The purpose of the Act, which has been to set a time limit for the municipality regulatory efficiency.25 In economies amended several times since 1977, is 36 DOING BUSINESS IN SOUTH AFRICA 2015 to ensure uniformity in the law relating Department, City Power, Fire Department, to the construction of buildings in the city parks and Waste Management. areas of jurisdiction of local authorities. 19. According to the law, if the timeframe is not The Act assigns different functions and respected, “a court may on the application responsibilities to the South African Bureau of the applicant concerned make an order of Standards (SABS), a statutory body directing such local authority to perform its in charge of promoting and maintaining duties and exercise its powers.” The silence- quality standards in the building sector. is-consent rule does not apply. The SABS publishes and keeps updated 20. Delion, Marie Lily and Joyce Ibrahim. 2013. a “Code of Practice for the Application of “What Role Should Risk-Based Inspections the National Building Regulations.” Despite Play in Construction?” Doing Business 2014: not having force in law, this code sets out Understanding Regulations for Small and provisions that are necessary to satisfy and Medium-Size Enterprises. Washington, DC: to correctly interpret the technical aspects World Bank Group. of the National Building Regulations. 21. The one-stop online portal Construction 12. For a commercial warehouse like the one and Real Estate Network (CORENET), assumed by the Doing Business case study, http://www.corenet.gov.sg, allows the Buffalo City, Cape Town and eThekwini do electronic submission of plans to multiple not require preconstruction clearances. For approving authorities, as well as the less complex buildings, these municipalities possibility of tracking the status of the allow registered practitioners—such as application. qualified engineers or architects—to submit 22. A GIS is an integrated system of the building plan for approval without computer hardware, software and trained the need of preconstruction clearances. personnel capable of assembling, storing, Nonetheless, in practice consultations manipulating and displaying topographic, between the applicant and the municipal demographic, utility, facility, image and departments take place. other resource data that is geographically 13. In Mangaung the applicant must obtain referenced. clearances from the following departments: 23. City of Cape Town Official Website - Local Electricity, Fire, Health and Waste/Water. Government Services. https://www. In Johannesburg the applicant must obtain capetown.gov.za/en/Pages/default.aspx. clearances from the following departments: 24. Official Website of the eThekwini Electricity, Fire, Sewerage and Water. Municipality. http://www.durban.gov.za/ Additionally, the City of Johannesburg’s Pages/default.aspx. bylaws require a permit to hoard in the 25. Geginat, Carolin, Adrian Gonzalez and footway for the erecting, removing, altering, Valentina Saltane. 2012. Transparency and repairing or painting of any part of a Access to Information in Business Regulation. building or structure or the carrying out Washington, DC: World Bank Group. any excavation, on part of any land that is within 2 meters of a public road. 14. The law stipulates that no trenches or excavations should have concrete placed on them or no drainage installation should be backfilled before the municipality inspects and approves them. Additionally, any building control officer or any other person authorized by the Municipality may enter a building or land to determine whether the owner of the building or land complies with the provision of the National Building Regulations Act 1977 or any condition imposed by the local authority in terms of this Act. 15. Previously, construction companies were required to inform the municipal building inspectors of the completion of each construction phase that needed inspection. According to municipal authorities, this was not consistently done, prompting them to carry out inspections on a monthly basis. 16. South African Bureau of Services Standards Division. 2010. SANS10400, Code of Practice for the Application of the National Building Regulations, Pretoria: SABS. 17. For a building with an area of more than 500 square meters. 18. Water and Sewage Department, Road Agency, Health Department, Gas Doing Business in South Africa 2015 Getting electricity South Africa’s electricity supply is in needs (figure 5.1). These procedures in- ƒ Getting an electricity connection crisis. According to the World Economic clude applications and contracts with across South African cities takes Forum Global Competitiveness Report electricity utilities, necessary inspec- on average the same number of 2014-2015, South Africa ranks 99 out tions, clearances from the distribution procedures as across OECD high- of 144 economies in terms of the qual- utility and other agencies, and external income economies, but it is more ity of its electricity supply.1 The power and final connection works. To make expensive and the process takes twice grid is ageing, and investments in the the data comparable across cities, sev- as long. sector are lagging behind. Frequent eral assumptions about the warehouse ƒ The prolonged waiting time is load shedding—planned power cuts and the electricity connections are mostly driven by delays reported in effect since the start of the crisis in used. The location of the warehouse is in Johannesburg, Msunduzi, Nelson 2008 to preserve energy supplies—are assumed to be within city limits, the Mandela Bay and Tshwane, where harming the economy, especially small subscribed capacity of the connection getting an electricity connection takes and medium-size businesses.2 140 kilovolt amperes (kVA), and the on average three times longer than in length of the connection 150 meters. OECD high-income economies. Electricity is important to businesses. ƒ There are great disparities across Investment, productivity and growth locations. Getting an electricity are linked to the quality of and acces- connection is easier in Mangaung, sibility to infrastructure services,3 and HOW DOES GETTING where 4 procedures are required over unreliable electricity supply, lack of dis- ELECTRICITY WORK IN 80 days, and the connection costs tribution networks in rural areas and SOUTH AFRICA? 383.2% of income per capita. high connection costs all hinder busi- In South Africa electricity in urban ƒ Mangaung and Cape Town have ness activity. World Bank Enterprise areas is predominantly provided by the least burdensome processes to Surveys of 137 economies show that municipalities. In fact, 60% of electric- obtain a connection, requiring only 4 firms consider the getting of electricity ity distribution in South Africa is un- steps—just one additional procedure as the second biggest obstacle to their dertaken by municipalities. Eskom, the as compared to the best performing business.4 Self-supply is often pro- government-owned public utility, pro- economies worldwide. hibitively expensive, especially for small vides electricity to the remaining 40% firms.5 To get electricity, the customer of municipal consumers—mostly in must first obtain a connection—and smaller municipalities, rural areas and this is the key step measured by the townships.6 Internationally, however, getting electricity indicators. it is more common that these services are provided by stand-alone utilities, either from the public or private sector.7 WHAT DOES GETTING In terms of electricity generation, ELECTRICITY MEASURE? Eskom is the main supplier, generat- Doing Business measures the proce- ing approximately 95% of electric- dures, time and cost needed by a small ity. The rest is generated by small or medium-size enterprise to get a new municipal generators and indepen- electricity connection for a standard- dent power producers (IPPs).8 The ized warehouse with specific electricity National Energy Regulator (NERSA) 38 DOING BUSINESS IN SOUTH AFRICA 2015 procedures that take 80 days and FIGURE 5.1 Doing Business measures the connection process at the level of cost 383.2% of income per capita. distribution utilities The number of requirements to ob- tain an electricity connection in the surveyed municipalities ranges from 4 to 6 following a standard process, with slight differences in the order. In Mangaung and Cape Town only 4 Generation Transmission steps are necessary to obtain a new electricity connection. This is just Distribution one procedure more than the best X New connections performing economies worldwide— Network operation and maintenance for example Germany, Republic of Metering and billing Korea, and Taiwan (China). EThekwini, Customer Johannesburg, Msunduzi and Nelson Mandela Bay require 5 steps, while Buffalo City, Ekurhuleni and Tshwane is a regulatory authority established requires just 3 procedures and 18 days, require 6. pursuant to Section 3 of the National and it costs 41.1% of income per capita. Energy Regulator Act 2004 (Act No. 40 In Cape Town the customer does not of 2004).9 NERSA regulates the elec- Typically, the process of obtaining an have to sign a separate supply contract tricity, gas and petroleum industries. electricity connection in South Africa with the municipal utility, as is the case includes applying for a connection in all other cities. In Mangaung, the Across South Africa 5 procedures and at the relevant distribution utility, municipal utility Centlec performs an 141 days are required on average for receiving an external inspection and external inspection, usually without a business to obtain a new electricity estimate of the cost, and having the the customer’s presence because the connection, and the cost is 472.8% of distribution utility carry out the con- inspection is carried out on public land income per capita. This is comparable nection works (figure 5.3). In all munici- before the estimate is given. In Tshwane in terms of number of procedures to palities, the electrical contractor has to no external inspection is needed before OECD high-income economies (5 submit a Certificate of Internal Wiring the connection works commence. The procedures) (figure 5.2). However, the Compliance10 to the distribution utility municipality already has the draw- process takes twice as long as in OECD before the final connection is estab- ings of the area and knows the power high-income economies (76.8 days). lished. Most distribution utilities also capacity of each land plot. It is thus The long time is mainly driven by de- require the separate signing of a supply able to provide the quotation without lays in Johannesburg, Msunduzi, Nelson contract. Connections are usually un- an inspection. In all other cities, the Mandela Bay and Tshwane, where it derground, and the external connection customer is present during the external takes on average three times longer work is done either by the utilities’ own inspection. to obtain an electricity connection workers or by its subcontractors. than in OECD high-income economies. Buffalo City, Ekurhuleni and Tshwane Although South Africa’s electricity con- The process of obtaining a new have the most complex requirements nection cost is also significantly higher electricity connection for a business to obtain an electricity connection. than the average in OECD high-income is fairly standardized across South In Buffalo City, in addition to signing economies (73.2% of income per capita), African municipalities. However, a supply contract and submitting it compares favorably in the regional significant differences regarding the the Certificate of Internal Wiring context: Sub-Saharan Africa is the length of the process and the cost of a Compliance, the customer must also region with the highest connection cost connection exist. It is easier to obtain submit proof of payment of the secu- (4,348.5% of income per capita). In the an electricity connection in Mangaung rity deposit to the Municipal Electricity Republic of Korea, the best-performing and more difficult in Johannesburg Department before the final connec- economy on this indicator according and Nelson Mandela Bay (table 5.1). tion is established. In Tshwane the to Doing Business 2015 global ranking, Mangaung—South Africa’s best customer takes the “pink slip” issued obtaining a new electricity connection performing municipality—requires 4 by the Inspector after the final inspec- tion to the Customer Services and pays GETTING ELECTRICITY 39 FIGURE 5.2 Getting an electricity connection in South Africa compared globally Procedures Time Cost (number) (days) (% of income per capita) 0 0 0 Australia Republic of Korea (global best) Republic of Korea (global best) Malaysia Chile Chile 100 Malaysia OECD 1 Rwanda 50 United Kingdom Namibia Australia BUFFALO CITY 200 OECD EAP BUFFALO CITY Mexico MANGAUNG, CAPE TOWN EKURHULENI 2 100 EKURHULENI, ETHEKWINI 300 TSHWANE BRIC BRIC Mexico ETHEKWINI United Kingdom MANGAUNG Namibia 400 Republic of Korea South Africa average 3 150 (global best) Kenya MSUNDUZI South Africa average 500 MSUNDUZI TSHWANE NELSON MANDELA 4 200 BAY Rwanda, United Kingdom CAPE TOWN 600 MANGAUNG EAP JOHANNESBURG CAPE TOWN OECD ETHEKWINI 700 5 JOHANNESBURG 250 Australia, Malaysia MSUNDUZI South Africa average NELSON MANDELA BAY JOHANNESBURG BRIC 800 6 300 Chile, Kenya, Namibia BUFFALO CITY EKURHULENI EAP 900 TSHWANE NELSON MANDELA BAY Kenya 1,020.2 Mexico 7 350 Rwanda 3,073.9 Note: OECD is the OECD high-income economies average; EAP is the East Asia and the Pacific average; BRIC is the average of Brazil, Russian Federation, India and China. Source: Doing Business database. the required deposit. Customer Care some of the material in addition to con- Obtaining a new electricity connection initiates a request from the Electricity nection fees. However, in Ekurhuleni and is fastest in Buffalo City (66 days), Control room to energize the connec- Tshwane the customer must also obtain which is significantly below the average tion. An electrician is dispatched to ar- the meter box needed for the connec- of 141 days and also below the OECD range the switch-on for the customer. tion, and this can make the process high-income economies average of more burdensome. In Ekurhuleni the 76.8 days. In Buffalo City the municipal In the majority of municipalities, the util- meter box cost is included in the con- utility carries out the external connec- ity provides all the material needed for nection fee. Nevertheless, after paying tion work of laying the cables to con- the external connection works. In some the full connection fee, the customer is nect the warehouse to the network in municipalities—namely Buffalo City, referred to the Council stores to obtain about 1 month, which is faster than in Nelson Mandela Bay, eThekwini and the meter box and to install it according other municipalities. Mangaung, Cape Msunduzi—the customer has to pay for to municipal specifications. Town and Ekurhuleni are also among the municipalities where a customer can obtain a new connection relatively FIGURE 5.3 Main steps to obtain an electricity connection in South Africa fast, on average in less than 3 months. In Mangaung the external connection External Certificate of Supply contract Application External work is carried out in 45 days. connection Internal Wiring and final and estimate inspection works Compliance connection Ekhuruleni has implemented an inter- nal electronic communication platform Source: Doing Business database. 40 DOING BUSINESS IN SOUTH AFRICA 2015 up to 6 months to receive an estimate. TABLE 5.1 Where is it easy to get an electricity connection—and where not? Frequent strikes and high staff turnover Distance to the Cost that leave a vacuum in the electricity Municipality frontier Procedures (% of income per Municipal seat Rank (score) (number) Time (days) capita) department contribute to these long Mangaung 1 83.88 4 80 383.2 delays. Carrying out the external con- Bloemfontein nection works takes several months. Cape Town 2 81.81 4 87 640.0 Last but not least, theft of infrastruc- Cape Town ture (cables and other materials) may eThekwini 3 75.73 5 98 380.2 Durban also cause additional delays. Buffalo City 4 75.32 6 66 257.2 East London According to global experience, con- Ekurhuleni 5 71.83 6 90 258.5 nection costs can usually be divided Germiston into two categories: a clearly regulated Tshwane 6 68.51 6 104 572.6 Pretoria connection fee based on a formula or Msunduzi 7 63.00 5 184 446.0 a fixed price, and variable costs for Pietermaritzburg the connection, accounting for the ac- Johannesburg 8 55.74 5 226 729.5 tual labor and material required. Across Johannesburg South Africa, all distribution utilities, Nelson Mandela Bay 9 53.14 5 333 587.7 Port Elizabeth except for Johannesburg,12 charge a Note: Rankings are based on the average distance to frontier (DTF) score of procedures, time and cost associated with connection fee or a capital contribution getting a new commercial electricity connection. The DTF measure is normalized to range between 0 and 100, with charge. But the majority of municipali- 100 representing the frontier of best practices (the higher the score, the better). For more details, see the About Doing Business and About Doing Business in South Africa 2015 section. ties also charge customers for the cost Source: Doing Business database. of the materials, such as the meter box and cables (table 5.2). This is the case, for example, in Nelson Mandela Bay that allows for a fast turnaround of the delay is the long wait time for the and eThekwini. The costs are lowest in customer requests and an electronic completion of the external connection Buffalo City (257.2% of income per cap- management system that keeps track work, which includes the installation of ita) and Ekurhuleni (258.5% of income of the work progress.11 However, there a distribution transformer. The time to per capita). Cape Town and Ekurhuleni is still room for improvement. At the obtain a new connection is longest in charge only a connection fee, which moment, customers applying for a Nelson Mandela Bay. After submitting includes the cost of the material. This new connection need to submit to the the application, customers often wait electricity department proof of pay- ment of the estimate and the security TABLE 5.2 How does each municipality charge the connection cost? deposit. The electronic communica- tion platform is currently undergoing Municipality Connection fee and/or capital Variable cost (actual labor and Municipal seat contribution charge material cost) improvements, and it is expected that full functionality will be restored by Buffalo City 3 3 East London June 2015. This should enable seamless Cape Town 3 electronic communication between fi- Cape Town nance and electricity departments and Ekurhuleni 3 eliminate the need for customers to go Germiston back to the electricity department. eThekwini 3 3 Durban In Nelson Mandela Bay, Johannesburg Johannesburg 3 Johannesburg and Msunduzi getting a new electricity connection takes at least 4 months Mangaung 3 3 Bloemfontein longer than in Buffalo City. The long time in Msunduzi is driven by the delay Msunduzi 3 3 Pietermaritzburg associated with obtaining an estimate Nelson Mandela Bay 3 3 and the external connection work. Lack Port Elizabeth of qualified staff and a backlog of ap- Tshwane 3 3 plications are causing these delays. Pretoria In Johannesburg the main cause for Source: Doing Business database. GETTING ELECTRICITY 41 higher than in other municipalities. In BOX 5.1 Monthly consumption prices vary significantly across South African locations Johannesburg and Nelson Mandela Monthly electricity consumption prices are lowest in Johannesburg and high- Bay the higher costs are mostly due est in Mangaung (see figure below). Consumption tariffs usually comprise a to the need to install an additional basic charge and an energy charge based on the kilowatt hours used each distribution transformer. In addition, month. Often there is an additional charge based on the power demand of the in Johannesburg the customer has to connection. Many municipalities also differentiate between winter and sum- cover the actual material cost for the mer season and peak and off-peak demand during the day. Municipalities new connection. establish what is known as the “multi-year price determination (MYPD)” and tariff guideline. The tariffs have to be approved by NERSA and become effec- In addition to the upfront cost paid by tive on July 1 of each year, and are available on NERSA’s and the municipali- ties’ websites. small and medium-size businesses to get a connection, the monthly consump- Monthly consumption prices (% of income per capita) tion of electricity cost must also be analyzed. Across South Africa, monthly Johannesburg 43.3 consumption prices vary significantly (box 5.1). While a firm in Cape Town Cape Town 52.6 pays 1.7 times more than in Mangaung to obtain a connection, it pays 1.5 times eThekwini 56.2 less for monthly electricity consump- tion than its competitor in Mangaung. Ekurhuleni 56.7 Similarly, in Johannesburg a firm pays South Africa average almost twice the amount to get a con- 60.7 nection than in eThekwini, but it pays 1.3 Nelson Mandela Bay 62.2 times less for electricity consumption. Tshwane 65.2 Buffalo City 65.4 WHAT CAN BE IMPROVED? Streamline approval processes Msunduzi 65.8 One of the most effective ways to re- Mangaung 78.9 duce delays in obtaining a connection is to streamline approval processes.14 Typically, most economies worldwide Note: The consumption price for each municipality is calculated based on the following assumptions: The require that a customer apply for an case study warehouse operates from 9:00 to 17:00, and not 24 hours, without electricity cuts (assumed for simplicity reasons) and has a subscribed capacity of 140 kVA and a monthly consumption of 26,880 kWh. The excavation permit or right of way, al- business operates 30 days a month (thus the hourly consumption is 26,880 kWh/ 30 days/ 8 hours = 112 kWh). For each municipality, the corresponding tariff and tariff calculation was applied. lowing the utility to lay the cables or Source: Eskom; Doing Business database. extend wires for the connection with the department of roads or transport. Electricity tariffs are a key revenue source for municipalities, and this may This often means that the customer create disincentives to lower the consumption prices. Addressing this issue has to deal separately with the utility in municipalities where the prices are higher would likely require broader re- for the connection and with the mu- forms of inter-governmental revenue policy and administration, as well as nicipality for the excavation permit. In better bill collection. most South African cities, however, the utilities are part of the municipalities, and they obtain an excavation permit and other clearances on behalf of the customer. This relieves the customer makes the connection cost more trans- per capita), Cape Town (640.0% of of dealing with multiple agencies and parent and predictable, as connection income per capita) and Nelson Mandela makes the process less burdensome. fees and capital contribution charges Bay (588.0% of income per capita). In are regulated locally and based on a Cape Town usually no additional distri- There are additional ways in which to formula or a fixed price. Costs are high- bution transformer would be required;13 streamline the process of granting a est in Johannesburg (729.5% of income nevertheless, the connection fee is 42 DOING BUSINESS IN SOUTH AFRICA 2015 present during the external inspection FIGURE 5.4 Security deposit amounts across South African cities conducted by the utility, in most cases Amount of the security deposit* someone from the customer’s side is (% of income per capita) present. The utility requires the external 236.7 inspection before a cost estimate is is- sued to check the exact surroundings of the building and to determine the precise 168.6 location for cables and meter installa- 131.7 tion. In other economies worldwide, 121.9 113.4 103.1 utilities use Geographic Information Systems (GIS), which make the site visit obsolete. In Mexico, for example, the dis- 26.8 16.6 tribution utility developed a GIS to map 1.0 i zi i the electricity distribution network in ne ow n ay ity len urg du in ng wa eT la B lo C rhu esb un ekw ng au 2011/12 and thus no longer carries out Tsh Ca p an de ffa Ek u nn Ms eTh Ma Bu Joh a nM a physical inspection before issuing the elso N feasibility study.16 Likewise, with the *This is the total amount of security deposit that must be paid when applying for electricity connections widespread use of GIS in Turkey, the utility Boğaziçi Elektrik Dağıtım A.Ş. no Security deposit cost** longer conducts external inspections for (% of the total connection cost) new electricity connections. For all new 14.7 14.9 connections, the utility now checks via GIS whether an additional transformer is needed to provide electricity to the 9.9 new customer. Even though all munici- palities in South Africa already have GIS implemented, they do not use them to eliminate the need for a site visit for the 4.7 cost estimate.17 3.0 1.5 0.0 0.1 0.9 Alleviate the burden of security deposits rg n e n Ba y ity un g zi len i ini sbu wa Tow lo C du kw e Tsh e ela a nga un rhu e All surveyed distribution utilities in a nn Cap an d Bu ff Ma Ms Ek u eTh Joh nM South Africa require customers to elso N make security deposits as a guarantee **This is the present value of lost interest earnings or the cost of bank guarantees/bonds. against nonpayment of future electric- ity bills (figure 5.4). Utilities in 91 out of the 189 economies surveyed by Doing Note: Doing Business does not record the full amount of the security deposit. Instead, Doing Business records the Business in 2013/2014 have the same present value of the losses in interest earnings experienced by the customer because the utility holds the security requirement. Security deposits are deposit over a prolonged period, in most cases until the end of the contract (assumed to be after 5 years). See the data notes section for more details. particularly common in Latin America Source: Doing Business database. and the Caribbean and in Sub-Saharan Africa.18 All surveyed distribution utilities in South Africa hold the deposit new connection. On average, in South connection work to begin. The munici- until the end of the contract and repay Africa it takes 51 days for the distri- pality’s electronic platform utilized for it without interest. The exception is the bution utilities to internally process internal communications and for keep- distribution utility in Johannesburg, applications, prepare estimates and ing track of application review progress which pays the same interest as the schedule connection works.15 Internal could be a good practice for other cities national bank. communication and workflow process- to follow. es could be streamlined to decrease the The requirement of a security deposit time needed to obtain a connection. In Although it is not officially required that can impose a substantial financial Ekurhuleni it takes just 25 days for the the customer or a representative be burden on a small or medium-size GETTING ELECTRICITY 43 business, especially those facing credit Improve the transparency of assumed in the case study, costs are constraints. In eThekwini, for example, the connection process and fixed and based on an average for simi- a medium-size business must effec- connection costs lar projects in the area. tively grant the utility an interest-free Utilities should clearly explain to credit equivalent to 169% of income per customers what exactly is needed to capita—meanwhile being unable to put obtain a new electricity connection. NOTES the money to more productive use. In This would make the process more some utilities, for example in eThekwini 1. World Economic Forum. 2014. The Global transparent. As a starter, utilities could Competitiveness Report 2014–2015 (page and Ekurhuleni (figure 5.4), the secu- post information about the applica- 341). Geneva. World Economic Forum. rity deposit represents up to 15% of the tion process, the connection cost and 2. England, Andrew. (December 9, 2014). total connection cost. The majority of Worsening Electricity Crisis Adds to consumption tariffs not only in their South Africa’s Economic Woes. Financial distribution utilities request a security customer service offices but also on the Times. Retrieved from http://www.ft.com/ deposit equal to 2 to 3 months of con- municipal websites. All of the distribu- cms/s/0/69aa4a9e-7f89-11e4-b4f5- sumption charges. 00144feabdc0.html#ixzz3P0DT6NfB. tion utilities in South Africa post the 3. World Bank Group. 2010. Getting Electricity: consumption tariffs on their website, A Pilot Indicator Set from the Doing Business In Buffalo City, on the other hand, the and the majority of them also include Project. Washington, DC: World Bank Group. security deposit is based on a fixed 4. World Bank Group. 2010. World Bank some information on the connection Enterprise Surveys (2002–10). Washington, charge per kilovolt ampere.19 While cost. However, some municipalities DC: World Bank Group. security deposits based on estimated provide only little or no information on 5. Iimi, Atsushi. 2008. “Effects of Improving monthly consumption make it difficult Infrastructure Quality on Business Costs: the connection cost. All utilities should Evidence from Firm-Level Data.” Policy for the customer to know in advance also upload information on the actual Research Working Paper 4581, World Bank the amount of the security deposit, connection processes and legal time Group, Washington, DC. the customer in Buffalo City knows 6. Palm Development Group (PDG). “Demand limits in a user-friendly way. eThekwini, Side Management for Electricity and the exact amount in advance, mak- for example, has already outlined the Water and Financial Implications for Local ing the related connection cost more application process and connection Authorities”, Consolidated Report (Draft transparent. The electricity utility in Final Report v2.2), December 8. 2011, page 7. cost in a clear manner on its website. 7. Ibid, page 8. Mumbai, India changed its method 8. Information obtained in a meeting with for calculating the security deposit. The type of connection works can vary NERSA representatives on March 18, 2014. The utility now calculates it as a fixed 9. National Energy Regulator of South Africa, depending on the network’s capacity.22 www.nersa.org.za. charge per kilowatt rather than basing If capacity is constrained, a more com- 10. The distribution utility will require a it on a customer’s estimated monthly plicated connection may be required. Certificate of Internal Wiring Compliance consumption.20 signed by a registered electrical contractor. The resulting capital investments (such The customer’s electrician has to be as the installation of a distribution licensed/accredited by the Electrician In addition, utilities could consider al- transformer) are often covered by the Contractors Association of South Africa leviating the financial burden that the (ECASA). new customer. This obligation sub- 11. The name of the electronic management security deposits cause to customers. stantially raises the total connection system being used is Elecon Management A start would be to return the deposit cost. Thus, connection costs should System. The system is currently being used after 1-2 years rather than waiting un- only in the Germiston area. be transparent, allowing customers to 12. In Johannesburg the distribution utility til the end of the supply contract. In contest such charges when they feel charges the customer the actual cost Mangaung, Johannesburg and Buffalo they are paying more than they should. for material and labor for the external City utilities allow customers to settle connection works. However, in many economies utilities 13. The installation of a distribution the security deposit with a bank guar- often present customers with individual transformer could raise the total connection antee21 or bond rather than depositing budgets rather than following clearly cost. the entire amount with the utility. The 14. Doing Business database, 2014. regulated capital contribution policies 15. This is the average number of days from service cost for such bank guarantees aimed at spreading the fixed costs of the moment the customer submits an is usually lower than the interest the expanding the network over several application until external connection works customer loses on the deposit. More commence. customers. This is also true for most 16. Doing Business database, 2013. importantly, bank guarantees allow utilities in South Africa, the majority 17. For example, eThekwini has GIS and digital customers to keep control of their finan- of which charge variable costs to the city maps. However, the utility conducts a cial assets and improve their cash flow. site visit to verify capacity availability, site customer in addition to the connection conditions, and connection points. fees. Chile is among the economies that 18. Doing Business database, 2014. The number provide clear regulation of fees. For the of economies where utilities charge security deposits does not include those 140-kilovolt-ampere (kVA) connection where security deposits are rolled over into 44 DOING BUSINESS IN SOUTH AFRICA 2015 consumption bills for the first 3 months (Tunisia and United States). 19. Based on the Doing Business getting electricity case study assumptions, the total deposit amount would be ZAR461 (US$53) times 140kVa. 20. Doing Business database, 2014. 2 1. In Ekurhuleni the utility allows bank guarantees only for certain types of customers and only for one third of the amount of the security deposit. 22. Doing Business distinguishes between two cases: connecting to the low-voltage network and connecting to the medium- voltage network. The first case involves laying low-voltage underground cables or installing low-voltage overhead wires from the metering point to the closest connection point on the network. The second case usually occurs when the capacity of the utility’s low-voltage network cannot accommodate the power demand of a customer. This case involves installing a distribution transformer and connecting it between the customer’s installation and the utility’s medium-voltage network. According to the standardized case study, the customer requests a nontrivial but still relatively modest 140-kilovolt-ampere (kVA) connection. By comparison, the demand of a residential connection is about 20 kVA. Doing Business in South Africa 2015 Registering property A reliable, transparent and secure land governments, reliable, up-to-date ƒ The legal framework for the registration system protects owner- information in land registries is es- registration of property is the same ship rights in a myriad of property sential to correctly assess and collect across South Africa, and procedures transactions and promotes economic tax revenue. In Thailand the annual to transfer are similar across the cities growth through greater access to revenue from property and transfer measured in this report. credit.1 When people have proper title taxes rose from US$200 million in the ƒ Despite the shared legislative to their land, they can use the property 1980s to US$1.2 billion by 1995, and framework, differences in as collateral for a loan or transfer land the land titling program increasing the implementation exist. It takes 24 parcels in which they have invested.2 If number of registered property own- days to register property in Buffalo people feel more secure in their homes ers during the 1980s is considered as City, but 52 days in Mangaung, and and on their land, they are more likely one of the reasons for the increase.5 9 procedures in Cape Town, but only to invest in and make improvements to Modernization and computerization of 7 in Ekurhuleni, Johannesburg and their property, which in turn benefits land management in Karnataka, India Tshwane. overall health and well-being.3 quadrupled land-related revenue from ƒ Compared to East Asia and the Pacific US$120 million in 2000 to US$480 economies, South African locations At the commercial level, a recent million in 2008.6 transfer property one and a half study concluded that security in prop- months faster on average. erty rights impacts business growth ƒ It is easier to register property in through asset allocation.4 Companies Johannesburg and Tshwane thanks operating in environments with poorly WHAT DOES REGISTERING to the efficient functioning of the developed financial systems and weak PROPERTY MEASURE? locations’ deeds registries and an property rights are more likely to al- Doing Business records the full sequence effective electronic process to deliver locate resources in a suboptimal way, of procedures needed for a business to municipal rates clearance certificates. which in turn hinders business growth. purchase an immovable property from another business and formally transfer The benefits of land registration the property title to the buyer’s name go beyond the private sector. For (see figure 6.1). The process starts with FIGURE 6.1 What are the time, cost and number of procedures required to transfer property between two local companies? Cost (% of property value) Buyer can use the property, resell it or use it as collateral Number of procedures Land & 2-story warehouse Seller with property registered and no title disputes Time Pr Preregistration Registration Postregistration (days) 46 DOING BUSINESS IN SOUTH AFRICA 2015 obtaining the required documents, and to print ownership certificates. FIGURE 6.2 Locations across South such as a copy of the seller’s title, and The deeds registry database is central- Africa have similar procedural ends when the buyer is registered as ized and contains information on all requirements for transferring property the new property owner. Every proce- registered properties in South Africa. dure required by law or necessary in Conveyancers in South Africa usually Preregistration practice is included, whether it is the check the database online through the responsibility of the seller or the buyer deeds registry’s electronic platform, Conveyancer performs due diligence on building and companies and even if it must be completed by a DeedsWeb,9 or a licensed third-party third party on their behalf. software such as Korbitec or L@w.10 Municipality issues rates clearance certificate(s) The DeedsWeb interface was developed in 2001 and allows everyone access to Municipality issues building compliance certificate(s) deeds information online. Conveyancers HOW DOES REGISTERING may also request a copy of the title deed Conveyancer drafts sales deed PROPERTY WORK IN from the deeds registry. If the title deed SOUTH AFRICA? has been scanned, conveyancer can Conveyancer pays transfer duty to the South African Revenue Services The Deeds Registries Act 47 of 1937 obtain the copy within a day. For older established the foundation for prop- titles not yet scanned into the deeds Buyer and seller sign the sales deed erty administration in South Africa. It registry system, the waiting time is on asserts that “ownership of land may be average 3 days. conveyed from one person to another Registration only by means of a deed of transfer Conveyancers will subsequently Conveyancer lodges the transfer deed at executed or attested by the regis- conduct a company search with the the deeds registry and registrar trar.”7 This Act is amended regularly Companies and Intellectual Property approves the transfer and applies uniformly across South Commission11 to verify the identities Simultaneous procedures Africa. Consequently, deeds registries of the directors of both companies, throughout the country follow the same to check each company’s memoran- Procedures for which requirements and/or time varies across locations registration process and procedural dum and articles of association to requirements to transfer property. confirm the authority to acquire and Source: Doing Business database. However, because municipalities man- alienate immovable property, and to age the issuance of rates clearances ensure compliance with the Financial and building compliance certificates Intelligence Center Act by obtaining covering the particular parcel. After the required for property transfers, time proof of the companies’ primary busi- deeds registry has verified the validity and procedural variance between loca- ness location and tax registration. of the transfer deed, the conveyancer tions exist (figure 6.2). will sign the transfer deed before the Next, conveyancers will verify that the deeds registrar, and the property is South Africa’s land registration system rates clearances and building compli- deemed transferred to the new owner is similar to that of United Kingdom, ance certificates—such as the electrical (box 6.1). and most of the requirements are compliance certificate, entomologist executed by a conveyancer. Only certificate and plumbing certificate— In the 9 locations measured, transfer- conveyancers are legally empowered have been obtained by the parties from ring property from one firm to another to file and sign transfer deeds at the the municipalities, and pay the transfer takes on average 8 procedures and deeds registry.8 Conveyancers are also duty to the national South African 32.2 days and costs 6.31% of the responsible for drafting the title deed, Revenue Services (SARS). Determining property value (figure 6.3). While the checking the parties’ identities and the amount to be paid to SARS for the South African average lags behind obtaining documentation relevant to property transfer and obtaining the OECD high-income economies—where the transaction. transfer duty receipt is done online it takes 5 procedures, 24 days and through the SARS website. costs 4.2% of the property value— To transfer property, conveyancers good-performing locations exist in must perform due diligence to search Once all documents have been gath- South Africa. Registering property is through the deeds registry’s national ered, the parties will sign the transfer easier in Johannesburg and Tshwane, database and ascertain the property deed at the conveyancer’s office. The where 7 procedures and 23 or 30 days owners’ names, to ensure that there are conveyancer will then file the transfer are required respectively, and the cost no liens or encumbrances on the lands deed with the deeds registry office REGISTERING PROPERTY 47 FIGURE 6.3 South African cities on average lag behind OECD high-income economies, but are faster in transferring property than economies in East Asia and the Pacific (number) (days) (% of property value) 0 0 0 Georgia (global best) Georgia (global best) Rwanda Australia 1 Georgia (global best) 10 1 Chile Malaysia 2 2 20 JOHANNESBURG United Kingdom BUFFALO CITY 3 NELSON MANDELA BAY Rwanda OECD CAPE TOWN 3 Chile ETHEKWINI BRIC 30 4 TSHWANE BRIC, Malaysia Rwanda EKURHULENI South Africa average 4 OECD OECD 5 40 Kenya Australia EAP EAP MSUNDUZI United Kingdom 5 6 Mexico Chile, United Kingdom 50 Australia Namibia MANGAUNG 6 Mexico 7 BRIC EKURHULENI JOHANNESBURG 60 TSHWANE ALL 9 CITIES South Africa average 8 7 Malaysia, Namibia Mexico 5 CITIES 70 9 8 Kenya CAPE TOWN Kenya 10 EAP 80 Namibia 13.8 Note: OECD is the OECD high-income economies average; EAP is the East Asia and the Pacific average; BRIC is the average of Brazil, Russian Federation, India and China. Source: Doing Business database. is 6.30% of the property value. It is TABLE 6.1 Where is it easy to register property in South Africa--and where not? more difficult to register a property in Mangaung, where despite the same Distance to Municipality the frontier Procedures Time Cost (% of cost, 8 procedures and 52 days are Municipal seat Rank (score) (number) (days) property value) required (table 6.1). Johannesburg 1 65.82 7 23 6.30 Johannesburg While the 7 baseline procedures are Tshwane 2 64.71 7 30 6.30 Pretoria mandatory across locations in South Ekurhuleni 3 64.23 7 33 6.30 Africa, the total number of require- Germiston ments varies from 7 to 9 because of 1 Buffalo City 4 62.84 8 24 6.32 to 2 additional municipal requirements East London in certain locations. Nelson Mandela Bay 5 62.69 8 25 6.32 Port Elizabeth eThekwini 6 62.05 8 29 6.32 Section 118 of the Local Government Durban Municipal Systems Act 32 of 2000 Msunduzi 7 59.49 8 45 6.32 requires a rates clearance certificate Pietermaritzburg to transfer property. It certifies that all Cape Town 8 59.23 9 29 6.34 Cape Town rights and taxes on the property have Mangaung 9 58.41 8 52 6.30 been paid at the time of the transfer Bloemfontein and that electricity and water bills Note: Rankings are based on the average distance to frontier (DTF) score of procedures, time and cost associated with registering of property. The DTF measure is normalized to range between 0 and 100, with 100 representing the frontier have been settled. Therefore, all mu- of best practices (the higher the score, the better). For more details, see the About Doing Business and Doing Business in nicipalities issue a rates clearance South Africa 2015 section. Source: Doing Business database. 48 DOING BUSINESS IN SOUTH AFRICA 2015 BOX 6.1 Quality of land administration in South Africa The South African land administration system has established verification practices and procedures (prescribed by the Deeds Registries Act 47 of 1937), which ensure legal security of land transactions involving registered lands.a The validity and authenticity of the registration process in the deeds registries are backed and upheld by the courts. Surveying is under- taken exclusively by registered professional land surveyors who submit documents to Surveyors-General for examination and approval. The deeds registries and the Surveyor-General’s Office mainly interact when there is a change to the property, such as a redefinition of the boundaries. In instances where the property is subdivided as part of the transfer transaction, the property will be surveyed and the Surveyor-General’s Office will produce a new diagram to update the deeds registries’ parcel records. Deeds registries across South Africa follow the same process to verify and approve transfer deeds filed by conveyancers (see figure below). The registries have a workflow tracking system—each deed has an assigned bar code that is scanned as files are moved from one location to another. Deeds are first taken to the data unit to check the property number against the registry’s database and link the transfer deed number with the conveyancer’s registered firm number. Subsequently, handlers print out information to accompany the transfer deed. The deed is then passed on to a dispatch unit that scans and delivers the file to examiners tasked with checking for transfer conditions included in the deed and compli- ance requirements. Transfer deeds are checked by three levels of examiners at the deeds registries to verify compliance and accuracy of the data. Junior level examiners check that all documents necessary for the transfer have been included and signed by the autho- rized signatory. Senior level examiners check for overall accuracy of the work done by junior level examiners. Lastly, assistant registrars monitor the quality of the examinations performed by both levels of examiners. Once the examination process has certified that the transfer deed is valid, the conveyancer will sign the transfer deed before the registrar or deputy registrar at the deeds registry. When the deed is signed, the property is legally transferred to the new owner. The process to approve transfer deeds is the same in all deeds registries across South Africab STEP 1 STEP 2 STEP 3 STEP 4 Lodgement Lodgement Junior Senior 3rd Level Counter Data Prep Examination Examination Examination STEP 10 & 11 STEP 12 Registration: Delivery Delivery Rejected Passed Delivery of Rejected Scanning & Deeds Counter Deeds Deeds Microfilming Deeds STEP 9 STEP 7 & 8 STEP 6 STEP 5 Execute, Attend to notes, Final Registration: Final Black Book Number, Date & Checking Data Capture Finalize Finances & Emboss Deeds Sort Deeds Source: South Africa Department of Urban Development and Land Reform The amount of land covered by the registry is one of the main pillars of the quality of land administration. The utility of even the most reliable and transparent land administration system will be undermined if it covers only a limited area of the economy. Around the world, 27% of economies have a registry with full coverage of private land and 34% have a mapping system with complete coverage.c The maps and diagrams registered with the Surveyor-General Offices cover all territories of South Africa, and information is available online on the Chief Surveyor-General’s website.d According to the Chief Surveyor- General’s Office, up to 90% of individual private properties are formally registered. But it is estimated that between 25% and 30% of the population live on the remaining unregistered land.e a. The report measures urban areas (municipal seats) where the majority of land is registered and free of title disputes. This may not necessarily be the case in township areas within the metropolitan municipalities. b. This report measures 5 of the 10 Deeds Registries in South Africa: Bloemfontein Deeds Registry, Cape Town Deeds Registry, Johannesburg Deeds Registry, King Williams Town Deeds Registry, Pietermaritzburg Deeds Registry and Pretoria Deeds Registry. c. World Bank. 2014. Doing Business 2015: Going Beyond Efficiency. Washington, DC: World Bank Group. d. Chief Surveyor-General. http://csg.dla.gov.za/. e. Land Equity International Pty. Ltd. 2006. Land Administration: Indicators of Success, Future Challenges. Wollongong, Australia. http://www.unece.org/fileadmin/DAM/hlm/prgm/cph/ experts/kyrgyzstan/documents/LEI.comparative.study.land.reforms.pdf. REGISTERING PROPERTY 49 certificate listing the taxes related additional 3 weeks to obtain the rates examiners and 60 junior examiners, it to the property and electricity, water clearance from the municipality. experiences delays in responding. On and garbage collections charges. In the other hand, the King William Town addition, in Mangaung a separate elec- In locations demanding additional registry (covering Buffalo City metro) tricity clearance certificate from the compliance requirements—such as an covers a smaller area and receives an electricity utility Centlec is required. entomologist’s clearance certificate average of 60 requests per day. (in Buffalo City, Cape Town, eThekwini, Similarly, while an electrical compliance Msunduzi and Nelson Mandela Bay) Once a transfer deed is signed by the certificate is mandatory across the or a plumbing certificate (in Cape conveyancer and the registrar of deeds, country, some municipalities require Town)—1 week is needed for each ad- ownership of the property is trans- additional compliance certificates, ditional certificate. ferred to the buyer. However, obtaining adding to the procedural complexity an original hard copy of the title deed of transferring property. For instance, The time needed to approve a transfer takes additional time (box 6.2). in Buffalo City, Cape Town, eThekwini, deed also varies across South Africa. Msunduzi and Nelson Mandela Bay the The deeds registries in Tshwane or The cost of transferring property contractual practice is to obtain an Mangaung take 9 days to sign the across South African locations varies entomologist certificate verifying that transfer deed. In Cape Town and from 6.30% to 6.34% of the property there are no infestations on the prop- Msunduzi conveyancers wait 2 weeks. value, averaging to 6.31%, which is on erty. Per Section 14 of the City of Cape The different delays across registries par with Germany (6.7%). Cost is largely Town Water bylaw 2010,12 a certificate depend partly on the volumes pro- uniform across municipalities, as con- of compliance is also required for water cessed by each registry, the quality of veyancer fees, the transfer duty and installation (plumbing certificate). materials and the workforce capacity. registration fees are set by national Also the geographical coverage divi- laws and regulations. The small cost The time needed to transfer property sion of registries does not correspond variations are mainly driven by the varies from 23 days in Johannesburg to municipal borders. The registry in rates clearances fees charged by the to 52 days in Mangaung. The variation Cape Town, for instance, oversees municipalities and the costs incurred across locations is largely driven by a much larger area—encompassing from obtaining additional certificates. the time required to obtain the rates locations beyond Western Cape—than The transfer duty, which is the same clearance certificate in each munici- other registries. This registry reviews across locations, constitutes the big- pality, the additional requirements in a disproportionately high number of gest share of the cost (figure 6.5). specific locations and the efficiency of requests—an average of over 1,000 individual registries. per day.13 Even though it has 30 senior The time to obtain a rates clearance certificate varies from 7 days in Nelson FIGURE 6.4 On average, municipalities using electronic communication platforms Mandela Bay to 42 days in Mangaung. issue rates clearances faster Several municipalities have developed Time (days) electronic systems to deliver the cer- 42 tificates. They use these platforms to Municipalities with verify information on payments due, to electronic platforms communicate with other departments Municipalities without 30 and to issue the actual certificate. With electronic platforms the exception of Nelson Mandela Bay, all the municipalities that have estab- 21 20 lished electronic platforms, issue the 14 14 certificates faster than others (figure 11 10 6.4). In Mangaung, the rates clearance 7 certificate process is lengthy as it in- volves a two-step procedure: 3 weeks ty n en i ni g ng uz i y e Ci ow ul wi ur au Ba an eT k es b nd ela hw to obtain the electricity clearance cer- alo ur h h e nn an g su s uff Cap Ek eT a M M an d T tificate from the utility, followed by an B h M Jo n lso Ne Source: Doing Business database. 50 DOING BUSINESS IN SOUTH AFRICA 2015 FIGURE 6.5 The stamp duty makes up BOX 6.2 Obtaining the title deed after the property transfer can be a lengthy process the largest share of property transfer On average, property buyers wait one month and a half to obtain the original title costs deed. The delay is mainly due to 3 frequently inoperative electronic tools: (1) old 1.5% scanners that have fallen into disrepair and slow down the process of scanning Rates clearance, new title deeds; (2) the central data repository system that exhibits frequent and Conveyancer’s compliance unexpected service interruptions, thus inhibiting data input of newly transferred fee certificates and other properties before the new title deed can be issued; and (3) the electronic work- flow tracking system that often goes offline and prevents the transfer of files across departments within the registry. 13.8% The degree to which these delays affect the registries varies by location. The Tshwane, Mangaung and Msunduzi registries deliver the title in approximately 1 month. The Cape Town and Johannesburg registries take twice as long (see fig- ure below). The main reason behind the differences is the volume of transactions handled by the Cape Town and Johannesburg registries—approximately more than 1,000 and 700 transactions daily, respectively.a 84.7% On average across South African cities obtaining the title deed takes longer that the property registration process Stamp duty Ekurhuleni 33 60 Note: The percentages of cost are calculated as the Cape Town 29 60 average of the 9 benchmarked cities. Source: Doing Business database. Nelson Mandela Bay 25 60 Johannesburg 23 60 The cost of obtaining a rates clearance Mangaung 52 30 certificate varies from ZAR54 (US$6) South African average 32 45.6 in Tshwane to ZAR264 (US$30) in Pietermaritzburg 45 30 Msunduzi. In Msunduzi requests for rates clearance certificates have to be Buffalo City 24 50 filed in person with the municipality. Tshwane 30 30 The application is then circulated to eThekwini 29 30 all relevant departments. Outstanding dues are reported to conveyancers, Time to Time to obtain who must pay the requisite amount transfer property the original title to the municipality. In eThekwini con- Source: Doing Business database. a. The Cape Town volume is based on the number of cases handled by examiners daily (between 50 and 60 cases per veyancers request certificates online examiner per day). The Johannesburg volume is based on statistics received from the registry for the month of October 2014. and pay a reduced fee of ZAR128.84 (US$15), as compared to ZAR241.58 has the capability to issue a record of (US$28) for manual processing. To WHAT CAN BE IMPROVED? outstanding dues and can deliver encourage conveyancers to use the Adopt the electronic issuance certificates within 2 weeks through its electronic system, some municipalities of rates clearance certificates electronic system—even when han- offer cheaper tariffs for online requests. across the country or even dling a large number of requests. Prior consider replacing them to implementing the electronic system, Getting additional compliance certifi- altogether with online obtaining rates clearance certificates cates adds to the total cost of register- payment confirmation could reportedly take months. ing property, although insignificantly. A certified electrician inspects the Obtaining a rates’ clearance certificate Six years ago, the city authorities property and delivers an electrical can be a lengthy process and has been started to develop an SAP-based certificate for an average of ZAR1,250 repeatedly reported as one of the electronic platform to issue rates (US$144). The entomologist and major bottlenecks when transferring clearance certificates. The Automated plumbing certificates cost on average property in South Africa. However, it Rates Clearance system was rolled ZAR600 (US$69). does not have to be this way. In Cape out in 2014. The program enables Town, for example, the municipality conveyancers in Cape Town to request REGISTERING PROPERTY 51 rates clearance certificates online from Set effective service delivery communication with other stakehold- their offices. A SAP case is created in time limits for the deeds ers, such as the Surveyor-General’s the electronic system. Conveyancers registries and/or introduce Offices and municipalities, allowing receive notification of outstanding bal- fast-track approvals all parties to check on the status of a ances and make advance payments to The Deeds Registries Act 47 of 1937 given transfer or obtain information cover any charges that occur while the and its amendments set no time limit on the relevant title deed. All agencies transfer is ongoing. for the provision of registry services. involved—registries, municipalities, South Africa entrepreneurs complain Chief Surveyor-General and SARS— The municipal authorities in eThekwini that applications may get delayed for could move to one platform where the took a similar approach and started unknown reasons. Time limits can give information about a property could developing an electronic system in entrepreneurs guidance regarding the be accessed. In 2006, South Africa 2002. The eThekwini Interim Rates expected waiting time and also set a launched the e-cadaster project meant Clearance Application Management maximum time for public agencies to to achieve the single-platform goal, (IRCAM) system became fully opera- complete their tasks. Time standards but it still remains a work in progress. tional in 2007. The system facilitates can encourage greater transparency After conducting a thorough assess- the management of the volume of and are most useful when enforced. ment across registries to identify the requests received by the municipality An example of an effective time limit main reasons why the e-cadaster is and still manages to deliver certificates comes from Spain, where the Registry’s still not fully accessible to all stake- within 2 weeks. fees are discounted by 30% if the regis- holders involved in property transfers, tration takes longer than 15 days and South African authorities could look to According to conveyancers across no objective justification for the delay economies like Denmark and Austria South Africa, it is impossible to track is given. for remedial measures. the status of the certificate in other locations, and there is a perceived lack Introducing expedited or fast-track pro- In 2009, the Danish land registry initi- of responsiveness on the part of the cedures that speed up processing times ated its computerization process, and municipality in case of an inquiry or for an extra fee would also ensure faster records were progressively digitized. problem with the delivery of the cer- delivery for users in a hurry and willing Once digitization was complete, the tificate. An online electronic application to pay an extra charge. The additional land registry introduced electronic system would allow conveyancers revenue from charging for expedited application for property transfers. By to view real-time information on the procedures could be used to hire addi- 2011, property transfer applications status of their request, thus increasing tional staff and provide more resources were only accepted online, allowing the municipalities’ transparency and to the registry. Georgia, Lithuania and the information technology system to accountability. the Slovak Republic offer these types screen applications in an efficient way. of expedited procedures. Portugal has As a result, over a period of 5 years, Replacing rates clearance certificates introduced both effective time limits the time to transfer a property was with online confirmation of payments and fast-track procedures for property reduced from 42 days to 4 days.15 has proven effective in other economies registration.14 South African cities could as well. In 2012, Rwanda eliminated follow suit after assessing the financial In Austria registering a property is done the requirement to obtain a separate and human resource available at local through an electronic system called tax clearance certificate, formerly the registries, thus ensuring that enough WebERV. The WebERV system is an longest part of its property registration well-trained staff is available to meet online-based form of communication process. Combined with other reforms, the demand. between the courts, notaries and law- this reduced the time to register prop- yers for submission of claims, briefs erty by 13 days. Similarly, in 2013 Greek Develop an integrated and applications, as well as delivery of authorities eliminated the need to registry system for electronic court transcripts, orders and decisions. obtain a tax clearance certificate from registration It is now mandatory for attorneys and the municipality before signing the Although the South African system of notaries to submit their applications sales agreement. land administration is comprehensive concerning the transfer and registra- and ensures title security for registered tion of property using this system. In lands, it can be slow. Moving from Austria it takes 3 procedures and 20.5 paper-based to electronic registration days to register a property. could assure a streamlined process at the registries while also easing 52 DOING BUSINESS IN SOUTH AFRICA 2015 In the interim, locations must also and Fostering Sustainable Development in Developing Countries. See also: Burns, establish contingency plans in Tony. 2007. Land Administration case of electronic platforms failure. Reform: Indicators of Success and Conveyancers experience delays at reg- Future Challenges, Agriculture and Rural Development Discussion Paper 37. istries largely due to the intermittently Washington, DC: World Bank Group. operational electronic workflow track- 7. Section 16, Deeds Registries Act 47 of 1937. ing system. Files are scanned through 8. Section 15, Deeds Registry Act 47 of 1937. 9. DeedsWeb. http://www.deeds.gov.za/. the workflow system when they move 10. All the third-party databases contain the through the registry. When the elec- same information obtained from the deeds tronic system goes down, the workflow registry. 11. This is valid when the transaction involves 2 stops. To curb delays, registries could firms as described in the Doing Business case use a non-electronic logbook to track study for this indicator. file movement when workflow cannot be 12. City of Cape Town, Water By-Law of 2010. https://www.capetown.gov.za/en/ tracked electronically, and then update EnvironmentalResourceManagement/ the system when it is back online. tips/Documents/Water_By-Law_CCT_ amended_2010-10-27.pdf. 13. The registry has around 30 senior Registries also report that due to faulty examiners, each of whom reviews between equipment for checking the national 50 and 60 cases a day. database and microfilming, they some- 14. World Bank. 2012. Doing Business 2013: Smarter Regulations for Small and Medium times cannot connect to the central Size Enterprises. Washington, DC: World registry’s database whose servers are Bank Group. located in Pretoria. This means that 15. Doing Business database. registrars cannot process applications because the information to verify the accuracy of data presented in the transfer deeds is unavailable. Investing in more reliable and better function- ing equipment would avoid technical delays in the deed verification and transfer process. NOTES 1. World Bank. 2014. Doing Business 2015: Going Beyond Efficiency. Washington, DC: World Bank Group. 2. Galiani, Sebastian, and Ernesto Shargrodsky. 2009. Property Rights for the Poor: Effects of Land Titling. Working Paper 7 (revised), Ronald Coase Institute, St. Louis, MO. 3. World Bank 2014. Doing Business 2015: Going Beyond Efficiency. Washington, DC: World Bank Group 4. Claessens, Stijn, and Luc Laeven. 2003. Financial Development, Property Rights, and Growth. Journal of Finance. American Finance Association. 5. Burns, Anthony. 2002. Land Registration to Improve Security, Transparency, Governance & Sustainable Resource Management. In Comparative Study of Land Administration Systems. World Bank Asia Regional Workshop on Land Policy and Administration working paper. Washington, DC: World Bank Group. 6. European Parliament. 2014. Report on the Role of Property Rights, Property Ownership and Wealth Creation in Eradicating Poverty Doing Business in South Africa 2015 Enforcing contracts A visitor of the civil section of the all other factors being equal, where the ƒ It is easier to enforce a contract in Durban Magistrates’ Court in eThek- backlog of pending trials is relatively Mangaung—resolving a commercial wini is greeted by a massive bulletin large, credit is less widely available, the dispute there requires 29 procedures, board with information about which average interest rate is higher, and the takes 473 days, and costs magistrate is handling what motion, default rate is greater.3 A second study approximately 29.4% of the claim trial, administrative order and Section has shown that firms tend to receive value. 581 hearing, and in what courtroom. less bank financing for new invest- ƒ Case backlogs and the waiting time The court clerk’s office exhibits multiple ments in Eastern European economies during the pre-trial and trial period counters, rows of well-labeled files, and with slower court systems.4 are among the main reasons for the clear signage denoting the appropriate disparity in trial duration across South counter. Individual offices handling Africa. various civil court functions have log- ƒ The enforcement of judgments in books that require that files be signed WHAT DOES ENFORCING South Africa is more than a month in and out to enable workflow track- CONTRACTS MEASURE? faster than in OECD high-income ing. Other South African courts may Doing Business measures the time, cost economies. consider looking to Durban to better and procedural complexity of resolv- ƒ Resolving a commercial dispute as fast understand how resources, staff and ing a commercial dispute between 2 as in Msunduzi and as inexpensively as workflow—all factors impacting court domestic businesses. The case study in Mangaung would place South Africa efficiency—could be managed. assumes that the dispute involves the among the world’s top 25 economies on breach of a sales contract worth twice the ease of enforcing contracts—ahead An efficient and transparent conflict the income per capita of the economy, of Malaysia, United Kingdom and resolution system supports entre- that the court hears arguments on the United States. preneurship and promotes business growth. Without it, businesses are less inclined to transact with clients FIGURE 7.1 What are the time, cost not vetted through previous interac- and number of procedures necessary to tions, thus limiting business growth. resolve a commercial dispute through the courts? Transparent courts give firms the confidence that they will have judicial Court recourse in case of contract disputes. Speedy trials are especially important Time to small and medium-size enterprises Cost Number of lacking the resources to stay in busi- procedures ness while awaiting the outcome of a lengthy trial. Company A Company B Commercial Research shows a strong correlation (seller & (buyer & dispute plaintiff) defendant) between efficient contract enforce- Filing & Trial & Enforcement ment and increased access to financ- service judgment ing for enterprises.2 A study of 27 judicial districts in Italy showed that, 54 DOING BUSINESS IN SOUTH AFRICA 2015 FIGURE 7.2 Enforcing contracts in South Africa, compared globally Procedures Time Cost (number) (days) (% of claim) 0 0 0 10 100 10 Singapore (global best) OECD 20 200 Australia BRIC Rwanda Singapore (global best) Chile 30 MANGAUNG Mexico 300 South Africa average 20 7 CITIES Namibia Singapore (global best) Malaysia 40 BUFFALO CITY Rwanda United Kingdom Mexico 400 Australia Malaysia Kenya EAP 50 Australia United Kingdom United Kingdom, Malaysia 30 MSUNDUZI Namibia MANGAUNG ALL 9 CITIES Kenya 500 OECD Chile Namibia EKURHULENI, ETHEKWINI, 60 OECD TSHWANE, CAPE TOWN Chile South Africa average Mexico EAP 600 EAP JOHANNESBURG 70 40 BRIC NELSON MANDELA BAY 700 BUFFALO CITY Kenya 80 BRIC Rwanda 50 800 90 Note: OECD is the OECD high-income economies average; EAP is the East Asia and the Pacific average; BRIC is the average of Brazil, Russian Federation, India and China. Source: Doing Business database. merits and that an expert provides an and a magistrates’ court,6 both having a breach of contract case is consistent opinion on the quality of the disputed subject-matter jurisdiction over breach throughout the country—it requires 29 goods. This distinguishes the case from of contract claims and overlapping steps, which is less than the average simple debt enforcement. The time, monetary jurisdiction.7 When the claim for OECD high-income and East Asia cost and procedures involved are mea- value falls within the lower court’s and the Pacific economies. sured from the seller’s perspective (the monetary jurisdiction, litigants most plaintiff) pursuing the standardized often file their case in the applicable Resolving a commercial dispute across case through local courts (figure 7.1). magistrates’ court rather than the the 9 South African locations takes on high court to benefit from simpler average 550.6 days and costs 32.2% of court procedures and lower legal fees. the claim value. This is nearly 2 weeks Consequently, the magistrates’ court is longer than the time needed in OECD HOW DOES IT WORK IN used for this study.8 high-income economies and one-third SOUTH AFRICA? more expensive. Conversely, the dura- The South African Constitution of 1996 Enforcing contracts measures the tion is comparable to East Asia and the created a five-level judicial system. time, cost and number of procedural Pacific economies, although it is also The country’s courts and their respec- steps needed during the 3 main phases one-third cheaper (figure 7.2). Within tive rules and civil procedures are of the court proceeding: filing and South Africa there are substantial governed by national legislation.5 Like service of process, trial and judgment, differences in the duration and cost of the 128 other economies measured and enforcement of judgment. The civil litigation depending on the mag- by Doing Business, South Africa has laws and procedural rules governing istrates’ court. Enforcing a contract a two-tiered first-instance civil court magistrates’ courts are national,9 and is easier in Mangaung, Msunduzi and structure constituted of a high court the procedural complexity of litigating eThekwini and more difficult in Nelson ENFORCING CONTRACTS 55 Court, have an organized and well- TABLE 7.1 Where is it easier to enforce a contract in South Africa—and where not? managed case intake process, proving Distance to the that by managing staff, resources and Municipality frontier Cost Municipal seat Rank (score) Time (days) (% of claim) the workflow, a larger volume of sum- Mangaung 1 71.04 473 29.4 monses can be handled efficiently. Bloemfontein Msunduzi 2 70.81 469 30.3 In Ekurhuleni, Johannesburg, Mangaung Pietermaritzburg and Tshwane on average 30 days are eThekwini 3 69.27 521 30.6 Durban needed for an attorney to prepare, the Ekurhuleni 4 68.26 513 33.9 court to issue and the sheriff to serve a Germiston summons on the defendant. In Buffalo Tshwane 5 68.17 527 33.1 City the same process takes 75 days. Pretoria Cape Town 6 67.53 545 33.5 Cape Town The magistrates’ courts in Nelson Mandela Bay 7 66.89 611 30.4 Johannesburg, Mangaung, Nelson Port Elizabeth Mandela Bay and Tshwane issue on- Johannesburg 8 66.14 600 33.2 site summonses—known in South Johannesburg Africa as “over-the-counter” service Buffalo City 9 62.54 696 35.8 East London (table 7.2). Under this procedure, the clerk will immediately processes a Note: Rankings are based on the average distance to frontier (DTF) score of procedures, time and cost associated with enforcing a contract. The DTF measure is normalized to range between 0 and 100, with 100 representing the frontier summons filed by an attorney with the of best practices (the higher the score, the better). For more details, see the About Doing Business and About Doing Business in South Africa 2015 section. court, ensuring that the documents Source: Doing Business database. meet the filing requirements, and as- sign a case number before handing the documents back to the attorney or Mandela Bay, Johannesburg and The time needed to enforce a contract depositing them directly in the sheriff’s Buffalo City (table 7.1). In Buffalo City varies from 469 days in Msunduzi to pigeonhole. In courts where this process it takes 696 days and costs 35.8% of 696 days in Buffalo City (figure 7.3). In is not done “over-the-counter,” the filing the claim value to enforce a contract, courts with smaller caseloads, it may and service phase tends to be lengthier. while in Mangaung it is 32% faster (473 be easier to enforce a contract expe- Unlike the over-the-counter procedure, days) and nearly 18% cheaper (29.4% of ditiously. Nevertheless, some larger the claim value). courts, like the Durban Magistrates’ TABLE 7.2 Where are summonses issued over the counter—and where FIGURE 7.3 Courts in Mangaung and Msunduzi are faster not? Buffalo City Over-the- 75 557 64 696 (East London) counter Municipality issuance of Nelson Mandela Bay 35 496 80 611 Municipal seat summonse (Port Elizabeth) Buffalo City Johannesburg 30 (Johannesburg) 490 80 600 East London Cape Town Cape Town (Cape Town) 31 438 76 545 Cape Town Ekurhuleni Tshwane (Pretoria) 30 414 83 527 Germiston eThekwini eThekwini 408 80 521 Durban (Durban) 33 Ekurhuleni 400 83 513 Johannesburg Johannesburg 3 (Germiston) 30 Mangaung Mangaung Bloemfontein 3 (Bloemfontein) 30 360 83 473 Msunduzi Msunduzi 353 83 469 Pietermaritzburg (Pietermaritzburg) 33 Nelson Mandela Bay Port Elizabeth 3 Filing and Trial and judgement Enforcement service period period period Tshwane Pretoria 3 Source: Doing Business database. Source: Doing Business database. 56 DOING BUSINESS IN SOUTH AFRICA 2015 the attorney deposits the summons in designed to narrow the legal issues and or monthly. The number of sheriffs an inbox rather than meeting with the encourage settlement. (including deputies) available to handle clerk. In some courts, unsecured in- judgment enforcement varies, with boxes have resulted in lost summonses, In most jurisdictions, pre-trial hearings more populous municipalities having improper allocation of case numbers will take place approximately 1 month more sheriffs. and delays. In response, the Cape Town after the application for a pre-trial Magistrates’ Court recently instituted date. Generally, a trial date will only The cost to enforce a contract across a requirement that all orders (including be allocated after pre-trial proceed- South Africa ranges from 29.4% of summonses) be received and logged by ings. Due to case backlogs, after the the claim value in Mangaung to 35.8% a clerk.10 pre-trial conference parties can wait in Buffalo City. Attorney fees make between 3 to 9 months for their day up on average 67% of the total cost, Under both types of processes, upon in court. Durban and Johannesburg— and attorney fees vary from 18.8% in receipt of the summons, the sheriff among the municipalities with the Mangaung to 25.2% in Buffalo City. will ensure service upon the defendant. largest number of summonses issued Overall, lawyers practicing in munici- Under South Africa’s civil procedure in 2013/1412—have 13 and 12 civil mag- palities with larger populations (such rules, personal service is not required istrates respectively, reflecting their as Cape Town, Ekurhuleni, eThekwini, for businesses; it is sufficient to post the large populations and the number of Johannesburg and Tshwane) charge summons in a prominent place.11 In the filed cases. However, a court’s number 20% of the claim value or more for their majority of cases involving businesses, of magistrates is not always propor- services, while in smaller cities (such one service attempt is sufficient. In tionate to the number of cases filed. as Mangaung, Msunduzi and Nelson Buffalo City, where summonses are The court in Tshwane, for example, has Mandela Bay), lawyers charge less. not issued “over-the-counter,” lawyers only 6 civil magistrates but has issued The exception among the smaller cities report that the clerk takes between 3 53,958 summonses in 2013/14.13 Not is Buffalo City, which has the highest and 10 working days to issue a sum- all civil magistrates in a given court attorney fees across all cities. Longer mons. Additionally, service time is handle trials; for instance, although litigation time in Buffalo City drives up disproportionately longer, often lasting Buffalo City has 6 civil magistrates, legal fees because attorneys typically more than a month. only 1 is allocated to hear trials. charge on an hourly basis throughout the country. On average, the trial period (from when Enforcing a judgment across South pleadings close to when a judgment is Africa takes on average 79 days, which In South Africa there are no court fees entered) in South Africa lasts nearly is significantly faster than the aver- for filing a suit. Across the country, the 15 months. Trial time is shortest in age in OECD high-income (115.8 days) average expert witness fee and the cost Msunduzi (just under 12 months) and and East Asia and the Pacific (195.1 of service of process amount to 7.6% of longest in Buffalo City (almost 19 days) economies. Enforcement time the claim value. Service of process and months). The Magistrates’ Court Act ranges from just 2 months in Buffalo enforcement fees are charged by the gives magistrates discretion to order City to nearly 3 months in Pretoria. sheriffs, whose fees are regulated by the parties to attend a pre-trial confer- Sheriffs are appointed by the Minister national law.14 Enforcement fees—in- ence. All locations except Buffalo City, of Justice and may in turn appoint and cluding attachment, removal, storage, Johannesburg and Msunduzi, have assign tasks to deputies. While some advertisement and organization of the made pre-trial conferences mandato- deputies might be tasked with serv- public sale—amount to an average of ry. The parties must either attend the ing summonses, others may handle 3.0% of the claim value in all locations. conference before a magistrate or con- enforcement proceedings. In Buffalo duct the meeting on their own and file City anecdotal evidence suggests that In an effort to provide an alternative minutes with the court. As of October because more deputy sheriffs are as- to lengthy and costly litigation, South 2014 the Johannesburg Magistrates’ signed to handle enforcement, the en- Africa introduced court-annexed me- Court requires certification hearings forcement time is shorter. Throughout diation in several magisterial districts.15 where a magistrate ensures that South Africa sheriffs take on average The pilot program was launched on pleadings have closed and the matter between 1 to 3 weeks to inventory December 1, 2014, in 13 courts in the is ready for trial. For instance, the court and attach the debtor’s property, fol- Gauteng and the North West prov- will determine whether the party bring- lowed by an additional 1 to 2 weeks to inces.16 The new fora are intended to ing the claim has standing. This differs organize removal. Property is stored for have a simplified procedure, allowing from pre-trial conferences, which are an average of 1 month before sale. On the parties in commercial litigation average, auctions occur every 2 weeks to appear before mediators without ENFORCING CONTRACTS 57 legal representation. Through the new plan, the judges followed 20 guide- misplacement and improper allocation mediation program, cases are heard by lines, which promoted: the issuance of of case numbers. In 2010 the Republic mediators trained by the Department short and concise judgments; the use of Korea launched its electronic case of Justice and Constitutional of timetables or calendars during the filing system, which enables electronic Development to help parties reach a first hearing; the issuance of decisions submissions, registration, service settlement. Under the mediation rules, on the inadmissibility of unsubstanti- notification and access to court docu- the presiding mediator charges a fixed ated adjournments; shorter adjourn- ments. The new system saves US$221 tariff, which is far lower than court ments; and oral as opposed to written per e-filing,21 reduces paper use and litigation costs.17 hearings. By 2010, cases older than 3 decreases lawyers’ time spent in court, years represented less than 5% of the while concurrently facilitating the ar- court’s caseload.18 chiving of documents and the payment of fees. In 2011 Brazil followed suit, in- WHAT CAN BE IMPROVED? Judicial case management systems troducing e-filing for initial complaints, Use court statistics to monitor are also effective in monitoring the as well as for other court documents, performance and introduce performance of judges and court of- in the Sao Paolo Civil District Court.22 case management for ficers. By analyzing court workloads, E-filing has also proved successful in commercial cases computerized case-management the United States, where filing of paper South Africa presently uses a tool systems can help predict trends and documents in Chicago used to take up known as NOC to collect statistics strategically allocate resources. An ef- to 5 days for a circuit court clerk to from individual courts—including the fective case management system may process in 2008 and now takes just 4 number of summonses—which are prevent judges from being overburdened seconds with the e-filing system. reported to the Department of Justice with a large volume of complex cases. and Constitutional Development. Malaysian courts, for example, intro- Additionally, an e-filing system pro- However, the tool is limited as it does duced a new case management system vides greater document security. In not capture crucial information, in- in 2009.19 The system sorts cases into October 2010 a fire partly burned cluding the number of cases resulting 2 categories: cases that can be resolved down the Pretoria Magistrates’ Court in settlement or the number of back- on the basis of an affidavit and cases in Tshwane, leading to the loss of hun- logged cases. that must go to full trial. Judges are dreds of summonses and case files.23 A subsequently assigned an equal share computerized court system, with off- Monitoring and evaluation systems of both types of cases. From December site document backups, could reduce are powerful tools to ensure account- 2009 through May 2011, Malaysia was the risk of document loss. Additionally, ability and improve court perfor- able to purge backlogs in 120 of 429 it could safeguard documents against mance. An effective monitoring sys- magistrates’ courts.20 theft and restrict case file access to tem for civil cases would allow courts only authorized personnel. to determine how long cases have Introduce electronic filing been pending and enable real-time (e-filing) and automate court Budgetary, technological, administra- problem solving. The system would processes tive and legal constraints are common also allow courts to identify and re- Automating court processes and intro- obstacles to establishing electronic view unreasonably lengthy cases be- ducing information technology has been systems. Nonetheless, Rwanda and fore undertaking remedial measures. a common reform among economies Tanzania—economies with income per In addition, an analysis of docket benchmarked by Doing Business. Once capita below US$1,000—are develop- backlogs could help the judiciary in courts are computerized, electronic ing the components of an electronic establishing guidelines to shorten support functions—including electronic court and are among top-reforming litigation time. For example, in 2001 filing, case tracking, document manage- Sub-Saharan African economies authorities in Turin, Italy launched an ment, deadline reminders and schedul- because of the ease of enforcing con- ambitious plan to reduce backlogs and ing of hearings—can be introduced in tracts within their borders. eliminate cases not resolved after 3 phases, over time and as needed. years. Judges and registrars were in- Before an electronic system is intro- structed to: 1) prioritize older cases, 2) Currently, courts in South Africa do duced, the internal administrative classify and physically label all cases not make use of information technol- procedures should be streamlined to by the originating date, and 3) follow a ogy. E-filing would reduce delays and ensure better use of court staff and “first in, first out” approach. Under the costs, as well as the risk of document existing resources. Furthermore, the 58 DOING BUSINESS IN SOUTH AFRICA 2015 establishment of an electronic plat- 2007. Depending on the caseload and and 8,942 respectively. Five other measured locations issued between 14,274 and 82,238 form may be a lengthy legal process court needs, South African locations summonses in the past year. Conversely, requiring enabling legislation. could introduce specialized commercial in Buffalo City, where the process is courts, divisions or judges to deal exclu- longest, only 9,908 summonses were issued in 2013/14. Statistics on number of Introduce specialized sively with commercial matters. summonses provided by the South Africa commercial courts or court Department of Justice and Constitutional sections in locations with large Development. 11. Section 9(3)(d), Rules Regulating the caseloads NOTES Conduct of the Proceedings of the Although South Africa has a separate Magistrates’ Courts of South Africa, No. R. court for commercial crimes, it lacks 1. Section 58 (Consent to judgment or to 740 (August 23, 2010). judgment and an order for payment of 12. The Durban Magistrates’ Court issued a specialized commercial litigation judgment debt in instalments), Magistrates’ 49,209 summonses and the Johannesburg forum. Ninety-five of the 189 econo- Court Act 32 of 1944. Magistrates’ Court issued 82,238. Statistics mies covered by Doing Business have 2. Bae, Kee-Hong, Jae-Seung Baekb, Jun- provided by the South Africa Department of Koo Kangc and Wei-Lin Liud. 2012. “Do Justice and Constitutional Development. dedicated commercial courts, special- Controlling Shareholders’ Expropriation 13. Statistics provided by the South Africa ized commercial sections in existing Incentives Imply a Link between Corporate Department of Justice and Constitutional courts, or specialized judges in general Governance and Firm Value? Theory and Development. Evidence.” Journal of Financial Economics 105 14. Sheriff’s Fees Charged in the Magistrate’s civil courts. Where a limited number of (2): 412–35. Court, as published in Government commercial cases are handled, special- 3. Japelli, Tullio, Marco Pagano and Magna Gazette No. 36157, dated February 15, ized commercial sections provide a less Bianco. 2005. “Courts and Banks: Effects 2013. Amendment of Part 11 of Table C of of Judicial Enforcement on Credit Markets.” Annexure 2 of the Rules. expensive alternative to a commercial Journal of Money, Credit, and Banking 37 (2): 15. Chapter 2, Section 70(2), Rules Board for court. Specialized courts also tend to 223-44. Courts of Law Act, 1985 (Act. No. 107 of improve efficiency.24 Creating special- 4. Safavian, Mehnaz, and Siddharth Sharma. 1985), Amendment of Rules Regulating 2007. “When Do Creditor Rights Work?” the Conduct of the Proceedings of the ized commercial courts can result in Journal of Comparative Economics 35 (3): Magistrates’ Courts of South Africa, as faster and less costly contract en- 484–508. published in Government Gazette No. forcement. One reason for the greater 5. Section 166, Constitution of South Africa, 37448, dated March 18, 2014. 1996. 16. http://www.gov.za/court-annexed- efficiency is that judges become ex- 6. Doing Business database. mediation-service-increase-access-justice- perts in handling commercial disputes. 7. High courts can entertain civil cases all. Commercial courts often have less involving a monetary claim exceeding 17. Magisterial districts already have small ZAR100,000 (US$11,487). The lowest level claims courts, which also have simplified formal procedures—the use of oral of the court system is subdivided into procedure but cannot hear cases involving arguments being permitted even in regional and district magistrates’ courts. firms or claims larger than ZAR15,000. See economies where the general courts South Africa raised the magistrates’ Department of Justice and Constitutional courts’ monetary jurisdiction in March Development website, http://www.justice. require written procedures. 2014. District and regional courts now gov.za/scc/scc.htm. have a maximum monetary threshold 18. World Bank Group. 2012. Doing Business Of the 12 economies in Sub-Saharan of ZAR200,000 (US$22,975) and in Italy 2013. Washington, DC: World Bank ZAR400,000 (US$45,950), respectively. Group. Africa that have introduced commercial Determination of Monetary Jurisdiction 19. World Bank Group. 2011. Doing Business courts or sections since 2005—Benin, for Causes of Action in Respect of 2012: Doing Business in a More Transparent Burkina Faso, Cameroon, Democratic Regional Divisions, promulgated under the World. Washington, DC: World Bank Group. Magistrates’ Court Act No. 32 of 1944, as 20. World Bank. 2011. Poverty Reduction and Republic of Congo, Côte d’Ivoire, Ghana, published in Government Gazette No. 37477 Economic Management Sector Unit, East Asia Mauritania, Mozambique, Nigeria, dated March 27, 2014, to be effective from and Pacific Region. Malaysia: Court Backlog Rwanda, Seychelles and Togo—the June 1, 2014. and Delay Reduction Program – A Progress 8. Doing Business records the court in the Report. Washington, DC: World Bank Group. average time to resolve a standardized selected location with jurisdiction over 21. This amount is the result of calculations case measured by Doing Business was commercial cases worth 200% income provided to the Doing Business team by the reduced by two and a half months.25 per capita. Where multiple courts have Supreme Court of Korea. jurisdiction, the court most commonly 22. World Bank Group. 2013. Understanding For example, courts in Abidjan, Côte used by litigants, in practice, is recorded. Regulations for Small and Medium-Size d’Ivoire were particularly backlogged, For the assumed case with a claim amount Enterprises. Washington, DC: World Bank and it took more than 2 years to of ZAR125,180, the magistrates’ court is Group. recorded across South Africa. 23. Justice and Constitutional Development on resolve a commercial dispute in 2011. 9. Magistrates’ Court Act 32 of 1944 and Court-annexed Mediation Service. http:// The following year, authorities cre- Rules Regulating the Conduct of the www.sanews.gov.za/south-africa/fire- ated a standalone commercial court, Proceedings of the Magistrates’ Courts of destroys-part-pretoria-magistrates-court. South Africa, No. R. 740 (August 23, 2010). 24. Botero, Juan Carlos, Rafael La Porta, reducing the time to enforce a contract 10. The magistrates’ courts recorded in Cape Florencio López-de-Silanes, Andrei Shleifer by more than 8 months. Nigeria saw Town and Ekurhuleni do not have an “over- and Alexander Volokh. 2003. “Judicial the average time drop by 9 months the-counter” procedure in place, but are Reform.” World Bank Research Observer 18 comparatively efficient and benefit from (1): 67–88. after it created a commercial court in fewer summonses issued in 2013/14—6,049 25. Doing Business database. Doing Business in South Africa 2015 Trading across borders As acknowledged by the National were to Southern African Development ƒ Long dwell times at ports and high Development Plan 2030, South Africa Community (SADC) members.9 inland transportation and port costs needs to increase exports to boost eco- are the main obstacles for traders in nomic growth and create jobs.1 Between South Africa. 2004 and 2013, South Africa’s exports ƒ South African ports perform better grew at an average of 2.8%. This rate is WHAT DOES TRADING than their regional peers but are slow lower than the average export growth ACROSS BORDERS compared globally. The main difference of middle-income economies (8.6%) and MEASURE? between the 4 analyzed ports is the considerably lower than the growth Doing Business measures the time and terminal handling time for imports, rate of other emerging economies— cost (excluding tariffs) associated with ranging from 6 to 9 days. China and India’s exports, for example, exporting and importing by sea trans- ƒ The number of documents necessary grew at an average of 14% during the port, and the number of documents for import and export in South Africa is same period.2 In 2012, 66% of South necessary to complete the transaction high compared globally. Africa’s exports were mineral products, (figure 8.1).10 The indicators record the ƒ Customs and ports have made metals and precious metals.3 Non- time and cost related to 4 stages of the much progress in recent years with mineral exports, on the other hand, logistics chain: document preparation; the introduction of electronic data were driven by technology-intensive port and terminal handling; clearing interchange systems and online products, which can compete on qual- procedures with customs and border processing of documents. ity and price, but are not considered a agencies; and inland transportation strong source of employment for the between the company warehouse and country’s large pool of low-skilled labor the import/export ports. as they require high-skilled labor.4 In particular, Doing Business in South Research shows that the time and cost Africa 2015 measures the ease of required to import and export goods trading across borders based on the significantly impact a country’s trade following case study: exporting a flows.5 Longer times reduce trade 20-foot container with manufactur- and increase logistics costs. A recent ing goods from Johannesburg to the study shows that each additional day European Union; and importing a of delay in the shipping of a product 20-foot container with electrical equip- reduces trade by more than 1%.6 Ports ment from China to Johannesburg. The and cargo dwell time are critical for same case study is analyzed for the promoting trade.7 About 98% of South country’s 4 major ports: Cape Town, Africa’s exports are transported Durban, Ngqura and Port Elizabeth.11 by sea, and efficient trade logistics The analysis of port and terminal han- through the country’s ports are thus dling focuses on the 4 ports, whereas essential.8 Efficient trade logistics is the other stages are analyzed from a also important from a regional per- national perspective. spective. Many of South Africa’s neigh- bors use Durban as the main port, and in 2013, 25% of South Africa’s exports 60 DOING BUSINESS IN SOUTH AFRICA 2015 containers by rail, a far higher volume FIGURE 8.1 What are the time, cost and documents associated with exporting and than the other ports. importing a 20-foot container by sea transport? Cape Town serves as the main port for the west of the country, where agricultural cargo usually requiring Time Time refrigeration dominates exports. The To export Cost Cost To import main challenge for the Cape Town port Documents Documents is the weather, the port often being Full, 20-foot container wind-bound. The summer in the Cape Import region is the high season for exports but also for stronger winds. Loading and unloading equipment is wind- Export sensitive and automatically stops if the Port and terminal Customs and Inland transport wind reaches a certain strength, which handling border agencies in turn can result in delays. The port of Ngqura, which was original- ly developed to become a major trans- Its two piers handle about 2.8 million shipment hub, started operating in HOW DOES SEABORNE twenty-foot equivalent units (TEUs), 2009 and has since grown quickly. As TRADE WORK IN SOUTH more than double of the other ports a deep-sea port, it can attract larger AFRICA? (table 8.1). The port also benefits from vessels. Port Elizabeth, traditionally the Transnet, a state-owned company, its geographical location—it is much main port in the area, is equipped with manages ports, freight rail and pe- closer to Johannesburg—and better a manganese facility and a car termi- troleum pipelines in South Africa.12 road connections with neighboring nal, but with the creation of the Ngqura Transnet reports to the Department economies. It also receives up to 20% of port only 50 kilometers away, Port of Public Enterprises and is super- Elizabeth’s container operations have vised by the Ports Regulator of South Africa, which approves port tariffs. Two separate divisions deal with ports: TABLE 8.1 Ports’ main features Transnet National Port Authority (TNPA) Durban Cape Town Ngqura Port Elizabeth acts as the landlord in charge of major Containers handled 2.7 0.9 0.7 0.3 infrastructure and maritime security, (million TEUs) and Transnet Port Terminals (TPT) oper- Container vessels 1,248 973 438 329 (number) ates the terminals and handles the cargo and traffic.13 Transnet has 99% Transshipment rate 13% 20% 54% 53% (% containers) of market share in container handling, Operating model Pier 1: RTG* Mixed RTG* Straddle whereas certain bulk terminals are Pier 2: Straddle model operated by private sector companies. Non-intrusive Yes No No No Another key player in the import and inspections export process is the customs author- equipment ity, which operates under the auspices Entry system for Autogate Regular Regular gate Autogate trucks gate of the South African Revenue Service (SARS). Free storage days 3.25 4 4 4 Storage fees 4th day: ZAR792 5th day onwards: 5th day: ZAR1,290 ZAR129 The role of South Africa’s main ports 6th day onwards: is influenced by their geographical ZAR2,100 location (figure 8.2). Durban is South Anchorage waiting 57 35 49 25 time (hours) Africa’s largest port and serves as gateway to the region—it is the main Truck turnaround 41 20 35 21 time (minutes) port used by Botswana, Lesotho, *Rubber Tyred Gantry. Swaziland, Zambia and Zimbabwe. Source: Transnet Port Terminals, 2014 annual report. The time period reported is April 2013 to March 2014. TRADING ACROSS BORDERS 61 FIGURE 8.2 The role of South Africa’s main ports is influenced by their geographical location Pretoria LEGEND Highways Johannesburg Main ports Durban Containers Container Transshipment handled vessels rate (million TEUs) (number) (% containers) 2.7 1,248 13% Ngqura Containers Container Transshipment Cape Town Port Elizabeth handled vessels rate (million TEUs) (number) (% containers) 0.7 438 54% Containers Container Transshipment Containers Container Transshipment This map was produced by the Map Design Unit of The handled vessels rate handled vessels rate World Bank. The boundaries, colors, denominations and (million TEUs) (number) (% containers) (million TEUs) (number) (% containers) any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on GSDPM the legal status of any territory, or any endorsement or 0.9 973 20% 0.3 329 53% Map Design Unit acceptance of such boundaries. Source: Doing Business database. diminished over the past 3 years. The In 2009, the South African Revenue TABLE 8.2 Trading across borders in number of transshipment containers in Service started a customs moderniza- South Africa compared globally Ngqura and Port Elizabeth is more than tion program. As part of the program, Distance to the double that of the Durban and the Cape Customs introduced electronic submis- frontier (DTF Town ports. sion of import and export declarations, Economy Rank 100=frontier) and by 2011 80% of submissions were Singapore 1 96.47 done online.15 Mandatory paper sub- Korea, Rep. 3 93.45 mission of supporting documents was Ireland 5 93.01 HOW DOES SOUTH AFRICA eliminated, and the need to submit Panama 9 91.25 PERFORM IN TRADING supporting documents is now based ACROSS BORDERS? France 10 90.18 on risk profiles, being required only Malaysia 11 89.94 Compared globally, trading across bor- if the value of the goods is high or an ders through the port in Durban ranks irregularity is suspected.16 By 2014, the Egypt, Arab Rep. 99 71.56 100 of 189 economies measured by customs authority requested support- South Africa* 100 71.05 Doing Business 2015.14 Long dwell times ing documentation for approximately Brazil 123 66.11 at the ports and high inland trans- 15% of imports and less than 10% of Note: South Africa is represented by Durban in the global portation and port costs are the main exports. However, traders still need to ranking. The ranking of economies on the ease of trading across borders is determined by sorting their distance to obstacles to traders (table 8.2 and 8.3). submit supporting documents to the frontier scores for trading across borders. These scores South Africa stands among the top 50 shipping lines and to the port authority. are the simple average of the distance to frontier scores for each of the component indicators. most expensive economies to export Source: Doing Business database. globally. However, over the past years, The customs authority has also simpli- South Africa has been reducing the fied other document requirements over time, cost and number of documents the past decade. It introduced the single necessary to import and export. administrative document (SAD 500)17 62 DOING BUSINESS IN SOUTH AFRICA 2015 form are needed. Panama requires only TABLE 8.3 Time, cost and documents required to export and import through South 3 documents (figure 8.3). Africa’s 4 ports Export Import The time to import a container ranges Cost Cost Port* Documents Time (US$ per Documents Time (US$ per from 19 days through Cape Town to (number) (days) (number) (days) container) container) 21 days through Durban, while export- Durban 5 16 1,830 6 21 2,080 ing takes between 16 days through Port Elizabeth 5 16 1,984 6 20 2,193 Durban, Ngqura and Port Elizabeth to Ngqura 5 16 1,979 6 20 2,222 17 days through Cape Town (figure 8.4). Cape Town 5 17 2,078 6 19 2,267 In comparison, in Singapore, the top performer globally, the time needed *The Doing Business methodology assumes that the company is located in the largest business city, in this case Johannesburg. Inland transportation therefore assumes that the goods travel between a warehouse in Johannesburg to import is 4 days and to export 6 and 1 of the 4 ports for exports, and vice versa for imports. The trading partner for exports is the European Union and for imports China. The time and cost of maritime transportation is not included. days, and in the OECD high-income Source: Doing Business database. economies, it takes 9.6 days to import and 10.5 days to export. In other large and eliminated the requirement to sub- and shipping lines, thus facilitating the economies like Mexico or Brazil export- mit the Exchange Control Form F178 control of port operations, the tracking ing and importing takes 12 and 11.2 to the South Africa Reserve Bank for of cargo movements and the payment days, and 6 and 8 days respectively. exports. The Customs Modernization of port fees. program further enhanced inspection Most of the time needed to trade in processes and introduced a case man- While these reforms have gradu- South Africa is dedicated to terminal agement workflow. ally simplified bureaucratic require- handling, taking between 6 to 9 days ments, traders still need 6 separate for imports, and 3 to 4 days for exports. Transnet also improved port and documents to import a container and In 45 of the 189 economies measured terminal handling over the past years. 5 documents to export it through any by Doing Business, port and terminal In 2012, a new electronic data inter- of the country’s main ports. In France handling procedures for imports and change system—known as NAVIS— and Ireland, for example, only the bill exports can be completed in 2 days or was introduced to exchange informa- of lading and the customs declaration less. These include the largest trans- tion between customs, port authorities shipment hubs such as Singapore, FIGURE 8.3 The number of documents necessary to import and export in South Africa is high compared globally Number of documents EXPORT IMPORT France and Ireland 2 France and Ireland 2 Austria, Canada Canada, Denmark 3 and 6 other economies** 3 and 11 other economies* Mexico 4 Mexico 4 South Africa 5 China 5 Brazil 6 South Africa 6 China 8 Brazil 8 OECD OECD average average Documents required to export in South Africa: Documents required to import in South Africa: Balance of Payment (BOP) Form Balance of Payment (BOP) form Bill of lading Bill of lading Commercial Invoice Cargo release order Customs export declaration (SAD 500) Commercial invoice Packing List Customs import declaration (SAD 500) Packing list *Estonia, Hong Kong SAR (China), Italy, Japan, Republic of Korea, Panama, Singapore, Sweden, Switzerland, United Arab Emirates and United States **Hong Kong SAR (China), Italy, Republic of Korea, Panama, Singapore and Sweden Source: Doing Business database. TRADING ACROSS BORDERS 63 than in Cape Town. In fact, average an- FIGURE 8.4 The largest variations in time are related to port and terminal chorage waiting and truck turnaround handling efficiency Time to import (days) times are almost twice as long as in Cape Town or Port Elizabeth.18 Cape Town 7 6 2 4 19 Different operational models impact Port Elizabeth 7 7 2 4 20 delays: In the Ngqura port and Pier 1 in Durban, containers are unloaded form Ngqura 7 7 2 4 20 vessels with rubber tyred gantry cranes (RTGs) and stacked on top of each Durban 7 9 2 3 21 other. While this method increases the terminals’ capacity, consignees have to Document Port and Customs Inland wait for a whole batch to be released preparation Terminal transport handling and handling before they can pick up their contain- ers. Port Elizabeth and Pier 2 in Durban Note: The 4 stages measured include the following: a) document preparation records the time necessary to obtain have straddle carriers, allowing con- the 5 and 6 required documents in South Africa as measured by Doing Business, obtaining the letter of credit, and in the case of exports, the certificate of origin; b) port and terminal handling includes in the case of exports, the signees to pick up their containers as arrival of the vessel to the port, berthing, unloading of containers and exit of the containers from the port; in the case of imports, the arrival of the container to the port and loading of the container unto the vessel until it departs; c) soon as they are unloaded. Durban and customs records the time necessary to obtain clearances with customs and other border agencies if applicable; and d) Ngqura have “auto gates,” which allow inland transportation includes the time to coordinate and make transport arrangements, as well as the time of actual transportation of the container between the port and the warehouse, and vice versa. truck drivers arriving at a terminal gate Source: Doing Business database. to type in previously received secret codes to automatically receive pick Panama and the United Arab Emirates, and operational models (table 8.1). up points. Still, truck turnaround time but also Japanese ports, which handle In Durban, which handles the largest remains higher in these two ports—40 similar volumes as Durban. Within volume of containers and is the most minutes in Durban and 35 minutes in South Africa delays vary across ports congested port, overall port and ter- Ngqura—than in Cape Town and Port due to different levels of congestion minal handling time is one-third longer Elizabeth, which require 20 and 21 min- utes respectively.19 In Durban longer truck turnaround times could be due FIGURE 8.5 Exporting a container from South Africa is more expensive than in OECD high-income economies to congestion, and in Ngqura because Cost to export a 20 ft. container (US$) of the larger distances within the port trucks must cover. OECD high-income Singapore 120 150 50 140 460 economy average (US$1,080) The cost to import and export through Chile 220 190 100 400 910 South African ports is high compared globally. The cost of importing a 20- Mexico foot container from Johannesburg (Mexico City) 200 200 150 900 1,450 through the main ports in South Africa ranges from US$2,080 in Durban to Durban 355 285 90 1,100 1,830 US$2,267 in Cape Town, and the cost of exporting ranges between US$1,830 Brazil (São Paulo) 325 500 400 700 1,925 in Durban to US$2,078 in Cape Town (figure 8.5). The main cost is inland Ngqura 355 330 95 1,200 1,979 transportation, which varies due to distances.20 It is more expensive to Port export or import from Johannesburg 355 334 95 1,200 1,984 Elizabeth through the port of Cape Town be- cause the distance is larger than the Cape Town 355 323 100 1,300 2,078 distance between Johannesburg and Document Port and Customs Inland the other ports. preparation Terminal transport handling and handling Source: Doing Business database. 64 DOING BUSINESS IN SOUTH AFRICA 2015 Port and terminal handling costs Jordan reduced port and terminal han- are high compared internationally, WHAT CAN BE IMPROVED? dling time by expanding the wharf of particularly for imports. These costs Reduce and streamline Aqaba’s Container Terminal, extending include cargo dues paid to Transnet documentation requirements working hours, and introducing a new National Port Authority and terminal Despite simplified document require- x-ray scanner for export shipments handling charges paid to Transnet Port ments and the increased use of tech- at port entry. Poland implemented a Terminals—which are standard across nology over the past years, traders in new terminal operating system at the ports—and other fees charged by the South Africa still dedicate half of their port of Gdansk, allowing exchange of shipping lines.21 Overall, traders pay be- time to paperwork related to exports. information about the status of the tween US$417 and US$482 for imports South Africa can further reduce and cargo between the port, customs, and US$285 and US$334 for exports. streamline documentation require- inspectors, maintenance and clients. In Singapore, importers and export- ments in line with article 10 of the World Tanzania managed to reduce the ers pay US$150 for both imports and Trade Organization Trade Facilitation time to import from 31 to 26 days by exports. A study published by South Agreement, to which it is a signatory. upgrading infrastructure at the port of Africa’s Port Regulator shows that the For example, the South African Reserve Dar es Salaam.27 Thanks to new cranes, fees charged to cargo containers are Bank requests a Balance of Payment a conveyor belt and anchorage tankers, significantly more expensive than the Form (BOP form) for exporting and the port reduced congestion, as well as global average, despite tariff reduc- importing. The Central Bank could ob- berthing and unloading times. The port tions over the past years.22 The report tain the necessary information directly also privatized the operation of its con- also shows there is cross-subsidization from Customs through the SAD docu- tainer terminal through a concession to across port functions: from cargo ment, eliminating the need of a sepa- a private company and reformed fees owners, including containers, in favor rate BOP form. The Republic of South and charges. The port of Mombasa, of some dry bulk commodities and Korea requires only 3 documents—the Kenya increased its efficiency stream- vessel owners.23 Other reports show bill of lading, the customs declaration lining cargo clearance procedures and that Transnet uses its port revenues to and the packing list/delivery order—as increased storage tariffs to discourage subsidize freight rail capital projects.24 does Panama, which requires the bill of traders from using the port as a stor- lading, the customs export/import dec- age space. Free storage days and demurrage laration and the commercial invoice. penalties vary from port to port to Consider reducing port tariffs manage demand. The priority for the Improve port efficiency South Africa’s container port tariffs Ngqura and Port Elizabeth ports is to Port and terminal handling times in are high compared globally. One of the increase transshipment volumes, which South Africa are high, taking between reasons is that Transnet’s pricing strat- typically involve longer waiting times to 6 and 9 days for imports depending on egy serves to cross-subsidize different allow for containers arriving in feeders the port. Although Transnet introduced services within and beyond the ports. to arrive. On the other hand, the major performance indicators and targets to Port tariffs for cargo owners are high challenge for Durban’s terminal opera- help track progress, this still remains compared globally, whereas exports tor is reducing congestion; to this end, a key area for improvement. Many and vessels pay tariffs that are below it became stricter in enforcing storage economies worldwide have managed the global average. Also, port revenues fees to nudge consignees to pick up to improve the efficiency of their ports. are used to fund rail capital projects. containers earlier.25 Consignees have Some of the policy tools used in order to The Ports Regulator has already con- 4 free storage days in Ngqura, Port achieve this goal are: allowing private demned this practice, which is also out- Elizabeth and Cape Town, while in sector participation and increasing lawed by Directive 23(1).28 After a tariff Durban they only have 3 days. Storage competition in the provision of logistics decrease in 2013, the Ports Regulator fees are also much higher in Durban services; streamlining regulatory and curtailed tariff increases in 2014 and (between US$71 and US$187 per con- inspection procedures and the use 2015. Transnet could consider reducing tainer per day) than in the other ports of automation; modifying fees and fees charged to containers. (US$12 per container per day).26 charges; and improving terminal infra- structure or expanding port capacity. Introduce an electronic single window for trade Each port can benefit from a different Currently, communication between policy mix, as reflected by improve- SARS and Transnet occurs through ments in port management during an electronic data interchange sys- 2014 in Jordan, Poland or Tanzania. tem. Transnet’s system (NAVIS) and TRADING ACROSS BORDERS 65 the customs system are not directly estimates that the introduction of its border can also save costs. A harmo- connected, but they send messages single-window system brought some nized document for trade between to each other through Electronic Data US$18 million in benefits in 2010, part China and Hong Kong SAR, China, Interchange (EDI). Transnet notifies of the overall economic benefits that reduced paperwork by 60%.31 Thanks SARS every time a container is dis- year of up to US$3.47 billion from the to a border cooperation agreement charged and about any movements on agency’s trade facilitation efforts.30 with Sweden and Finland, Norway is the ports. South Africa could consider estimated to have avoided more than developing an electronic single window Promote regional integration US$9 million a year in costs to customs for trade going beyond the ports and through border cooperation authorities and US$48 million a year in including the different actors involved. agreements costs to businesses.32 Some of the benefits of electronic single South Africa is a key player for regional windows are: a single client interface integration in Southern Africa. Many of South Africa could consider introduc- with the government; standardization its neighbors depend on it as the main ing fast track procedures for low-risk of business processes; reduction of port of entry. Regional agreements to exporters and importers, including physical interactions and opportuni- ease procedures at border crossings are smaller firms who are part of larger ties for corruption; and decrease of essential. A trader in Vienna, in land- value chain suppliers. Introducing processing times through paperless locked Austria, needs only 4 days to trusted trader or authorized economic systems. arrange for the transportation and sub- operator programs with a regional sequent transport of cargo to the port framework could promote faster and Introducing an electronic single window of Hamburg, Germany, 900 kilometers cheaper access to ports and greater is a major undertaking. The first step away. On the other hand, a trader in regional integration. should be to assess and simplify pro- Harare, in landlocked Zimbabwe, needs cesses of the agencies involved to avoid about 2 weeks to transport cargo to replicating or even duplicating often Durban, 1,670 kilometers away. These NOTES outdated paper based processes. Also, longer times are partly due to the qual- an electronic single window requires ity of infrastructure but also to controls 1. National Development Plan 2030. http:// www.gov.za/issues/national-development- specific legal and regulatory framework and waiting times at border posts. plan-2030. to operate. Today, 73 economies around Botswana is benefiting from greater 2. World Development Indicators. Annual the world have implemented single- cooperation with South Africa at the growth rate of exports of goods and services based on constant local currency. window systems with varying degrees Tlokweng-Kopfontein border crossing, Exports of goods and services represent the of sophistication—18 link all relevant but it still takes more than a week to value of all goods and other market services government agencies and 55 do so par- transport cargo over a similar distance provided to the rest of the world. 3. COMTRADE and Observatory of Economic tially.29 The most sophisticated single to Durban than it takes from Vienna to Complexity. http://atlas.media.mit.edu/ windows systems link government and Hamburg. profile/country/zaf/. private parties involved in trade and 4. World Bank Group. 2014. South Africa Economic Update Focus on Export transport into a unique platform, allow- South Africa and Mozambique have al- Competitiveness. Africa Regional Poverty ing the exchange of information in real ready signed an agreement to develop Reduction and Economic Management, time and speeding up approvals. a one-stop border post, which is pend- Issue No. 5. Washington, DC: World Bank Group. ing implementation. There are many 5. Subramanian, Uma. 2012. “Trade Logistics Korea has gone beyond the one-stop reform examples facilitating regional Reforms: Linking Business to Global shop to implement an electronic single trade. Mali signed a border cooperation Markets.” ViewPoint. Note Number 335. Washington, DC: World Bank Group. window where importers and export- agreement with Senegal that harmo- 6. Djankov, Simeon, Caroline Freund and Cong ers can submit documents and obtain nized the countries’ trade documents. S. Pham. 2010. “Trading on Time.” Review of approvals from customs and different The number of checkpoints between Economics and Statistics 92 (1): 166–73. 7. Raballand, Gaël, Salim Refas, Monica agencies. This electronic window has Bamako and Dakar dropped from 25 Beuran and Gozde Isik. 2012. “Why Cargo brought together 69 government agen- to 4. In 2005, Honduras and Nicaragua Dwell Time Matters in Trade”. Economic cies, as well as private participants, cut the waiting time at their shared Premise Series. Washington, DC: World Bank Group. including traders, banks, customs border in half. Previously traders had to 8. Transnet 2014 annual report. brokers, insurance companies and go through inspections on both sides of 9. WITS World Bank/ UN COMTRADE. The freight-forwarders. It allows all par- the border; now the mutual recognition product nomenclature used is HS 1988/92. Exports indicated are Gross Exports ties to exchange information in real of inspections ensures that a single (including re-exports) and valuation is Free time, thus considerably speeding up inspection suffices. Synchronizing on Board (FOB). approvals. The Korea Customs Service documents and procedures at the 10. To ensure comparability across economies, the Doing Business methodology assumes 66 DOING BUSINESS IN SOUTH AFRICA 2015 trade by sea transport, which accounted for April 2014. http://www.transnet-tpt.net/ 80% of the volume of global trade in 2012. Customer/Tariffs/Tariff%20Book%202014. (UNCTAD). pdf. 11. Since the methodology focuses exclusively 27. Doing Business database. on containerized trade, only ports with 28. The Directives develop the National Ports container terminals were selected. Act (2005) and its Regulations. Directive 12. Transnet National Port Authority (TNPA) 23(1) establishes the criteria that the Ports owns and manages eight commercial ports. Regulator needs to consider when approving A ninth port, primarily a fishing port, is tariff changes requested by Transnet. utilized by the De Beers Group for mining- 29. World Bank Group. 2013. Doing Business related activities. 2014: Understanding Regulations for Small and 13. The 1996 White Paper on Transport policy Medium-Size Enterprises. Washington, DC: found the need to split cargo handling, World Bank Group. which is commercial in nature, from landlord 30. Korea Customs Service. 2011. The and marine activities, which are considered Embodiment of Business-Friendly Environment services. In 2000, the Transnet’s ports by KCS Challenges. Seoul. division (Portnet) was split to create TPT 31. World Bank Group. 2006. Doing Business and TNPA. 2007: How to Reform. P46. Washington, DC: 14. South Africa is represented by the port of World Bank Group. Durban in the global report for the indicator 32. World Bank Group. 2008. Doing Business trading across borders. in Landlocked Economies 2009. p. 47. 15. Doing Business database. Washington, DC: World Bank Group. 16. Interview with SARS representatives. March 2014. Pretoria. 17. SAD 500 was introduced in 2006. 18. Data provided by Transnet Port Terminals in March 2014. 19. Transnet 2014 annual report. 20. Per methodology, itinerary covered by inland transportation is from the warehouse –assumed to be in Johannesburg– and each of the ports. The distances are as follows: Johannesburg to Durban, 570 kilometers; Johannesburg to Port Elizabeth and Ngqura, 1,070 kilometers; and Johannesburg to Cape Town, 1,400 kilometers. 21. Consignees pay cargo dues to the TNPA as follows: US$179 for importing or US$59 for exporting a 20-foot container. They also pay approximately US$125 for terminal handling charges to the TPT. Terminal handling charges are paid to the TPT through the shipping line. 22. Ports Regulator of South Africa. 2013. “Global Port Pricing Comparator Study—01/04/2013 Research Summary.” Durban, South Africa. http://www. portsregulator.org/images/documents/Port- tariffs-benchmarking-report-2013-14.pdf. 23. Port tariffs on cars are also higher than the global average. The report identifies coal and iron as the main bulk commodities benefitted. Lower port tariffs on vessels seem to especially favor transshipment vessels. 24. Steyn, Grove. 2012. The impact of economic regulation on the management and performance of South Africa State Owned Enterprises. South African Economic Regulators Conference. Meridian Economics. 25. Raballand, Gaël, Tshepo Kgare and Hans W. Ittmann. 2011. “Cargo Dwell Time in Durban.” Policy Research Working Paper 5794. Africa Region Transport Unit. Washington, DC: World Bank Group. 26. Storage fees in local currency are as follow: in Durban, they start at ZAR792 on day 4, increasing gradually; after the day 6, they are ZAR2,100. In the other three ports, there is a standard fee of ZAR129 per day starting on day 5. Transnet Port Terminals Tariff. Doing Business in South Africa 2015 Data notes The indicators presented and analyzed professionals routinely administering or in Doing Business in South Africa 2015 advising on legal and regulatory require- measure business regulation and the pro- ments. These experts had several rounds tection of property rights—and their ef- of interaction with the Doing Business fect on businesses, especially small and in South Africa team, involving confer- medium-size domestic firms. First, the ence calls, written correspondence and indicators document the complexity of visits by the team. The data from ques- regulation, such as the number of proce- tionnaires were subjected to numerous dures to start a business or to register a rounds of verification, leading to revisions transfer of commercial property. Second, or expansions of the information col- they gauge the time and cost to achieve lected. a regulatory goal or comply with regula- tion, such as the time and cost to enforce The Doing Business methodology offers a contract. several advantages. It is transparent, us- ing factual information about what laws This report presents Doing Business in- and regulations say and allowing multi- dicators for 9 cities in South Africa. The ple interactions with local respondents data for all sets of indicators in Doing to clarify potential misinterpretations of Business in South Africa 2015 are current questions. Having representative sam- as of January 2015. The data for Johan- ples of respondents is not an issue; Do- nesburg and 188 other economies used ing Business is not a statistical survey, the for comparison are based on the indica- texts of the relevant laws and regulations tors in Doing Business 2015, Going Beyond are collected and answers checked for Efficiency, the twelfth in a series of an- accuracy. The methodology is inexpen- nual reports published by the World Bank sive and easily replicable, so data can be Group.1 collected in a large sample of economies. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. METHODOLOGY Finally, the data not only highlight the extent of specific regulatory obstacles The Doing Business in South Africa 2015 to business but also identify their source data were collected in a standardized and point to what might be reformed. way. To start, the team customized the Doing Business questionnaires for the specific study in South Africa. The ques- tionnaires use a simple business case to LIMITS TO WHAT IS ensure comparability across economies and over time—with assumptions about MEASURED the legal form of the business, its size, The Doing Business methodology has 4 its location and the nature of its opera- limitations that should be considered tions. Questionnaires were administered when interpreting the data. First, the to local experts, including lawyers, busi- data often focus on a specific business ness consultants, architects, engineers, form—generally a limited liability compa- public officials, magistrates, and other ny (or its legal equivalent) of a specified 68 DOING BUSINESS IN SOUTH AFRICA 2015 size—and may not be representative of Economy characteristics the regulation on other businesses, for example, sole proprietorships. Second, Gross national income per capita transactions described in a standardized Doing Business in South Africa 2015 reports 2013 income per capita as published case scenario refer to a specific set of is- in the World Bank’s World Development Indicators 2014. Income is calculated sues and may not represent the full set of using the Atlas method (current U.S. dollars). For cost indicators expressed as a issues that a business encounters. Third, percentage of income per capita, 2013 gross national income (GNI) in U.S. dollars the measures of time involve an element is used as the denominator. South Africa’s GNI per capita in 2013 = US$7,190 of judgment by the expert respondents. (ZAR62,590). When sources indicate different esti- mates, the time indicators reported in Region and income group Doing Business represent the median val- Doing Business uses the World Bank regional and income group classifications, ues of several responses given under the available at http://data.worldbank.org/about/country-classifications. While the assumptions of the standardized case. World Bank does not assign regional classifications to high-income economies, regional averages presented in figures and tables in the Doing Business in South Finally, the methodology assumes that a Africa 2015 report include economies from all income groups (low, lower middle, business has full information on what is upper middle and high income). For the purpose of the report, high-income OECD required and does not waste time when economies are assigned the “regional” classification OECD high income. completing procedures. In practice, com- pleting a procedure may take longer if Exchange rate the business lacks information or is un- The exchange rate used in this report is: 1 US$ = 8.7 South African Rand (ZAR). able to follow up promptly. Alternatively, the business may choose to disregard some burdensome procedures. For both local incorporation lawyers, notaries and reasons the time delays reported in Do- STARTING A BUSINESS public officials complete and verify the ing Business would differ from the recol- Doing Business records all procedures data. lection of entrepreneurs reported in the officially required, or commonly done World Bank Enterprise Surveys or other in practice, for an entrepreneur to start Information is also collected on the se- firm-level surveys. up and formally operate an industrial or quence in which procedures are to be commercial business, as well as the time completed and whether procedures may and cost to complete these procedures be carried out simultaneously. It is as- and the paid-in minimum capital require- sumed that any required information is CHANGES IN WHAT IS ment (figure 9.1). These procedures in- readily available and that the entrepre- MEASURED clude obtaining all necessary licenses neur will pay no bribes. If answers by lo- and permits and completing any required cal experts differ, inquiries continue until As part of a 2-year update in methodol- notifications, verifications or inscriptions the data are reconciled. ogy, Doing Business 2015 incorporated important changes that are reflected in for the company and employees with rel- evant authorities. The ranking of cities on To make the data comparable across Doing Business in South Africa 2015. All economies, several assumptions about the ease of starting a business is deter- topic-level rankings are now computed the business and the procedures are mined by sorting their distance to fron- on the basis of distance to frontier (see used. tier scores for starting a business. These the section About Doing Business and Do- scores are the simple average of the dis- ing Business in South Africa 2015). tance to frontier scores for each of the Assumptions about the component indicators (figure 9.2). The business For the indicator of dealing with con- distance to frontier measure illustrates The business: struction permits, the cost of construc- the distance of an economy to the “fron- tion is now set at 50 times income per tier,” which is derived from the most ef- ĖŤ Is a limited liability company (or its le- capita (before, the cost was assessed by ficient practice or highest score achieved gal equivalent). If there is more than the Doing Business respondents). In addi- on each indicator. one type of limited liability company tion, this indicator set no longer includes in the economy, the limited liability the procedures for obtaining a landline After a study of laws, regulations and form most common among domestic telephone connection. For enforcing con- publicly available information on business firms is chosen. Information on the tracts, the value of the claim is now set at entry, a detailed list of procedures is de- most common form is obtained from twice the income per capita with a mini- veloped, along with the time and cost to incorporation lawyers or the statistical mum of US$5,000. comply with each procedure under nor- office. mal circumstances and the paid-in mini- ĖŤ Operates in the selected city. mum capital requirement. Subsequently, DATA NOTES 69 FIGURE 9.1 What are the time, cost, paid-in minimum capital and number of FIGURE 9.2 Starting a business: procedures to get a local limited liability company up and running? getting a local limited liability company up and running Cost (% of income per capita) Rankings are based on distance to frontier scores for 4 indicators Formal operation Preregistration, registration and As % of income Paid-in postregistration per capita, no $ Number of minimum procedures (in calendar days) bribes included capital 25% 25% Time Cost Entrepreneur 25% 25% Time Procedures Paid-in Preregistration Registration, Postregistration (days) minimum incorporation capital Procedures are Funds deposited in a completed when bank or with a notary final document before registration, as % is received of income per capita ĖŤ Is 100% domestically owned and has must be completed in the same build- 5 owners, none of whom is a legal en- ing but in different offices or at different tity. counters are counted separately. If found- ers have to visit the same office several to the general public, they are used by ĖŤ Has start-up capital of 10 times in- times for different sequential procedures, come per capita, paid in cash. the majority of companies, and avoiding each is counted separately. The founders them cause substantial delays. ĖŤ Performs general industrial or com- are assumed to complete all procedures mercial activities, such as the produc- themselves, without middlemen, facilita- Only procedures required of all business- tion or sale to the public of products tors, accountants or lawyers, unless the es are covered. Industry-specific proce- or services. The business does not use of such a third party is mandated by dures are excluded. For example, pro- perform foreign trade activities and law or solicited by the majority of entre- cedures to comply with environmental does not handle products subject to a preneurs. If the services of professionals regulations are included only when they special tax regime, for example, liquor are required, procedures conducted by apply to all businesses conducting gen- or tobacco. It is not using heavily pol- such professionals on behalf of the com- eral commercial or industrial activities. luting production processes. pany are counted separately. Each elec- Procedures that the company undergoes tronic procedure is counted separately. If to connect to electricity, water, gas and ĖŤ Leases the commercial plant or offices 2 procedures can be completed through and is not a proprietor of real estate. waste disposal services are not included. the same website but require separate ĖŤ Does not qualify for investment incen- filings, they are counted as 2 separate Time tives or any special benefits. procedures. Time is recorded in calendar days. The ĖŤ Has at least 10 and up to 50 employ- measure captures the median duration Both pre- and postincorporation proce- ees 1 month after the commencement that incorporation lawyers indicate is dures that are officially required for an of operations, all of them domestic na- necessary in practice to complete a pro- entrepreneur to formally operate a busi- tionals. cedure with minimum follow-up with ness are recorded (table 9.1). government agencies and no extra pay- ĖŤ Has a turnover of at least 100 times ments. It is assumed that the minimum income per capita. Procedures required for official corre- time required for each procedure is 1 day, spondence or transactions with public except for procedures that can be fully ĖŤ Has a company deed 10 pages long. agencies are also included. For example, completed online, for which the time re- if a company seal or stamp is required quired is recorded as half a day. Although Procedures on official documents, such as tax dec- procedures may take place simultaneous- A procedure is defined as any interaction larations, obtaining the seal or stamp is ly, they cannot start on the same day (that of the company founders with external counted. Similarly, if a company must is, simultaneous procedures start on con- parties (for example, government agen- open a bank account before register- secutive days), again with the exception cies, lawyers, auditors or notaries). In- ing for sales tax or value added tax, this of procedures that can be fully completed teractions between company founders or transaction is included as a procedure. online. A procedure is considered com- company officers and employees are not Shortcuts are counted only if they fulfill 4 pleted once the company has received counted as procedures. Procedures that criteria: they are legal, they are available the final incorporation document, such 70 DOING BUSINESS IN SOUTH AFRICA 2015 value added tax is not part of the incorpo- requesting and receiving all necessary in- TABLE 9.1 What do the starting ration cost. The company law, the com- spections (unless completed by a private, a business indicators measure? mercial code, and specific regulations third-party inspector). Doing Business also Procedures to legally start and operate a and fee schedules are used as sources for records procedures for obtaining connec- company (number) calculating costs. In the absence of fee tions for water and sewerage. Procedures Preregistration (for example, name verification or schedules, a government officer’s esti- necessary to register the warehouse so reservation, notarization) mate is taken as an official source. In the that it can be used as collateral or trans- Registration in the selected city absence of a government officer’s esti- ferred to another entity are also counted. Postregistration (for example, social security mate, estimates by incorporation lawyers The questionnaire divides the process of registration, company seal) are used. If several incorporation lawyers building a warehouse into distinct pro- Time required to complete each procedure provide different estimates, the median cedures and solicits data for calculating (calendar days) reported value is applied. In all cases the the time and cost to complete each pro- Does not include time spent gathering cost excludes bribes. cedure. The ranking of cities on the ease information of dealing with construction permits is Each procedure starts on a separate day Paid-in minimum capital determined by sorting their distance to (2 procedures cannot start on the same day)— The paid-in minimum capital require- frontier scores for dealing with construc- though procedures that can be fully completed online are an exception to this rule ment reflects the amount that the en- tion permits. These scores are the simple trepreneur needs to deposit in a bank or average of the distance to frontier scores Procedure considered completed once final incorporation document is received with a notary before registration and up for each of the component indicators to 3 months following incorporation and (figure 9.4). No prior contact with officials is recorded as a percentage of the econ- Cost required to complete each procedure omy’s income per capita. The amount Information is collected from experts in (% of income per capita) is typically specified in the commercial construction licensing, including archi- Official costs only, no bribes code or the company law. Many econo- tects, civil engineers, construction law- No professional fees unless services required by mies require minimum capital but allow yers, construction firms, utility service law businesses to pay only a part of it before providers and public officials who deal Paid-in minimum capital (% of income per registration, with the rest to be paid af- with building regulations, including ap- capita) ter the first year of operation. In Turkey provals, permit issuance and inspections. Funds deposited in a bank or with a notary in June 2014, for example, the minimum To make the data comparable across before registration (or within 3 months) capital requirement was 10,000 Turk- economies, several assumptions about ish liras, of which one-fourth needed to the business, the warehouse project and be paid before registration. The paid-in the utility connections are used. minimum capital recorded for Turkey is as the company registration certificate or therefore 2,500 Turkish liras, or 12.14% of Assumptions about the tax number. If a procedure can be accel- income per capita. construction company erated for an additional cost, the fastest procedure is chosen if that option is more The business (BuildCo): The data details on starting a business can beneficial to the economy’s ranking. It is assumed that the entrepreneur does not be found for each economy at http://www. ĖŤ Is a limited liability company. waste time and commits to completing doingbusiness.org. This methodology was ĖŤ Operates in the selected city. each remaining procedure without delay. developed by Djankov and others (2002) The time that the entrepreneur spends on and is adopted here with minor changes. ĖŤ Is 100% domestically and privately gathering information is ignored. It is as- owned. sumed that the entrepreneur is aware of ĖŤ Has 5 owners, none of whom is a legal all entry requirements and their sequence DEALING WITH entity. from the beginning but has had no prior CONSTRUCTION PERMITS contact with any of the officials. ĖŤ Is fully licensed and insured to carry Doing Business records all procedures re- out construction projects, such as quired for a business in the construction Cost building warehouses. industry to build a warehouse (figure 9.3). Cost is recorded as a percentage of the These procedures include obtaining and ĖŤ Has 60 builders and other employees, economy’s income per capita. It includes submitting all relevant project-specific all of them nationals with the techni- all official fees and fees for legal or pro- documents (for example, building plans, cal expertise and professional experi- fessional services if such services are site maps and certificates of urbanism) to ence necessary to obtain construction required by law. Fees for purchasing and the authorities; hiring external third-party permits and approvals. legalizing company books are included if supervisors, engineers or inspectors (if these transactions are required by law. ĖŤ Has at least 1 employee who is a li- necessary); obtaining all necessary clear- Although value added tax registration censed architect or engineer and ances, licenses, permits and certificates; can be counted as a separate procedure, submitting all required notifications; and DATA NOTES 71 FIGURE 9.3 What are the time, cost and number of procedures to comply with FIGURE 9.4 Dealing with construction formalities to build a warehouse? permits: building a warehouse Rankings are based on distance to frontier scores for 3 indicators Cost (% of warehouse value) Days to comply As % of with formalities warehouse Completed to build a value, no warehouse warehouse bribes included Number of procedures 33.3% 33.3% Time Cost 33.3% A business in the Procedures construction industry Time P Preconstruction Construction Postconstruction (days) and utilities Procedures are completed when final document is received; construction permits, inspections and utility connections included registered with the local association of accurately registered in the cadastre If a wet fire protection system is re- architects or engineers. and land registry. quired by law, it is assumed that the water demand specified below also ĖŤ Has paid all taxes and taken out all ĖŤ Is valued at 50 times income per cap- covers the water needed for fire pro- necessary insurance applicable to its ita. tection. general business activity (for example, ĖŤ Will be a new construction (there was accidental insurance for construction ĖŤ Will have an average water use of 662 no previous construction on the land). workers and third-person liability). liters (175 gallons) a day and an aver- ĖŤ Owns the land on which the ware- ĖŤ Will have complete architectural and age wastewater flow of 568 liters (150 technical plans prepared by a licensed gallons) a day. house will be built. architect. If preparation of the plans ĖŤ Will have a peak water use of 1,325 Assumptions about the requires such steps as obtaining fur- liters (350 gallons) a day and a peak warehouse ther documentation or getting prior wastewater flow of 1,136 liters (300 The warehouse: approvals from external agencies, gallons) a day. these are counted as procedures. ĖŤ Will be used for general storage ac- ĖŤ Will have a constant level of water de- ĖŤ Will include all technical equipment tivities, such as storage of books or mand and wastewater flow through- required to be fully operational. stationery. The warehouse will not be out the year. used for any goods requiring special ĖŤ Will take 30 weeks to construct (ex- ĖŤ Will be 1 inch in diameter for the water conditions, such as food, chemicals or cluding all delays due to administra- connection and 4 inches in diameter pharmaceuticals. tive and regulatory requirements). for the sewerage connection. ĖŤ Will have 2 stories, both above Assumptions about the utility Procedures ground, with a total constructed area connections A procedure is any interaction of the of 1,300.6 square meters (14,000 The water and sewerage connections: company’s employees or managers, or square feet). Each floor will be 3 me- any party acting on behalf of the com- ters (9 feet, 10 inches) high. ĖŤ Will be 150 meters (492 feet) from pany, with external parties, including the existing water source and sewer ĖŤ Will have road access and be located government agencies, notaries, the land tap. If there is no water delivery infra- in the peri-urban area of the selected registry, the cadastre, utility companies structure in the economy, a borehole city (that is, on the fringes of the city and public inspectors—or the hiring of will be dug. If there is no sewerage in- but still within its official limits). private inspectors and technical experts frastructure, a septic tank in the small- apart from in-house architects and en- ĖŤ Will not be located in a special eco- est size available  will be installed or gineers. Interactions between company nomic or industrial zone. built. employees, such as development of the ĖŤ Will be located on a land plot of 929 ĖŤ Will not require water for fire protec- warehouse plans and inspections con- square meters (10,000 square feet) tion reasons; a fire extinguishing sys- ducted by employees, are not counted as that is 100% owned by BuildCo and is tem (dry system) will be used instead. procedures. But interactions necessary to 72 DOING BUSINESS IN SOUTH AFRICA 2015 is, simultaneous procedures start on con- The questionnaire divides the process TABLE 9.2 What do the dealing secutive days), again with the exception of getting an electricity connection into with construction permits indicators of procedures that can be fully completed distinct procedures and solicits data for measure? online. If a procedure can be accelerated calculating the time and cost to complete Procedures to legally build a warehouse legally for an additional cost and the ac- each procedure. The ranking of econo- (number) celerated procedure is used by the major- mies on the ease of getting electricity Submitting all relevant documents and obtaining ity of companies, the fastest procedure is is determined by sorting their distance all necessary clearances, licenses, permits and certificates chosen. It is assumed that BuildCo does to frontier scores for getting electricity. not waste time and commits to complet- These scores are the simple average of Submitting all required notifications and receiving all necessary inspections ing each remaining procedure without the distance to frontier scores for each delay. The time that BuildCo spends on of the component indicators (figure 9.6). Obtaining utility connections for water and sewerage gathering information is not taken into account. It is assumed that BuildCo is Data are collected from the electricity Registering the warehouse after its completion (if required for use as collateral or for transfer of aware of all building requirements and distribution utility, then completed and the warehouse) their sequence from the beginning. verified by electricity regulatory agencies Time required to complete each procedure and independent professionals such as (calendar days) Cost electrical engineers, electrical contrac- Does not include time spent gathering Cost is recorded as a percentage of the tors and construction companies. The information warehouse value (assumed to be 50 electricity distribution utility consulted Each procedure starts on a separate day— times income per capita). Only official is the one serving the area (or areas) though procedures that can be fully completed costs are recorded. All the fees associ- where warehouses are located. If there is online are an exception to this rule a choice of distribution utilities, the one ated with completing the procedures to Procedure considered completed once final legally build a warehouse are recorded, serving the largest number of customers document is received including those associated with obtaining is selected. No prior contact with officials land use approvals and preconstruction Cost required to complete each procedure design clearances; receiving inspections To make the data comparable across (% of warehouse value) before, during and after construction; ob- economies, several assumptions about Official costs only, no bribes taining utility connections; and register- the warehouse and the electricity con- ing the warehouse property. Nonrecur- nection are used. ring taxes required for the completion of obtain any plans, drawings or other docu- the warehouse project are also recorded. Assumptions about the ware- Sales taxes (such as value added tax) or house ments from external parties (including capital gains taxes are not recorded. Nor The warehouse: any documentation required for the ar- are deposits that must be paid up front chitect to prepare the plans), or to have such documents approved or stamped and are later refunded. The building code, ĖŤ Is owned by a local entrepreneur. information from local experts, and spe- by external parties, are counted as pro- ĖŤ Is located in the selected city (In the cific regulations and fee schedules are cedures. Procedures that the company case of South Africa, the location is used as sources for costs. If several local undergoes to connect the warehouse assumed to be within each municipal- partners provide different estimates, the to water and sewerage are included. All ity’s seat—e.g. Durban in eThekwini or median reported value is used. procedures that are legally required, or Pretoria in Tshwane). that are done in practice by the majority of companies, to build a warehouse are The data details on dealing with construc- ĖŤ Is located in an area where similar counted, even if they may be avoided in tion permits can be found for each economy warehouses are typically located. In exceptional cases (table 9.2). at http://www.doingbusiness.org. this area a new electricity connection is not eligible for a special investment Time promotion regime (offering special Time is recorded in calendar days. The subsidization or faster service, for ex- measure captures the median duration GETTING ELECTRICITY ample). that local experts indicate is necessary to Doing Business records all procedures re- ĖŤ Is located in an area with no physical complete a procedure in practice. It is as- quired for a business to obtain a perma- constraints. For example, the property sumed that the minimum time required nent electricity connection and supply for is not near a railway. for each procedure is 1 day, except for a standardized warehouse (figure 9.5). procedures that can be fully completed These procedures include applications ĖŤ Is a new construction and is being online, for which the time required is and contracts with electricity utilities, connected to electricity for the first recorded as half a day. Although proce- all necessary inspections and clearances time. dures may take place simultaneously, from the utility and other agencies, and ĖŤ Has 2 stories, both above ground, with they cannot start on the same day (that the external and final connection works. a total surface area of approximately DATA NOTES 73 FIGURE 9.5 Doing Business measures the connection process at the level of FIGURE 9.6 Getting electricity: distribution utilities obtaining an electricity connection Rankings are based on distance to frontier scores for 3 indicators Days to obtain As % of income an electricity per capita, no connection bribes included Generation Transmission 33.3% 33.3% Time Cost 33.3% Procedures Distribution X New connections Network operation and maintenance Metering and billing Steps to file an application, prepare a Customer design, complete works, obtain approvals, go through inspections, install a meter and sign a supply contract 1,300.6 square meters (14,000 square ĖŤ Will supply monthly electricity con- services of professionals (such as a pri- feet). The plot of land on which it is sumption of 0.07 gigawatt-hours vate firm rather than the utility for the built is 929 square meters (10,000 (GWh). external works), these procedures are square feet). recorded if they are commonly done. For ĖŤ Does not involve work to install the all procedures, only the most likely cases ĖŤ Is used for storage of refrigerated internal electrical wiring. This has al- (for example, more than 50% of the time goods. ready been completed, up to and in- the utility has the material) and those fol- cluding the customer’s service panel lowed in practice for connecting a ware- Assumptions about the elec- or switchboard and installation of the house to electricity are counted. tricity connection meter base. The electricity connection: Procedures Time ĖŤ Is a permanent one. A procedure is defined as any interaction Time is recorded in calendar days. The of the company’s employees or its main measure captures the median duration ĖŤ Is a 3-phase, 4-wire Y, 140-kilovolt- that the electricity utility and experts electrician or electrical engineer (that is, ampere (kVA) (subscribed capac- indicate is necessary in practice, rather the one who may have done the internal ity) connection (where the voltage than required by law, to complete a pro- wiring) with external parties, such as the is 120/208 V, the current would be cedure with minimum follow-up and no electricity distribution utility, electric- 400 amperes; where it is 230/400 B, extra payments. It is also assumed that ity supply utilities, government agencies, the current would be nearly 200 am- the minimum time required for each pro- electrical contractors and electrical firms. peres). cedure is 1 day. Although procedures may Interactions between company employ- ĖŤ Is 150 meters long. The connection ees and steps related to the internal take place simultaneously, they cannot is to either the low-voltage or the electrical wiring, such as the design and start on the same day (that is, simulta- medium-voltage distribution network execution of the internal electrical instal- neous procedures start on consecutive and either overhead or underground, lation plans, are not counted as proce- days). It is assumed that the company whichever is more common in the dures. Procedures that must be complet- does not waste time and commits to area where the warehouse is located. ed with the same utility but with different completing each remaining procedure departments are counted as separate without delay. The time that the compa- ĖŤ Requires works that involve the cross- procedures (table 9.3). ny spends on gathering information is not ing of a 10-meter road (such as by taken into account. It is assumed that the excavation or overhead lines) but are The company’s employees are assumed company is aware of all electricity con- all carried out on public land. There is to complete all procedures themselves nection requirements and their sequence no crossing of other owners’ private unless the use of a third party is man- from the beginning. property because the warehouse has dated (for example, if only an electrician access to a road. registered with the utility is allowed to ĖŤ Includes only a negligible length in the submit an application). If the company customer’s private domain. can, but is not required to, request the 74 DOING BUSINESS IN SOUTH AFRICA 2015 Doing Business does not record the full present value of lost interest earnings of TABLE 9.3 What do the getting amount of the security deposit. If the L 70,998.58. In contrast, if the customer electricity indicators measure? deposit is based on the customer’s ac- chose to settle the deposit with a bank Procedures to obtain an electricity connection tual consumption, this basis is the one guarantee at an annual rate of 2.5%, the (number) assumed in the case study. Rather than amount lost over the 5 years would be Submitting all relevant documents and obtaining the full amount of the security deposit, just L 14,804.30. all necessary clearances and permits Doing Business records the present value Completing all required notifications and of the losses in interest earnings expe- The data details on getting electricity can receiving all necessary inspections rienced by the customer because the be found for each economy at http://www. Obtaining external installation works and utility holds the security deposit over a possibly purchasing material for these works doingbusiness.org. prolonged period, in most cases until the Concluding any necessary supply contract and end of the contract (assumed to be after obtaining final supply 5 years). In cases where the security de- Time required to complete each procedure posit is used to cover the first monthly (calendar days) REGISTERING PROPERTY consumption bills, it is not recorded. To Is at least 1 calendar day Doing Business records the full sequence calculate the present value of the lost of procedures necessary for a business Each procedure starts on a separate day interest earnings, the end-2013 lending (the buyer) to purchase a property from Does not include time spent gathering rates from the International Monetary another business (the seller) and to trans- information Fund’s International Financial Statistics are fer the property title to the buyer’s name Reflects the time spent in practice, with little used. In cases where the security deposit follow-up and no prior contact with officials so that the buyer can use the property is returned with interest, the difference for expanding its business, use the prop- Cost required to complete each procedure between the lending rate and the interest (% of income per capita) erty as collateral in taking new loans or, paid by the utility is used to calculate the if necessary, sell the property to another Official costs only, no bribes present value. business. The process starts with obtain- Value added tax excluded ing the necessary documents, such as a In some economies the security deposit copy of the seller’s title if necessary, and can be put up in the form of a bond: the conducting due diligence if required. The Cost company can obtain from a bank or an transaction is considered complete when Cost is recorded as a percentage of the insurance company a guarantee issued it is opposable to third parties and when economy’s income per capita. Costs are on the assets it holds with that financial the buyer can use the property, use it as recorded exclusive of value added tax. All institution. In contrast to the scenario collateral for a bank loan or resell it (fig- the fees and costs associated with com- in which the customer pays the deposit ure 9.7). The ranking of cities on the ease pleting the procedures to connect a ware- in cash to the utility, in this scenario the of registering property is determined by house to electricity are recorded, includ- company does not lose ownership con- sorting their distance to frontier scores ing those related to obtaining clearances trol over the full amount and can con- for registering property. These scores from government agencies, applying for tinue using it. In return the company will are the simple average of the distance to the connection, receiving inspections of pay the bank a commission for obtaining frontier scores for each of the component both the site and the internal wiring, pur- the bond. The commission charged may indicators (figure 9.8). chasing material, getting the actual con- vary depending on the credit standing of nection works and paying a security de- the company. The best possible credit Every procedure required by law or nec- posit. Information from local experts and standing and thus the lowest possible essary in practice is included, whether specific regulations and fee schedules are commission are assumed. Where a bond it is the responsibility of the seller or the used as sources for costs. If several lo- can be put up, the value recorded for the buyer or must be completed by a third cal partners provide different estimates, deposit is the annual commission times party on their behalf. Local property law- the median reported value is used. In all the 5 years assumed to be the length of yers, notaries and property registries pro- cases the cost excludes bribes. the contract. If both options exist, the vide information on procedures as well cheaper alternative is recorded. as the time and cost to complete each of Security deposit them. The registering property indicators Utilities require security deposits as a In Honduras in June 2014 a customer do not measure the accessibility of prop- guarantee against the possible failure of requesting a 140-kVA electricity connec- erty registration systems, the legal secu- customers to pay their consumption bills. tion would have had to put up a security rity offered by formal registration, the use For this reason the security deposit for a deposit of 118,434 Honduran lempiras (L) of informal property registration systems new customer is most often calculated in cash or check, and the deposit would or the equity of land policies. as a function of the customer’s estimated have been returned only at the end of consumption. the contract. The customer could instead To make the data comparable across have invested this money at the prevail- economies, several assumptions about ing lending rate of 20.08%. Over the 5 years of the contract this would imply a DATA NOTES 75 FIGURE 9.7 What are the time, cost and number of procedures required to transfer FIGURE 9.8 Registering property: property between 2 local companies? transfer of property between 2 local companies Cost (% of property value) Rankings are based on distance to frontier scores for 3 indicators Buyer can use the property, As % of property resell it or use Days to it as collateral transfer value, no bribes property included Number of procedures Land & 2-story warehouse 33.3% 33.3% Seller with property Time Cost registered and no title disputes Time 33.3% Pr Preregistration Registration Postregistration (days) Procedures Steps to check encumbrances, obtain clearance certificates, prepare deed and transfer title so that the property can be the parties to the transaction, the prop- square feet) is located on the land. occupied, sold or used as collateral erty and the procedures are used. The warehouse is 10 years old, is in good condition and complies with all Assumptions about the parties safety standards, building codes and The parties (buyer and seller): other legal requirements. It has no and used by the majority of property own- heating system. The property of land ers. Although the buyer may use lawyers ĖŤ Are limited liability companies. and building will be transferred in its or other professionals where necessary entirety. in the registration process, it is assumed ĖŤ Are located in the selected city. that the buyer does not employ an out- ĖŤ Will not be subject to renovations or side facilitator in the registration process ĖŤ Are 100% domestically and privately additional building following the pur- unless legally or in practice required to do owned. chase. so. ĖŤ Have 50 employees each, all of whom ĖŤ Has no trees, natural water sources, are nationals. natural reserves or historical monu- ĖŤ Perform general commercial activities. ments of any kind. TABLE 9.4 What do the registering ĖŤ Will not be used for special purpos- property indicators measure? Assumptions about the es, and no special permits, such as Procedures to legally transfer title on property for residential use, industrial plants, immovable property (number) The property: waste storage or certain types of ag- Preregistration procedures (for example, ricultural activities, are required. checking for liens, notarizing sales agreement, ĖŤ Has a value of 50 times income per paying property transfer taxes) capita. The sale price equals the value. ĖŤ Has no occupants, and no other party Registration procedures in the selected city holds a legal interest in it. ĖŤ Is fully owned by the seller. Postregistration procedures (for example, filing Procedures title with municipality) ĖŤ Has no mortgages attached and has A procedure is defined as any interaction Time required to complete each procedure been under the same ownership for of the buyer or the seller, their agents (if (calendar days) the past 10 years. an agent is legally or in practice required) Does not include time spent gathering or the property with external parties, information ĖŤ Is registered in the land registry or ca- dastre, or both, and is free of title dis- including government agencies, inspec- Each procedure starts on a separate day— tors, notaries and lawyers. Interactions though procedures that can be fully completed putes. online are an exception to this rule between company officers and employ- ĖŤ Is located in a peri-urban commercial ees are not considered. All procedures Procedure considered completed once final document is received zone, and no rezoning is required. that are legally or in practice required for registering property are recorded, even if No prior contact with officials ĖŤ Consists of land and a building. The they may be avoided in exceptional cases Cost required to complete each procedure land area is 557.4 square meters (% of property value) (table 9.4). It is assumed that the buyer (6,000 square feet). A 2-story ware- follows the fastest legal option available Official costs only, no bribes house of 929 square meters (10,000 No value added or capital gains taxes included 76 DOING BUSINESS IN SOUTH AFRICA 2015 Time FIGURE 9.9 What are the time, cost TABLE 9.5 What do the enforcing Time is recorded in calendar days. The and number of procedures to resolve a contracts indicators measure? measure captures the median duration commercial dispute through the courts? that property lawyers, notaries or registry Procedures to enforce a contract through the courts (number) officials indicate is necessary to complete a procedure. It is assumed that the mini- Court Steps to file and serve the case mum time required for each procedure is 1 Steps for trial and judgment day, except for procedures that can be fully Time Cost Steps to enforce the judgment completed online, for which the time re- Number of Time required to complete procedures quired is recorded as half a day. Although procedures (calendar days) procedures may take place simultane- Time to file and serve the case ously, they cannot start on the same day, again with the exception of procedures Company A Company B Time for trial and to obtain the judgment Commercial that can be fully completed online. It is as- (seller & (buyer & Time to enforce the judgment dispute plaintiff) defendant) sumed that the buyer does not waste time Cost required to complete procedures (% of and commits to completing each remain- Filing & Trial & Enforcement claim) service judgment ing procedure without delay. If a procedure Average attorney fees can be accelerated for an additional cost, Court costs the fastest legal procedure available and used by the majority of property owners is Enforcement costs chosen. If procedures can be undertaken of civil procedure and other court regula- simultaneously, it is assumed that they tions as well as questionnaires completed of income per capita or US$5,000, are. It is assumed that the parties involved by local litigation lawyers and judges. The whichever is greater. are aware of all requirements and their se- ranking of cities on the ease of enforcing quence from the beginning. Time spent on ĖŤ At the outset of the dispute, Seller contracts is determined by sorting their gathering information is not considered. decides to attach Buyer’s movable as- distance to frontier scores for enforcing contracts. These scores are the simple sets (for example, office equipment Cost and vehicles) because Seller fears that average of the distance to frontier scores Cost is recorded as a percentage of the Buyer may hide its assets or otherwise for each of the component indicators property value, assumed to be equivalent become insolvent. (figure 9.10). to 50 times income per capita. Only of- ficial costs required by law are recorded, ĖŤ The claim is disputed on the merits including fees, transfer taxes, stamp du- Assumptions about the case because of Buyer’s allegation that the ties and any other payment to the prop- ĖŤ The value of the claim is equal to quality of the goods was not adequate. 200% of the economy’s income per Because the court cannot decide the erty registry, notaries, public agencies capita or US$5,000, whichever is case on the basis of documentary or lawyers. Other taxes, such as capital greater. evidence or legal title alone, an expert gains tax or value added tax, are excluded from the cost measure. Both costs borne ĖŤ The dispute concerns a lawful trans- opinion is given on the quality of the by the buyer and those borne by the action between 2 businesses (Seller goods. If it is standard practice in the seller are included. If cost estimates dif- and Buyer), both located in the se- economy for each party to call its own fer among sources, the median reported lected city. Pursuant to a contract expert witness, the parties each call value is used. between the businesses, Seller sells one expert witness. If it is standard some custom-made furniture to Buyer practice for the judge to appoint an in- The data details on registering property can worth 200% of the economy’s income dependent expert, the judge does so. per capita or US$5,000, whichever is In this case the judge does not allow be found for each economy at http://www. greater. After Seller delivers the goods opposing expert testimony. doingbusiness.org. to Buyer, Buyer refuses to pay the con- ĖŤ Following the expert opinion, the tract price, alleging that the goods are judge decides that the goods deliv- not of adequate quality. Because they ered by Seller were of adequate qual- ENFORCING CONTRACTS were custom-made, Seller is unable to ity and that Buyer must pay the con- sell them to anyone else. tract price. The judge thus renders a Indicators on enforcing contracts meas- ure the efficiency of the judicial system in ĖŤ Seller (the plaintiff) sues Buyer (the final judgment that is 100% in favor of resolving a commercial dispute. The data defendant) to recover the amount un- Seller. are built by following the step-by-step der the sales agreement. The dispute ĖŤ Buyer does not appeal the judgment. evolution of a commercial sale dispute is brought before the court applicable Seller decides to start enforcing the before local courts (figure 9.9). The data to the selected city with jurisdiction judgment as soon as the time allo- are collected through study of the codes over commercial cases worth 200% cated by law for appeal lapses. DATA NOTES 77 Time not included. All documents needed by FIGURE 9.10 Enforcing contracts: Time is recorded in calendar days, count- the trader to export or import the goods resolving a commercial dispute through ed from the moment the plaintiff decides across the border are also recorded. The the courts to file the lawsuit in court until payment. process of exporting goods ranges from Rankings are based on distance to frontier scores for 3 indicators This includes both the days when actions packing the goods into the container at take place and the waiting periods in be- the warehouse to their departure from Days to resolve Attorney, court and tween. The average duration of 3 different the port of exit. The process of importing commercial sale dispute enforcement costs as stages of dispute resolution is recorded: goods ranges from the vessel’s arrival at through the courts % of claim value the completion of service of process the port of entry to the cargo’s delivery (time to file and serve the case), the is- at the warehouse. For landlocked econo- suance of judgment (time for trial and to mies, since the seaport is located in the 33.3% 33.3% Time Cost obtain the judgment) and the recovery transit economy, the time, cost and docu- of the claim value through a public sale ments associated with the processes at 33.3% Procedures (time for enforcement of the judgment). the inland border are also included. It is assumed that the payment is made by Cost letter of credit, and the time, cost and Cost is recorded as a percentage of documents required for the issuance or Steps to file claim, obtain judgment the claim, assumed to be equivalent to advising of a letter of credit are taken into and enforce it 200% of income per capita or US$5,000, account (figure 9.11). whichever is greater. Three types of costs are recorded: court costs, enforcement The ranking of economies on the ease of costs and average attorney fees. trading across borders is determined by ĖŤ Seller takes all required steps for sorting their distance to frontier scores prompt enforcement of the judgment. Court costs include all costs that Seller for trading across borders. These scores The money is successfully collected (plaintiff) must advance to the court, re- are the simple average of the distance to through a public sale of Buyer’s mov- gardless of the final cost borne by Seller. frontier scores for each of the component able assets (for example, office equip- Enforcement costs are all costs that Seller indicators (figure 9.12).2 ment and vehicles). (plaintiff) must advance to enforce the judgment through a public sale of Buyer’s Local freight forwarders, shipping lines, Procedures customs brokers, port officials and movable assets, regardless of the final The list of procedural steps compiled for cost borne by Seller. Average attorney banks provide information on required each economy traces the chronology of a fees are the fees that Seller (plaintiff) documents, cost and time to export and commercial dispute before the relevant must advance to a local attorney to rep- import. To make the data comparable court. A procedure is defined as any in- resent Seller in the standardized case. across economies, several assumptions teraction, required by law or commonly Bribes are not taken into account. about the business and the traded goods carried out in practice, between the par- are used. ties or between them and the judge or court officer. Other procedural steps, The data details on enforcing contracts can be found for each economy at http://www. Assumptions about the traded internal to the court or between the par- ties and their counsel, may be counted doingbusiness.org. This methodology was goods as well. Procedural steps include steps to developed by Djankov and others (2003) ĖŤ The traded product travels in a dry- file and serve the case, steps to assign the and is adopted here with minor changes. cargo, 20-foot, full container load.3 case to a judge, steps for trial and judg- It weighs 10 tons and is valued at ment and steps necessary to enforce the $20,000. The product: judgment (table 9.5). TRADING ACROSS ĖŤ Is not hazardous nor does it include military items. To indicate overall efficiency, 1 procedure BORDERS is subtracted from the total number for Doing Business measures the time and ĖŤ Does not require refrigeration or any economies that have specialized com- cost (excluding tariffs) associated with other special environment. mercial courts or divisions, and 1 proce- exporting and importing a standardized dure for economies that allow electronic ĖŤ Does not require any special phy- cargo of goods by sea transport. The time filing of the initial complaint. Some pro- tosanitary or environmental safety and cost necessary to complete 4 pre- cedural steps that are part of others are standards other than accepted inter- defined stages (document preparation; not counted in the total number of pro- national standards. customs clearance and inspections; in- cedures. land transport and handling; and port and ĖŤ Is one of the economy’s leading export terminal handling) for exporting and im- or import products. porting the goods are recorded; however, the time and cost for sea transport are 78 DOING BUSINESS IN SOUTH AFRICA 2015 FIGURE 9.11 How much time, how many documents and what cost to export and import FIGURE 9.12 Trading across borders: by sea transport? exporting and importing by sea transport Rankings are based on distance to frontier scores for 3 indicators Time Time Document preparation, All documents customs clearance and To export Cost Cost To import required by inspections, port and customs and other terminal handling, inland Documents Documents agencies Full, 20-foot container transport and handling Import 33.3% 33.3% Documents Time to to export export and and import import Export 33.3 3 3% 33.3% e Cost to export Port and terminal Customs and Inland transport and import imp handling border agencies Assumptions about the renewal per shipment (for example, an US$ per 20-foot container, no bribes or tariffs included business: annual tax clearance certificate) are not The business: included. Documents that are required by customs authorities purely for purposes waiting time that occurs in practice—for ĖŤ Is located in the economy’s largest of preferential treatment but are not re- example, in queues to obtain a service or business city (Johannesburg in the quired for any other purpose by any of the during the unloading and moving of the case of South Africa). authorities in the process of trading are cargo at the seaport—is included in the not included. For example, if a certificate measure. ĖŤ Is a private, limited liability company. of origin is only presented to qualify for a ĖŤ Does not operate in an export pro- preferential tariff rate under trade agree- Cost cessing zone or an industrial estate ments, the document is not counted. It Cost measures the fees levied on a 20- with special export or import privi- is assumed that the exporter will always foot container in U.S. dollars. All fees leges. obtain a certificate of origin for its trade charged by government agencies and the partner, and the time and cost associ- private sector to a trader in the process ĖŤ Conducts export and import activities ated with obtaining this certificate are of exporting and importing the goods are but does not have any special accredi- therefore included in the time and cost of taken into account. These include but are tation, such as an authorized econom- document preparation to export. not limited to costs for documents, ad- ic operator status. ministrative fees for customs clearance Is 100% domestically owned. Time and inspections, customs broker fees, The time for exporting and importing port-related charges and inland trans- Documents is recorded in calendar days. The time port costs. The exporter is responsible It is assumed that a new contract is calculation for each of the 4 predefined for the incurred costs related to export- drafted per shipment and that the con- stages starts from the moment the stage ing the goods until they depart from the tract has already been agreed upon and is initiated and runs until it is completed. exporting economy, and the importer is executed by both parties. All documents Fast-track procedures applying only to responsible for the incurred costs related required by law or common practice by firms located in an export processing to importing from the moment the goods relevant agencies—including govern- zone, or only to certain accredited firms arrive at the seaport in the importing ment ministries, customs authorities, under authorized economic operator economy. The cost does not include cus- port authorities and other control agen- programs, are not taken into account toms tariffs and duties or costs related cies—per export and import shipment because they are not available to all trad- to sea transport. Only official costs are are taken into account (table 9.6). For ing companies. Sea transport time is not recorded. landlocked economies, documents re- included. It is assumed that neither the quired by authorities in the transit econ- exporter nor the importer wastes time The data details on trade across borders can omy are also included. Since payment is and that each commits to completing the be found for each economy at http:/ /www. by letter of credit, all documents required process without delay. It is assumed that doingbusiness.org. This methodology was by banks for the issuance or securing of document preparation, inland transport developed by Djankov, Freund and Pham a letter of credit are also taken into ac- and handling, customs clearance and in- (2010) and is adopted here with minor count. Documents that are requested at spections, and port and terminal handling the time of clearance but that are valid changes. require a minimum time of 1 day each and for a year or longer or do not require cannot take place simultaneously. The DATA NOTES 79 TABLE 9.6 What do the trading across borders indicators measure? Documents required to export and import (number) Bank documents Customs clearance documents Port and terminal handling documents Transport documents Time required to export and import (days) Obtaining, filling out and submitting all the documents Inland transport and handling Customs clearance and inspections Port and terminal handling Does not include sea transport time Cost required to export and import (US$ per container) All documentation Inland transport and handling Customs clearance and inspections Port and terminal handling Official costs only, no bribes NOTES 1. The Doing Business 2015 data for Johannesburg for starting a business and dealing with construction permits have been revised and updated since the publication of the Doing Business 2015: Going Beyond Efficiency global report. The complete data set can be obtained from the Doing Business website: www.doingbusiness.org 2. There are no subnational distance to frontier (DTF) ranking for South African ports, but the report compares Johannesburg internationally. 3. While different types of containers are used around the world, the 2 most important are 20-foot and 40-foot containers. Use of 40-foot containers is growing, but this year’s research confirms that 20-foot containers are still common in the majority of economies. According to respondents questioned in each of the 189 economies covered by Doing Business, 20-foot and 40-foot containers are equally common in 49% of the economies, 20-foot containers are more common in 29%, and 40-foot containers are mostly relied on in only 10%. For the remaining 12% of economies no data on the use of the 2 types of containers were available. The trading across borders indicators will continue to be based on 20- foot containers because this size remains the most relevant for international trade across the globe. Doing Business in South Africa 2015 City snapshots 82 DOING BUSINESS IN SOUTH AFRICA 2015 Buffalo City (East London) Starting a business (rank) 4 Registering property (rank) 4 Distance to frontier score (0-100) 78.67 Distance to frontier score (0-100) 62.84 Procedures (number) 6 Procedures (number) 8 Time (days) 56 Time (days) 24 Cost (% of income per capita) 0.3 Cost (% of property value) 6.32 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 3 Enforcing contracts (rank) 9 Distance to frontier score (0-100) 77.50 Distance to frontier score (0-100) 62.54 Procedures (number) 16 Procedures (number) 29 Time (days) 88 Time (days) 696 Cost (% of warehouse value) 1.13 Cost (% of claim) 35.8 Getting electricity (rank) 4 Distance to frontier score (0-100) 75.32 Procedures (number) 6 Time (days) 66 Cost (% of income per capita) 257.2 Cape Town (Cape Town) Starting a business (rank) 4 Registering property (rank) 8 Distance to frontier score (0-100) 78.67 Distance to frontier score (0-100) 59.23 Procedures (number) 6 Procedures (number) 9 Time (days) 56 Time (days) 29 Cost (% of income per capita) 0.3 Cost (% of property value) 6.34 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 1 Enforcing contracts (rank) 6 Distance to frontier score (0-100) 78.08 Distance to frontier score (0-100) 67.53 Procedures (number) 16 Procedures (number) 29 Time (days) 83 Time (days) 545 Cost (% of warehouse value) 1.06 Cost (% of claim) 33.5 Getting electricity (rank) 2 Distance to frontier score (0-100) 81.81 Procedures (number) 4 Time (days) 87 Cost (% of income per capita) 640.0 CITY SNAPSHOTS 83 Ekurhuleni (Germiston) Starting a business (rank) 1 Registering property (rank) 3 Distance to frontier score (0-100) 81.18 Distance to frontier score (0-100) 64.23 Procedures (number) 6 Procedures (number) 7 Time (days) 46 Time (days) 33 Cost (% of income per capita) 0.3 Cost (% of property value) 6.30 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 4 Enforcing contracts (rank) 4 Distance to frontier score (0-100) 76.84 Distance to frontier score (0-100) 68.26 Procedures (number) 16 Procedures (number) 29 Time (days) 98 Time (days) 513 Cost (% of warehouse value) 0.95 Cost (% of claim) 33.9 Getting electricity (rank) 5 Distance to frontier score (0-100) 71.83 Procedures (number) 6 Time (days) 90 Cost (% of income per capita) 258.5 eThekwini (Durban) Starting a business (rank) 4 Registering property (rank) 6 Distance to frontier score (0-100) 78.67 Distance to frontier score (0-100) 62.05 Procedures (number) 6 Procedures (number) 8 Time (days) 56 Time (days) 29 Cost (% of income per capita) 0.3 Cost (% of property value) 6.32 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 5 Enforcing contracts (rank) 3 Distance to frontier score (0-100) 76.15 Distance to frontier score (0-100) 69.27 Procedures (number) 16 Procedures (number) 29 Time (days) 104 Time (days) 521 Cost (% of warehouse value) 1.01 Cost (% of claim) 30.6 Getting electricity (rank) 3 Distance to frontier score (0-100) 75.73 Procedures (number) 5 Time (days) 98 Cost (% of income per capita) 380.2 84 DOING BUSINESS IN SOUTH AFRICA 2015 Johannesburg (Johannesburg) Starting a business (rank) 1 Registering property (rank) 1 Distance to frontier score (0-100) 81.18 Distance to frontier score (0-100) 65.82 Procedures (number) 6 Procedures (number) 7 Time (days) 46 Time (days) 23 Cost (% of income per capita) 0.3 Cost (% of property value) 6.30 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 8 Enforcing contracts (rank) 8 Distance to frontier score (0-100) 68.52 Distance to frontier score (0-100) 66.14 Procedures (number) 19 Procedures (number) 29 Time (days) 141 Time (days) 600 Cost (% of warehouse value) 1.06 Cost (% of claim) 33.2 Getting electricity (rank) 8 Distance to frontier score (0-100) 55.74 Procedures (number) 5 Time (days) 226 Cost (% of income per capita) 729.5 Mangaung (Bloemfontein) Starting a business (rank) 4 Registering property (rank) 9 Distance to frontier score (0-100) 78.67 Distance to frontier score (0-100) 58.41 Procedures (number) 6 Procedures (number) 8 Time (days) 56 Time (days) 52 Cost (% of income per capita) 0.3 Cost (% of property value) 6.30 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 9 Enforcing contracts (rank) 1 Distance to frontier score (0-100) 68.22 Distance to frontier score (0-100) 71.04 Procedures (number) 22 Procedures (number) 29 Time (days) 109 Time (days) 473 Cost (% of warehouse value) 0.68 Cost (% of claim) 29.4 Getting electricity (rank) 1 Distance to frontier score (0-100) 83.88 Procedures (number) 4 Time (days) 80 Cost (% of income per capita) 383.2 CITY SNAPSHOTS 85 Msunduzi (Pietermaritzburg) Starting a business (rank) 4 Registering property (rank) 7 Distance to frontier score (0-100) 78.67 Distance to frontier score (0-100) 59.49 Procedures (number) 6 Procedures (number) 8 Time (days) 56 Time (days) 45 Cost (% of income per capita) 0.3 Cost (% of property value) 6.32 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 6 Enforcing contracts (rank) 2 Distance to frontier score (0-100) 74.07 Distance to frontier score (0-100) 70.81 Procedures (number) 17 Procedures (number) 29 Time (days) 117 Time (days) 469 Cost (% of warehouse value) 0.71 Cost (% of claim) 30.3 Getting electricity (rank) 7 Distance to frontier score (0-100) 63.00 Procedures (number) 5 Time (days) 184 Cost (% of income per capita) 446.0 Nelson Mandela Bay (Port Elizabeth) Starting a business (rank) 4 Registering property (rank) 5 Distance to frontier score (0-100) 78.67 Distance to frontier score (0-100) 62.69 Procedures (number) 6 Procedures (number) 8 Time (days) 56 Time (days) 25 Cost (% of income per capita) 0.3 Cost (% of property value) 6.32 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 2 Enforcing contracts (rank) 7 Distance to frontier score (0-100) 78.05 Distance to frontier score (0-100) 66.89 Procedures (number) 15 Procedures (number) 29 Time (days) 88 Time (days) 611 Cost (% of warehouse value) 1.60 Cost (% of claim) 30.4 Getting electricity (rank) 9 Distance to frontier score (0-100) 53.14 Procedures (number) 5 Time (days) 333 Cost (% of income per capita) 587.7 86 DOING BUSINESS IN SOUTH AFRICA 2015 Tshwane (Pretoria) Starting a business (rank) 1 Registering property (rank) 2 Distance to frontier score (0-100) 81.18 Distance to frontier score (0-100) 64.71 Procedures (number) 6 Procedures (number) 7 Time (days) 46 Time (days) 30 Cost (% of income per capita) 0.3 Cost (% of property value) 6.30 Minimum capital (% of income per capita) 0.0 Dealing with construction permits (rank) 7 Enforcing contracts (rank) 5 Distance to frontier score (0-100) 69.88 Distance to frontier score (0-100) 68.17 Procedures (number) 16 Procedures (number) 29 Time (days) 169 Time (days) 527 Cost (% of warehouse value) 1.03 Cost (% of claim) 33.1 Getting electricity (rank) 6 Distance to frontier score (0-100) 68.51 Procedures (number) 6 Time (days) 104 Cost (% of income per capita) 572.6 Doing Business in South Africa 2015 Indicator snapshots 88 DOING BUSINESS IN SOUTH AFRICA 2015 Starting a business Paid-in minimum Distance to Ease of Cost capital frontier starting a Procedures Time (% of income (% of income score business Municipality (Municipal seat) (number) (days) per capita) per capita) (0–100) (rank) Buffalo City (East London) 6 56 0.3 0.0 78.67 4 Cape Town (Cape Town) 6 56 0.3 0.0 78.67 4 Ekurhuleni (Germiston) 6 46 0.3 0.0 8 1 .1 8 1 eThekwini (Durban) 6 56 0.3 0.0 78.67 4 Johannesburg (Johannesburg) 6 46 0.3 0.0 8 1 .1 8 1 Mangaung (Bloemfontein) 6 56 0.3 0.0 78.67 4 Msunduzi (Pietermaritzburg) 6 56 0.3 0.0 78.67 4 Nelson Mandela Bay (Port Elizabeth) 6 56 0.3 0.0 78.67 4 Tshwane (Pretoria) 6 46 0.3 0.0 8 1 .1 8 1 Dealing with construction permits Ease of Distance to dealing with Cost frontier construction Procedures Time (% of warehouse score permits Municipality (Municipal seat) (number) (days) value) (0–100) (rank) Buffalo City (East London) 16 88 1 .1 3 77.50 3 Cape Town (Cape Town) 16 83 1.06 78.08 1 Ekurhuleni (Germiston) 16 98 0.95 76.84 4 eThekwini (Durban) 16 104 1.01 76.15 5 Johannesburg (Johannesburg) 19 141 1.06 68.52 8 Mangaung (Bloemfontein) 22 109 0.68 68.22 9 Msunduzi (Pietermaritzburg) 17 117 0.71 74.07 6 Nelson Mandela Bay (Port Elizabeth) 15 88 1.60 78.05 2 Tshwane (Pretoria) 16 169 1.03 69.88 7 Getting electricity Distance to Ease of Cost frontier getting Procedures Time (% of income score electricity Municipality (Municipal seat) (number) (days) per capita) (0–100) (rank) Buffalo City (East London) 6 66 257.2 75.32 4 Cape Town (Cape Town) 4 87 640.0 81.81 2 Ekurhuleni (Germiston) 6 90 258.5 71.83 5 eThekwini (Durban) 5 98 380.2 75.73 3 Johannesburg (Johannesburg) 5 226 729.5 55.74 8 Mangaung (Bloemfontein) 4 80 383.2 83.88 1 Msunduzi (Pietermaritzburg) 5 184 446.0 63.00 7 Nelson Mandela Bay (Port Elizabeth) 5 333 587.7 5 3 .1 4 9 Tshwane (Pretoria) 6 104 572.6 68.51 6 INDICATOR SNAPSHOTS 89 Registering property Distance to Ease of Cost frontier registering Procedures Time (% of property score property Municipality (Municipal seat) (number) (days) value) (0–100) (rank) Buffalo City (East London) 8 24 6.32 62.84 4 Cape Town (Cape Town) 9 29 6.34 59.23 8 Ekurhuleni (Germiston) 7 33 6.30 64.23 3 eThekwini (Durban) 8 29 6.32 62.05 6 Johannesburg (Johannesburg) 7 23 6.30 65.82 1 Mangaung (Bloemfontein) 8 52 6.30 5 8 . 41 9 Msunduzi (Pietermaritzburg) 8 45 6.32 59.49 7 Nelson Mandela Bay (Port Elizabeth) 8 25 6.32 62.69 5 Tshwane (Pretoria) 7 30 6.30 64.71 2 Enforcing contracts Distance to Ease of frontier enforcing Procedures Time Cost score contracts Municipality (Municipal seat) (number) (days) (% of claim) (0–100) (rank) Buffalo City (East London) 29 696 35.8 62.54 9 Cape Town (Cape Town) 29 545 33.5 67.53 6 Ekurhuleni (Germiston) 29 513 33.9 68.26 4 eThekwini (Durban) 29 521 30.6 69.27 3 Johannesburg (Johannesburg) 29 600 33.2 6 6 .1 4 8 Mangaung (Bloemfontein) 29 473 29.4 71.04 1 Msunduzi (Pietermaritzburg) 29 469 30.3 7 0. 8 1 2 Nelson Mandela Bay (Port Elizabeth) 29 611 30.4 66.89 7 Tshwane (Pretoria) 29 527 33.1 6 8 .1 7 5 Trading across borders Cost Cost Documents Time to export Documents Time to import to export to export (US$ per to import to import (US$ per Port (number) (days) container) (number) (days) container) Durban 5 16 1,830 6 21 2,080 Port Elizabeth 5 16 1,984 6 20 2,193 Ngqura 5 16 1,979 6 20 2,222 Cape Town 5 17 2,078 6 19 2,267 Doing Business in South Africa 2015 List of procedures 92 DOING BUSINESS IN SOUTH AFRICA 2015 Procedure 3. Register for income tax Cost: .Ť!.23 LIST OF PROCEDURES and withholding taxes at the South Comments: The applicant must submit the VAT STARTING A BUSINESS 101 form in person at the closest local SARS African Revenue Service (SARS) office Buffalo City, East London in East London 1-!'Ťǭ!#Ď Businesses with annual taxable turnover of more Standard company legal form: Private Limited Time: 1 day than ZAR 1,000,000 must register for VAT. A Liability Company Cost: .Ť!.23 business may also choose to register voluntarily Minimum capital requirement: ZAR 1 (US$ 0) if the income earned in the past twelve-month Comments: SARS is linked electronically to the Data as of: January 2015 period exceeded ZAR 50,000. The registration CIPC. When an entrepreneur visits a SARS branch to register for income tax, SARS retrieves the process can take from 1 to 21 working days Procedure 1. Register the company information previously provided in procedure 1 by depending on the risk level assigned to the online with the Companies and the entrepreneur to the CIPC. SARS will access company. The risk depends on different factors, Intellectual Property Commission this information and update it. including business activity and turnover. (CIPC) The entrepreneur needs to visit the closest SARS Procedure 6*. Register with the UIF at Time: 14 days office for: the Labor Center in East London Cost: ZAR 175 (ZAR 125 registration fee + ZAR a. Income tax registration: 50 name reservation fee) The applicant needs to present: Time: 7 days Comments: To register the company online, the ĖŤ 6-#1Ť  Cost: .Ť!.23 user must first register as a customer on the CIPC ĖŤ #%(2313(.-Ť#13(ǫ!3# Comments: According to the Unemployment website and transfer ZAR175 (ZAR 50 for the ĖŤ -*Ť33#,#-3 Insurance Act and the Unemployment Insurance name reservation + ZAR 125 for the registration). Contributions Act, all employees working more ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ After a couple of days, the user’s account will be than 24 hours per month must be registered with Unemployment Insurance Fund (UIF), and credited, and he or she will be able to complete the UIF. The employer is liable for the registration Skills Development Levy (SDL) registration: the required steps online. of the employees. The employer must submit The entrepreneur must submit the EMP 101e $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ During the registration process, the following form available online or at the local SARS office. (employees registration) either at the Pretoria information must be provided: Registration is immediate.  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ a. Details about the owners/directors: ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť3'#Ť#,/+.8#1Ť(2Ť1#04(1#"Ť3.Ť When the process is completed, the applicant ĖŤ ,#İ2 deduct from an employee’s paid remuneration. 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť ĖŤ .4-318Ť.$Ť.1(%(- The employer is required to register pursuant #Ĭ,(+Ď ĖŤ İ22/.13Ť-4, #1 to Schedule 4, paragraph 15, of the Income Tax UIF contributions are 2% of the employee´s saĬ ĖŤ //.(-3,#-3Ť"3# Act. lary. The employer covers 50% and withholds the ĖŤ 3#Ť.$Ť(13' ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť other 50% from the employee. Payment is done employment benefits. The funds are used through SARS, but employee claims are requested ĖŤ '.-#ďŤ#Ĭ,(+ 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť through the UIF. ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."#Ď become unemployed or unable to work for b. Details about the company: various reasons. Any employer required to  ŤŤ  ĖŤ (--!(+Ť8#1Ť#-" 1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť3.Ť register with SARS for the unemployment Cape Town, Cape Town ĖŤ 43'.1(9#"Ť2'1#2 insurance contributions. Standard company legal form: Private Limited ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť Liability Company postal code fund education and training as stated in the Minimum capital requirement: ZAR 1 (US$ 0) c. Company name reservation (5 days). Once Skills Development Act 1998. This levy is Data as of: January 2015 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť payable monthly by employers to SARS. be sent to the applicant requesting additional ".!4,#-33(.-ďŤ6'(!'Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť Procedure 1. Register the company Procedure 4. Register with the online with the Companies and the CIPC: Compensation Fund at the Labor Center ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť Intellectual Property Commission in East London (CIPC) directors and incorporators Time: 40 days Time: 14 days ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť same as one of the indicated initial directors or Cost: .Ť!.23 Cost: ZAR 175 (ZAR 125 registration fee + ZAR incorporators Comments: The applicant must submit form 50 name reservation fee) ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 W.As.2 at the closest labor center in East Comments: To register the company online, the London. The form can be downloaded from the user must first register as a customer on the CIPC Procedure 2. Open a bank account Department of Labor website. website and transfer ZAR 175 (ZAR 50 for the Time: 1 day After completing and submitting the documents, name reservation + ZAR 125 for the registration). the company will receive the following documents After a couple of days, the user’s account will Cost: .Ť!.23 to complete periodically or as needed (although be credited, and he or she and will be able to Comments: To open a bank account, the applicant these are not required for registration): complete the required steps online. must submit: a. W.As.8, which must be filed within 30 days of During the registration process, the following a. Proof of the director’s identity and address; the financial year end and which must balance information must be provided: b. Proof of business address; and with the employer’s CF account; a. Details about the owners/directors: c. Original company documents. b. W.As.6a, which details the assessment of the ĖŤ ,#İ2 Commissioner for premiums payable, less any The Financial Intelligence Centre Act 38 of 2001 ĖŤ .4-318Ť.$Ť.1(%(- amounts paid in advance; and (FICA) requires all banks to verify the information ĖŤ İ22/.13Ť-4, #1 listed above. c. WG30, W.As.2, and W.Acl (E), which are claim forms. ĖŤ //.(-3,#-3Ť"3# ĖŤ 3#Ť.$Ť(13' Procedure 5*. Register for VAT at the ĖŤ '.-#ďŤ#Ĭ,(+Ť SARS office in East London ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# Time: 10 days * This procedure can be completed simultaneously with previous procedures. .) %')-'4O4.'.#,!-4#,44 93 b. Details about the company: ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť  ŤŤ  ĖŤ (--!(+Ť8#1Ť#-" fund education and training as stated in the Ekurhuleni, Germiston Skills Development Act 1998. This levy is ĖŤ 43'.1(9#"Ť2'1#2Ť Standard company legal form: Private Limited payable monthly by employers to SARS. ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť Liability Company postal code Procedure 4. Register with the Minimum capital requirement: ZAR 1 (US$ 0) c. Company name reservation (5 days). Once Compensation Fund at the Labor Center Data as of: January 2015 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť in Cape Town be sent to the applicant requesting additional Procedure 1. Register the company ".!4,#-33(.-ďŤ6'(!'Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť Time: 40 days online with the Companies and the CIPC: Cost: .Ť!.23 Intellectual Property Commission ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť Comments: The applicant must submit form (CIPC) directors’ and incorporators W.As.2 at the closest labor center in Cape Time: 14 days ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3Ť Ť($Ť-.3Ť3'#Ť Town. The form can be downloaded from the same as one of the indicated initial directors or Department of Labor website. Cost: ZAR 175 (ZAR 125 registration fee + ZAR incorporators 50 name reservation fee) After completing and submitting the documents, ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 the company will receive the following documents Comments: To register the company online, the to complete periodically or as needed (although user must first register as a customer on the CIPC Procedure 2. Open a bank account these are not required for registration): website and transfer ZAR 175 (ZAR 50 for the name reservation + ZAR 125 for the registration). Time: 1 day a. W.As.8, which must be filed within 30 days of the financial year end and which must balance After a couple of days, the user’s account will be Cost: .Ť!.23 credited, and he or she will be able to complete with the Employer’s CF account; Comments: To open a bank account, the applicant the required steps online. b. W.As.6a, which details the assessment of the must submit: Commissioner for premiums payable, less any During the registration process, the following a. Proof of the director’s identity and address; amounts paid in advance; and information must be provided: b. Proof of business address; and c. WG30, W.As.2, and W.Acl (E), which are claim a. Details about the owners/directors: c. Original company documents. forms. ĖŤ ,#İ2 The Financial Intelligence Centre Act 38 of 2001 ĖŤ .4-318Ť.$Ť.1(%(- (FICA) requires all banks to verify the information Procedure 5*. Register for VAT at the ĖŤ İ22/.13Ť-4, #1 listed above. SARS office in Cape Town ĖŤ //.(-3,#-3Ť"3# Time: 7 days ĖŤ 3#Ť.$Ť(13' Procedure 3. Register for income tax Cost: .Ť!.23 ĖŤ '.-#ďŤ#Ĭ,(+Ť and withholding taxes at the South African Revenue Service (SARS) office Comments: The applicant must submit the VAT ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# in Cape Town 101 form in person at the closest local SARS b. Details about the company: 1-!'Ťǭ!#Ď ĖŤ (--!(+Ť8#1Ť#-" Time: 1 day 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť ĖŤ 43'.1(9#"Ť2'1#2Ť Cost: .Ť!.23 than ZAR 1,000,000 must register for VAT. A business may also choose to register voluntarily ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť Comments: SARS is linked electronically to the postal code CIPC. When an entrepreneur visits a SARS branch ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť period exceeded ZAR 50,000 . The registration c. Company name reservation (5 days). Once to register for income tax, SARS retrieves the 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť information previously provided in procedure 1 by process can take from 1 to 21 working days depenĬ ding on the risk level assigned to the company. be sent to the applicant requesting additional the entrepreneur to the CIPC. SARS will access ".!4,#-33(.-ďŤ6'(!'Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť this information and update it. The risk depends on different factors, including business activity and turnover. the CIPC: The entrepreneur needs to visit the closest SARS ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť office for: Procedure 6*. Register with the UIF at directors and incorporators a. Income tax registration: the Labor Center in Cape Town ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť The applicant needs to present: same as one of the indicated initial directors or Time: 22 days ĖŤ 6-#1Ť  incorporators Cost: .Ť!.23 ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 ĖŤ -*Ť33#,#-3 Comments: According to the Unemployment Insurance Act and the Unemployment Insurance Procedure 2. Open a bank account ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ Contributions Act, all employees working more Unemployment Insurance Fund (UIF), and than 24 hours per month must be registered with Time: 1 day Skills Development Levy (SDL) registration: the UIF. The employer is liable for the registration Cost: .Ť!.23 The entrepreneur must submit the EMP 101e of the employees. The employer must submit Comments: To open a bank account, the applicant form available online or at the local SARS office. $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ must submit: Registration is immediate. (employees registration) either at the Pretoria  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ a. Proof of the director’s identity and address; ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť3'#Ť#,/+.8#1Ť(2Ť1#04(1#"Ť deduct from an employee’s paid remuneration. When the process is completed, the applicant b. Proof of business address; and The employer is required to register pursuant 1#!#(5#2ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť c. Original company documents. to Schedule 4, paragraph 15, of the Income Tax #Ĭ,(+Ď The Financial Intelligence Centre Act 38 of 2001 Act. UIF contributions are 2% of the employee´s saĬ (FICA) requires all banks to verify the information ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť lary. The employer covers 50% and withholds the listed above. employment benefits. The funds are used other 50% from the employee. Payment is done 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť through SARS, but employee claims are requested Procedure 3. Register for income tax become unemployed or unable to work for through the UIF. and withholding taxes at the South various reasons. Any employer required to African Revenue Service (SARS) office 1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť3.Ť in Edenvale register with SARS for the unemployment insurance contributions. Time: 1 day * This procedure can be completed simultaneously with previous procedures. 94 DOING BUSINESS IN SOUTH AFRICA 2015 Cost: .Ť!.23 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť Comments: SARS is linked electronically to the than ZAR 1,000,000 must register for VAT. A postal code CIPC. When an entrepreneur visits a SARS branch business may also choose to register voluntarily c. Company name reservation (5 days). Once to register for income tax, SARS retrieves the ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť information previously provided in procedure 1 by period exceeded ZAR 50,000 . The registration be sent to the applicant requesting additional the entrepreneur to the CIPC. SARS will access process can take from 1 to 21 working days depenĬ ".!4,#-33(.-ďŤ6'(!'Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť this information and update it. ding on the risk level assigned to the company. the CIPC: The risk depends on different factors, including The entrepreneur needs to visit the closest SARS ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť business activity and turnover. office for: directors and incorporators a. Income tax registration: Procedure 6*. Register with the UIF at ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť same as one of the indicated initial directors or The applicant needs to present: the Labor Center in Germiston incorporators ĖŤ 6-#1Ť Ť Time: 7 days ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť Cost: .Ť!.23 ĖŤ -*Ť33#,#-3 Procedure 2. Open a bank account Comments: According to the Unemployment ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ Insurance Act and the Unemployment Insurance Time: 1 day Unemployment Insurance Fund (UIF), and Contributions Act, all employees working more Skills Development Levy (SDL) registration: Cost: .Ť!.23 than 24 hours per month must be registered with The entrepreneur must submit the EMP 101e the UIF. The employer is liable for the registration Comments: To open a bank account, the applicant form available online or at the local SARS office. of the employees. The employer must submit must submit: Registration is immediate. $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ a. Proof of the director’s identity and address; ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť-Ť#,/+.8#1Ť(2Ť1#04(1#"Ť3.Ť (employees registration) either at the Pretoria b. Proof of business address; and deduct from an employee’s paid remuneration.  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ c. Original company documents. The employer is required to register pursuant When the process is completed, the applicant to Schedule 4, paragraph 15, of the Income Tax 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť The Financial Intelligence Centre Act 38 of 2001 Act. #Ĭ,(+Ď (FICA) requires all banks to verify the information listed above. ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť UIF contributions are 2% of the employee´s saĬ employment benefits. The funds are used lary. The employer covers 50% and withholds the other 50% from the employee. Payment is done Procedure 3. Register for income tax 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť become unemployed or unable to work for through SARS, but employee claims are requested and withholding taxes at the South various reasons. Any employer required to through the UIF. African Revenue Service (SARS) office 1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť3.Ť in Durban register with SARS for the unemployment  ŤŤ  Time: 1 day insurance contributions. eThekwini, Durban Cost: .Ť!.23 ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť fund education and training as stated in the Standard company legal form: Private Limited Comments: SARS is linked electronically to the Skills Development Act 1998. This levy is Liability Company CIPC. When an entrepreneur visits a SARS branch payable monthly by employers to SARS. Minimum capital requirement: ZAR 1 (US$ 0) to register for income tax, SARS retrieves the Data as of: January 2015 information previously provided in procedure 1 by Procedure 4. Register with the entrepreneur to the CIPC. SARS will access the Compensation Fund at the Procedure 1. Register the company this information and update it. Compensation office in Pretoria online with the Companies and The entrepreneur needs to visit the closest SARS Intellectual Property Commission office for: Time: 30 days (CIPC) a. Income tax registration: Cost: .Ť!.23 The applicant needs to present: Time: 14 days Comments: The applicant must submit form ĖŤ 6-#1Ť  W.As.2 at the Compensation Fund office in Cost: ZAR 175 (ZAR 125 registration fee + ZAR 50 name reservation fee) ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť Pretoria. The form can be downloaded from the Department of Labor website. ĖŤ -*Ť33#,#-3 Comments: To register the company online, the After completing and submitting the documents, user must first register as a customer on the CIPC ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ the company will receive the following documents website and transfer ZAR 175 (ZAR 50 for the Unemployment Insurance Fund (UIF), and to complete periodically or as needed (although name reservation + ZAR 125 for the registration). Skills Development Levy (SDL) registration: these are not required for registration): After a couple of days, the user’s account will be The entrepreneur must submit the EMP 101e a. W.As.8, which must be filed within 30 days of credited,and he or she will be able to complete the form available online or at the local SARS office. the financial year end and which must balance required steps online. Registration is immediate. with the Employer’s CF account; During the registration process, the following ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť-Ť#,/+.8#1Ť(2Ť1#04(1#"Ť3.Ť b. W.As.6a, which details the assessment of the information must be provided: deduct from an employee’s paid remuneration. Commissioner for premiums payable, less any a. Details about the owners/directors: The employer is required to register pursuant amounts paid in advance; and to Schedule 4, paragraph 15, of the Income Tax ĖŤ ,#İ2 Act. c. WG30, W.As.2, and W.Acl (E), which are claim ĖŤ .4-318Ť.$Ť.1(%(- forms. ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť ĖŤ İ22/.13Ť-4, #1 employment benefits. The funds are used Procedure 5*. Register for VAT at the ĖŤ //.(-3,#-3Ť"3# 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť ĖŤ 3#Ť.$Ť(13' become unemployed or unable to work for SARS office in Edenvale various reasons. Any employer required to Time: 14 days ĖŤ '.-#ďŤ#Ĭ,(+Ť 1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť3.Ť ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# register with SARS for the unemployment Cost: .Ť!.23 b. Details about the company: insurance contributions. Comments: The applicant must submit the VAT ĖŤ (--!(+Ť8#1Ť#-" ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť 101 form in person at the closest local SARS ĖŤ 43'.1(9#"Ť2'1#2Ť fund education and training as stated in the 1-!'Ťǭ!#Ď Skills Development Act 1998. This levy is payable monthly by employers to SARS. * This procedure can be completed simultaneously with previous procedures. .) %')-'4O4.'.#,!-4#,44 95 Procedure 4. Register with the  ŤŤ  Cost: .Ť!.23 Compensation Fund at the Labor Center Johannesburg, Johannesburg Comments: SARS is linked electronically to the in Durban Standard company legal form: Private Limited CIPC. When an entrepreneur visits a SARS branch Liability Company to register for income tax, SARS retrieves the Time: 40 days information previously provided in procedure 1 by Minimum capital requirement: ZAR 1 (US$ 0) Cost: .Ť!.23 the entrepreneur to the CIPC. SARS will access Data as of: January 2015 this information and update it. Comments: The applicant must submit form W.As.2 at the closest labor center in Durban. The Procedure 1. Register the company The entrepreneur needs to visit the closest SARS form can be downloaded from the Department of office for: online with the Companies and Labor website. a. Income tax registration: Intellectual Property Commission After completing and submitting the documents, (CIPC) The applicant needs to present: the company will receive the following documents ĖŤ 6-#1Ť  to complete periodically or as needed (although Time: 14 days ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť these are not required for registration): Cost: ZAR 175 (ZAR 125 registration fee + ZAR 50 name reservation fee) ĖŤ -*Ť33#,#-3 a. W.As.8, which must be filed within 30 days of the financial year end and which must balance ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ Comments: To register the company online, the Unemployment Insurance Fund (UIF), and with the Employer’s CF account; user must first register as a customer on the CIPC Skills Development Levy (SDL) registration: b. W.As.6a, which details the assessment of the website and transfer ZAR 175 (ZAR 50 for the Commissioner for premiums payable, less any name reservation + ZAR 125 for the registration). The entrepreneur must submit the EMP 101e amounts paid in advance; and After a couple of days, the user’s account will be form available online or at the local SARS office. credited, and he or she will be able to complete Registration is immediate. c. WG30, W.As.2, and W.Acl (E), which are claim forms. the required steps online. ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť3'#Ť#,/+.8#1Ť(2Ť1#04(1#"Ť During the registration process, the following to deduct from an employee’s paid remuneraĬ Procedure 5*. Register for VAT at the information must be provided: tion. The employer is required to register under SARS office in Durban Schedule 4, paragraph 15, of the Income Tax a. Details about the owners/directors: Act. Time: 14 days ĖŤ ,#İ2 ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť Cost: .Ť!.23 ĖŤ .4-318Ť.$Ť.1(%(- employment benefits. The funds are used Comments: The applicant must submit the VAT ĖŤ İ22/.13Ť-4, #1 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť 101 form in person at the closest local SARS ĖŤ //.(-3,#-3Ť"3# become unemployed or unable to work for 1-!'Ťǭ!#Ď various reasons. Any employer required to ĖŤ 3#Ť.$Ť(13' 1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť3.Ť 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť ĖŤ '.-#ďŤ#Ĭ,(+Ť register with SARS for the unemployment than ZAR 1,000,000 must register for VAT. A ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# insurance contributions. business may also choose to register voluntarily ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť b. Details about the company: ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť period exceeded ZAR 50,000 . The registration ĖŤ (--!(+Ť8#1Ť#-" fund education and training as stated in the process can take from 1 to 21 working days depenĬ Skills Development Act 1998. This levy is ĖŤ 43'.1(9#"Ť2'1#2Ť ding on the risk level assigned to the company. payable monthly by employers to SARS. ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť The risk depends on different factors, including postal code business activity and turnover. Procedure 4. Register with c. Company name reservation (5 days). Once the Compensation Fund at the 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť Compensation office in Pretoria Procedure 6*. Register with the UIF at be sent to the applicant requesting additional the Labor Center in Durban ".!4,#-33(.-Ť3'3Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť3'#Ť Time: 30 days Time: 14 days CIPC: Cost: .Ť!.23 Cost: .Ť!.23 ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť Comments: The applicant must submit form directors and incorporators W.As.2 at the Compensation Fund office in Comments: According to the Unemployment Insurance Act and the Unemployment Insurance ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť Pretoria. The form can be downloaded from the Contributions Act, all employees working more same as one of the indicated initial directors or Department of Labor website. than 24 hours per month must be registered with incorporators After completing and submitting the documents, the UIF. The employer is liable for the registration ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 the company will receive the following documents of the employees. The employer must submit to complete periodically or as needed (although $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ Procedure 2. Open a bank account these are not required for registration): (employees registration) either at the Pretoria Time: 1 day a. W.As.8, which must be filed within 30 days of  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ the financial year end and which must balance When the process is completed, the applicant Cost: .Ť!.23 with the Employer’s CF account; 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť Comments: To open a bank account, the applicant b. W.As.6a, which details the assessment of the #Ĭ,(+Ď must submit: Commissioner for premiums payable, less any UIF contributions are 2% of the employee´s saĬ a. Proof of the director’s identity and address; amounts paid in advance; and lary. The employer covers 50% and withholds the b. Proof of business address; and c. WG30, W.As.2, and W.Acl (E), which are claim other 50% from the employee. Payment is done forms. through SARS, but employee claims are requested c. Original company documents. through the UIF. The Financial Intelligence Centre Act 38 of 2001 (FICA) requires all banks to verify the information Procedure 5*. Register for VAT at the listed above. SARS office in Johannesburg Time: 7 days Procedure 3. Register for income tax Cost: .Ť!.23 and withholding taxes at the South African Revenue Service (SARS) office Comments: The applicant must submit the VAT in Johannesburg 101 form in person at the closest local SARS 1-!'Ťǭ!#Ď Time: 1 day * This procedure can be completed simultaneously with previous procedures. 96 DOING BUSINESS IN SOUTH AFRICA 2015 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť Procedure 4. Register with the than ZAR 1,000,000 must register for VAT. A postal code Compensation Fund at the Labor Center business may also choose to register voluntarily c. Company name reservation (5 days). Once ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť in Bloemfontein 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť period exceeded ZAR 50,000 . The registration be sent to the applicant requesting additional Time: 40 days process can take from 1 to 21 working days depenĬ ".!4,#-33(.-Ť3'3Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť3'#Ť Cost: .Ť!.23 ding on the risk level assigned to the company. CIPC: The risk depends on different factors, including Comments: The applicant must submit ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť form W.As.2 at the closest labor center in business activity and turnover. directors and incorporators +.#,$.-3#(-ĎŤ'#Ť$.1,Ť!-Ť #Ť".6-+."#"Ť$1.,Ť Procedure 6*. Register with the UIF at ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť the Department of Labor website. same as one of the indicated initial directors or After completing and submitting the documents, the Labor Center in Johannesburg incorporators the company will receive the following documents Time: 4 days ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 to complete periodically or as needed (although Cost: .Ť!.23 these are not required for registration): Comments: According to the Unemployment Procedure 2. Open a bank account a. W.As.8, which must be filed within 30 days of Insurance Act and the Unemployment Insurance Time: 1 day the financial year end and which must balance Contributions Act, all employees working more with the Employer’s CF account; Cost: .Ť!.23 than 24 hours per month must be registered with b. W.As.6a, which details the assessment of the the UIF. The employer is liable for the registration Comments: To open a bank account, the applicant Commissioner for premiums payable, less any of the employees. The employer must submit must submit: amounts paid in advance; and $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ a. Proof of the director’s identity and address; c. WG30, W.As.2, and W.Acl (E), which are claim (employees registration) either at the Pretoria b. Proof of business address; and forms.  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ c. Original company documents. When the process is completed, the applicant Procedure 5*. Register for VAT at the 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť The Financial Intelligence Centre Act 38 of 2001 #Ĭ,(+Ď (FICA) requires all banks to verify the information SARS office in Bloemfontein UIF contributions are 2% of the employee´s saĬ listed above. Time: 12 days lary. The employer covers 50% and withholds the Cost: .Ť!.23 other 50% from the employee. Payment is done Procedure 3. Register for income tax and withholding taxes at the South Comments: The applicant must submit the VAT through SARS, but employee claims are requested African Revenue Service (SARS) office 101 form in person at the closest local SARS through the UIF. in Bloemfontein 1-!'Ťǭ!#Ď 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť  ŤŤ  Time: 1 day than ZAR 1,000,000 must register for VAT. A Mangaung, Bloemfontein Cost: .Ť!.23 business may also choose to register voluntarily Comments: SARS is linked electronically to the ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť Standard company legal form: Private Limited CIPC. When an entrepreneur visits a SARS branch period exceeded ZAR 50,000 . The registration Liability Company to register for income tax, SARS retrieves the process can take from 1 to 21 working days depenĬ Minimum capital requirement: ZAR 1 (US$ 0) ding on the risk level assigned to the company. Data as of: January 2015 information previously provided in procedure 1 by the entrepreneur to the CIPC. SARS will access The risk depends on different factors, including this information and update it. business activity and turnover. Procedure 1. Register the company online with the Companies and The entrepreneur needs to visit the closest SARS Procedure 6*. Register with the UIF at Intellectual Property Commission office for: the Labor Center in Bloemfontein (CIPC) a. Income tax registration: Time: 7 days The applicant needs to present: Time: 14 days Cost: .Ť!.23 ĖŤ 6-#1Ť  Cost: ZAR 175 (ZAR 125 registration fee + ZAR Comments: According to the Unemployment 50 name reservation fee) ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť ĖŤ -*Ť33#,#-3 Insurance Act and the Unemployment Insurance Comments: To register the company online, the Contributions Act, all employees working more user must first register as a customer on the CIPC ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ than 24 hours per month must be registered with website and transfer ZAR 175 (ZAR 50 for the Unemployment Insurance Fund (UIF), and the UIF. The employer is liable for the registration name reservation + ZAR 125 for the registration). Skills Development Levy (SDL) registration: of the employees. The employer must submit After a couple of days, the user’s account will be The entrepreneur must submit the EMP 101e $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ credited, and he or she will be able to complete form available online or at the local SARS office. (employees registration) either at the Pretoria the required steps online. Registration is immediate.  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ During the registration process, the following ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť3'#Ť#,/+.8#1Ť(2Ť1#04(1#"Ť3.Ť When the process is completed, the applicant information must be provided: deduct from an employee’s paid remuneration. 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť The employer is required to register pursuant #Ĭ,(+Ď a. Details about the owners/directors: to Schedule 4, paragraph 15, of the Income Tax UIF contributions are 2% of the employee´s saĬ ĖŤ ,#İ2 Act. lary. The employer covers 50% and withholds the ĖŤ .4-318Ť.$Ť.1(%(- ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť other 50% from the employee. Payment is done ĖŤ İ22/.13Ť-4, #1 employment benefits. The funds are used through SARS, but employee claims are requested ĖŤ //.(-3,#-3Ť"3# 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť through the UIF. ĖŤ 3#Ť.$Ť(13' become unemployed or unable to work for various reasons. Any employer required to ĖŤ '.-#ďŤ#Ĭ,(+Ť 1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť3.Ť ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# register with SARS for the unemployment b. Details about the company: insurance contributions. ĖŤ (--!(+Ť8#1Ť#-" ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť ĖŤ 43'.1(9#"Ť2'1#2Ť fund education and training as stated in the Skills Development Act 1998. This levy is payable monthly by employers to SARS. * This procedure can be completed simultaneously with previous procedures. .) %')-'4O4.'.#,!-4#,44 97  ŤŤ  Cost: .Ť!.23 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť Msunduzi, Pietermaritzburg Comments: SARS is linked electronically to the than ZAR 1,000,000 must register for VAT. A CIPC. When an entrepreneur visits a SARS branch business may also choose to register voluntarily Standard company legal form: Private Limited ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť Liability Company to register for income tax, SARS retrieves the information previously provided in procedure 1 by period exceeded ZAR 50,000 . The registration Minimum capital requirement: ZAR 1 (US$ 0) process can take from 1 to 21 working days depenĬ the entrepreneur to the CIPC. SARS will access Data as of: January 2015 this information and update it. ding on the risk level assigned to the company. The risk depends on different factors, including Procedure 1. Register the company The entrepreneur needs to visit the closest SARS business activity and turnover. office for: online with the Companies and Intellectual Property Commission a. Income tax registration: Procedure 6*. Register with the UIF at (CIPC) The applicant needs to present: the Labor Center in Pietermaritzburg ĖŤ 6-#1Ť Ť Time: 5 days Time: 14 days ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť Cost: .Ť!.23 Cost: ZAR 175 (ZAR 125 registration fee + ZAR ĖŤ -*Ť33#,#-3 50 name reservation fee) Comments: According to the Unemployment ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ Insurance Act and the Unemployment Insurance Comments: To register the company online, the Unemployment Insurance Fund (UIF), and user must first register as a customer on the CIPC Contributions Act, all employees working more Skills Development Levy (SDL) registration: than 24 hours per month must be registered with website and transfer ZAR 175 (ZAR 50 for the name reservation + ZAR 125 for the registration). The entrepreneur must submit the EMP 101e the UIF. The employer is liable for the registration After a couple of days, the user’s account will be form available online or at the local SARS office. of the employees. The employer must submit credited, and he or she will be able to complete Registration is immediate. $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ the required steps online. ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť-Ť#,/+.8#1Ť(2Ť1#04(1#"Ť3.Ť (employees registration) either at the Pretoria deduct from an employee’s paid remuneration.  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ During the registration process, the following The employer is required to register pursuant When the process is completed, the applicant information must be provided: to Schedule 4, paragraph 15, of the Income Tax 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť a. Details about the owners/directors: Act. #Ĭ,(+Ď ĖŤ ,#İ2 ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť UIF contributions are 2% of the employee´s saĬ ĖŤ .4-318Ť.$Ť.1(%(- employment benefits. The funds are used lary. The employer covers 50% and withholds the ĖŤ İ22/.13Ť-4, #1 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť other 50% from the employee. Payment is done ĖŤ //.(-3,#-3Ť"3# become unemployed or unable to work for through SARS, but employee claims are requested various reasons. Any employer required to through the UIF. ĖŤ 3#Ť.$Ť(13' 1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť3.Ť ĖŤ '.-#ďŤ#Ĭ,(+Ť register with SARS for the unemployment  ŤŤ  ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# insurance contributions. Nelson Mandela Bay, Port Elizabeth b. Details about the company: ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť ĖŤ (--!(+Ť8#1Ť#-" fund education and training as stated in the Standard company legal form: Private Limited Skills Development Act 1998. This levy is Liability Company ĖŤ 43'.1(9#"Ť2'1#2Ť payable monthly by employers to SARS. Minimum capital requirement: ZAR 1 (US$ 0) ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť Data as of: January 2015 postal code Procedure 4. Register with the c. Company name reservation (5 days). Once Compensation Fund at the Labor Center Procedure 1. Register the company 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť in Pietermaritzburg online with the Companies and be sent to the applicant requesting additional ".!4,#-33(.-Ť3'3Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť3'#Ť Time: 40 days Intellectual Property Commission (CIPC) CIPC: Cost: .Ť!.23 ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť Time: 14 days Comments: The applicant must submit directors and incorporators form W.As.2 at the closest labor center in Cost: ZAR 175 (ZAR 125 registration fee + ZAR ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť (#3#1,1(39 41%ĎŤ'#Ť$.1,Ť!-Ť #Ť".6-+."#"Ť 50 name reservation fee) same as one of the indicated initial directors or from the Department of Labor website. Comments: To register the company online, the incorporators After completing and submitting the documents, user must first register as a customer on the CIPC ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 the company will receive the following documents website and transfer ZAR 175 (ZAR 50 for the to complete periodically or as needed (although name reservation + ZAR 125 for the registration). Procedure 2. Open a bank account these are not required for registration): After a couple of days, the user’s account will be Time: 1 day a. W.As.8, which must be filed within 30 days of credited, and he or she will be able to complete the financial year end and which must balance the required steps online. Cost: .Ť!.23 with the Employer’s CF account; During the registration process, the following Comments: To open a bank account, the applicant b. W.As.6a, which details the assessment of the information must be provided: must submit: Commissioner for premiums payable, less any a. Details about the owners/directors: a. Proof of the director’s identity and address; amounts paid in advance; and ĖŤ ,#İ2 b. Proof of business address; and c. WG30, W.As.2, and W.Acl (E), which are claim ĖŤ .4-318Ť.$Ť.1(%(- c. Original company documents. forms. ĖŤ İ22/.13Ť-4, #1 The Financial Intelligence Centre Act 38 of 2001 ĖŤ //.(-3,#-3Ť"3# (FICA) requires all banks to verify the information Procedure 5*. Register for VAT at the listed above. SARS office in Pietermaritzburg ĖŤ 3#Ť.$Ť(13' Time: 7 days ĖŤ '.-#ďŤ#Ĭ,(+Ť Procedure 3. Register for income tax ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# Cost: .Ť!.23 and withholding taxes at the South b. Details about the company: African Revenue Service (SARS) office Comments: The applicant must submit the VAT ĖŤ (--!(+Ť8#1Ť#-" in Pietermaritzburg 101 form in person at the closest local SARS 1-!'Ťǭ!#Ď ĖŤ 43'.1(9#"Ť2'1#2Ť Time: 1 day * This procedure can be completed simultaneously with previous procedures. 98 DOING BUSINESS IN SOUTH AFRICA 2015 ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť Procedure 4. Register with the  ŤŤ  postal code Tshwane, Pretoria Compensation Fund at the Labor Center c. Company name reservation (5 days). Once in Port Elizabeth Standard company legal form: Private Limited the steps mentioned above are completed, an Time: 40 days Liability Company #Ĭ,(+Ť6(++Ť #Ť2#-3Ť3.Ť3'#Ť//+(!-3Ť1#04#23(-%Ť ""(3(.-+Ť".!4,#-33(.-Ť3'3Ť2'.4+"Ť #Ť#Ĭ Minimum capital requirement: ZAR 1 (US$ 0) Cost: .Ť!.23 mailed to the CIPC: Data as of: January 2015 Comments: The applicant must submit form ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť W.As.2 at the closest labor center in Port directors and incorporators Procedure 1. Register the company +(9 #3'ĎŤ'#Ť$.1,Ť!-Ť #Ť".6-+."#"Ť$1.,Ť3'#Ť online with the Companies and ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť Department of Labor website. same as one of the indicated initial directors or Intellectual Property Commission After completing and submitting the documents, (CIPC) incorporators the company will receive the following documents ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 to complete periodically or as needed (although Time: 14 days these are not required for registration): Cost: ZAR 175 (ZAR 125 registration fee + ZAR Procedure 2. Open a bank account a. W.As.8, which must be filed within 30 days of 50 name reservation fee) Time: 1 day the financial year end and which must balance Comments: To register the company online, the with the Employer’s CF account; Cost: .Ť!.23 user must first register as a customer on the CIPC b. W.As.6a, which details the assessment of the website and transfer ZAR 175 (ZAR 50 for the Comments: To open a bank account, the applicant Commissioner for premiums payable, less any name reservation + ZAR 125 for the registration). must submit: amounts paid in advance; and After a couple of days, the user’s account will be a. Proof of the director’s identity and address; c. WG30, W.As.2, and W.Acl (E), which are credited, and he or she will be able to complete b. Proof of business address; and claim forms. the required steps online. c. Original company documents. During the registration process, the following The Financial Intelligence Centre Act 38 of 2001 Procedure 5*. Register for VAT at the information must be provided: (FICA) requires all banks to verify the information SARS office in Port Elizabeth a. Details about the owners/directors: listed above. Time: 14 days ĖŤ ,#İ2 Cost: .Ť!.23 ĖŤ .4-318Ť.$Ť.1(%(- Procedure 3. Register for income tax Comments: The applicant must submit the VAT ĖŤ İ22/.13Ť-4, #1 and withholding taxes at the South African Revenue Service (SARS) office 101 form in person at the closest local SARS ĖŤ //.(-3,#-3Ť"3# in Port Elizabeth 1-!'Ťǭ!#Ď ĖŤ 3#Ť.$Ť(13' 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť ĖŤ '.-#ďŤ#Ĭ,(+Ť Time: 1 day than ZAR 1,000,000 must register for VAT. A ĖŤ '82(!+Ť""1#22Ť-"Ť/.23+Ť!."# Cost: .Ť!.23 business may also choose to register voluntarily ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť b. Details about the company: Comments: SARS is linked electronically to the ĖŤ (--!(+Ť8#1Ť#-" CIPC. When an entrepreneur visits a SARS branch period exceeded ZAR 50,000 . The registration to register for income tax, SARS retrieves the process can take from 1 to 21 working days depenĬ ĖŤ 43'.1(9#"Ť2'1#2Ť information previously provided in procedure 1 by ding on the risk level assigned to the company. ĖŤ Ĭ,(+Ť""1#22ďŤ6# 2(3#ďŤ/'82(!+Ť""1#22ďŤ-"Ť the entrepreneur to the CIPC. SARS will access The risk depends on different factors, including postal code this information and update it. business activity and turnover. c. Company name reservation (5 days). Once The entrepreneur needs to visit the closest SARS 3'#Ť23#/2Ť .5#Ť1#Ť!.,/+#3#"ďŤ-Ť#Ĭ,(+Ť6(++Ť Procedure 6*. Register with the UIF at be sent to the applicant requesting additional office for: the Labor Center in Port Elizabeth ".!4,#-33(.-Ť3'3Ť2'.4+"Ť #Ť#Ĭ,(+#"Ť3.Ť3'#Ť a. Income tax registration: Time: 7 days CIPC: The applicant needs to present: Cost: .Ť!.23 ĖŤ #13(ǫ#"Ť!./(#2Ť.$Ť 2Ť.$Ť++Ť(-"(!3#"Ť(-(3(+Ť ĖŤ 6-#1Ť  directors and incorporators ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť Comments: According to the Unemployment Insurance Act and the Unemployment Insurance ĖŤ #13(ǫ#"Ť!./8Ť.$Ť3'#Ť//+(!-3ġ2Ť Ť($Ť-.3Ť3'#Ť ĖŤ -*Ť33#,#-3 same as one of the indicated initial directors or Contributions Act, all employees working more ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ than 24 hours per month must be registered with incorporators Unemployment Insurance Fund (UIF), and the UIF. The employer is liable for the registration ĖŤ (%-#"Ť1#%(2313(.-Ť$.1,2 Skills Development Levy (SDL) registration: of the employees. The employer must submit The entrepreneur must submit the EMP 101e $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ Procedure 2. Open a bank account form available online or at the local SARS office. (employees registration) either at the Pretoria Time: 1 day Registration is immediate.  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť-Ť#,/+.8#1Ť(2Ť1#04(1#"Ť3.Ť When the process is completed, the applicant Cost: .Ť!.23 deduct from an employee’s paid remuneration. 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť Comments: To open a bank account, the applicant The employer is required to register pursuant #Ĭ,(+Ď must submit: to Schedule 4, paragraph 15, of the Income Tax UIF contributions are 2% of the employee´s saĬ a. Proof of the director’s identity and address; Act. lary. The employer covers 50% and withholds the b. Proof of business address; and ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť other 50% from the employee. Payment is done through SARS, but employee claims are requested c. Original company documents. employment benefits. The funds are used 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť through the UIF. The Financial Intelligence Centre Act 38 of 2001 become unemployed or unable to work for (FICA) requires all banks to verify the information various reasons. Any employer who is required listed above. 3.Ť1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť to register with SARS for the unemployment Procedure 3. Register for income tax insurance contributions. and withholding taxes at the South ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť African Revenue Service (SARS) office fund education and training as stated in the in Pretoria Skills Development Act 1998. This levy is Time: 1 day payable monthly by employers to SARS. * This procedure can be completed simultaneously with previous procedures. .) %')-'4O&#,!0#."),4.'-.#),%'+#.4 99 Cost: .Ť!.23 42(-#22#2Ť6(3'Ť--4+Ť37 +#Ť341-.5#1Ť.$Ť,.1#Ť clearance will be obtained upon completion of the Comments: SARS is linked electronically to the than ZAR 1,000,000 must register for VAT. A building and after the Fire Department inspects CIPC. When an entrepreneur visits a SARS branch business may also choose to register voluntarily the building). A Fire Safety Plan should be incluĬ to register for income tax, SARS retrieves the ($Ť3'#Ť(-!.,#Ť#1-#"Ť(-Ť3'#Ť/23Ť36#+5#Ĭ,.-3'Ť ded in the submission of the building plans. information previously provided in procedure 1 by period exceeded ZAR 50,000 . The registration Once all approvals and comments are obtained, the entrepreneur to the CIPC. SARS will access process can take from 1 to 21 working days depenĬ 3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť23,/2Ť3'#Ť this information and update it. ding on the risk level assigned to the company. building plans provided that all the requirements The risk depends on different factors, including are met and taking into consideration the other The entrepreneur needs to visit the closest SARS business activity and turnover. office for: departments’ comments. The application is approved if statutory compliance has been a. Income tax registration: Procedure 6*. Register with the UIF at achieved. If not, the application is refused, and the The applicant needs to present: the Labor Center in Pretoria reasons are given in writing. ĖŤ 6-#1Ť Ť Time: 5 days When plans are submitted, a building inspector ĖŤ #%(2313(.-Ť#13(ǫ!3#Ť inspects the site to ensure that the planned Cost: .Ť!.23 ĖŤ -*Ť33#,#-3 construction will fit on the plot of land and that Comments: According to the Unemployment the construction will be within the allowed ĎŤ ,/+.8##2Ť/8Ĭ2Ĭ8.4Ĭ#1-Ť37ŤijĴďŤ Insurance Act and the Unemployment Insurance building lines. Unemployment Insurance Fund (UIF), and Contributions Act, all employees working more Skills Development Levy (SDL) registration: The local authority should grant or refuse its than 24 hours per month must be registered with approval in less than 30 days (for any building The entrepreneur must submit the EMP 101e the UIF. The employer is liable for the registration where the architectural area is less than 500 form available online or at the local SARS office. of the employees. The employer must submit square meters) and in less than 60 days (for any Registration is immediate. $.1,2Ť ĬČŤij!.,/-8Ť1#%(2313(.-ĴŤ-"Ť ĬăčŤ building where the architectural area is more than ĖŤ đŤ'(2Ť(2Ť3'#Ť37Ť-Ť#,/+.8#1Ť(2Ť1#04(1#"Ť3.Ť (employees registration) either at the Pretoria 500 square meters). deduct from an employee’s paid remuneration.  Ť.ǭ!#ďŤ.-#Ť.$Ť3'#Ť+ .1Ť!#-3#12ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ The employer is required to register pursuant When the process is completed, the applicant Procedure 3. Submit notification of to Schedule 4, paragraph 15, of the Income Tax 6(++Ť1#!#(5#ŤŤ!.-ǫ1,3(.-Ť+#33#1Ťij$.1,Ť ĬąąĴŤ 8Ť commencement of building work to the Act. #Ĭ,(+Ď provincial Department of Labour ĖŤ  đŤŤ'(2Ť(2ŤŤ!.,/4+2.18Ť!.-31( 43(.-Ť3.Ť$4-"Ť UIF contributions are 2% of the employee´s saĬ employment benefits. The funds are used lary. The employer covers 50% and withholds the Time: 1 day 3.Ť/1.5("#Ť2'.13Ĭ3#1,Ť1#+(#$Ť2'.4+"Ť6.1*#12Ť other 50% from the employee. Payment is done Cost: .Ť!.23ŤŤ become unemployed or unable to work for through SARS, but employee claims are requested through the UIF. Comments: According to the Occupational various reasons. Any employer who is required Health and Safety Act 1993 (OHASA) related to 3.Ť1#%(23#1Ť$.1Ť3'#ŤŤ37Ť(2Ť+2.Ť1#04(1#"Ť Constructions Regulations, building companies to register with SARS for the unemployment LIST OF PROCEDURES must, at least 7 days before the construction work insurance contributions. starts, submit a notification of commencement of ĖŤ  đŤŤ'(2Ť+#58Ť(2Ť42#"Ť 8Ť3'#Ť%.5#1-,#-3Ť3.Ť DEALING WITH CONSTRUCTION the work to the provincial Department of Labour. fund education and training as stated in the PERMITS The building company should also ensure that Skills Development Act 1998. This levy is periodic health and safety audits and document payable monthly by employers to SARS. Buffalo City, East London verification are conducted, and also keep on site a Warehouse value: ZAR 3,129,500 (US$ 359,500) health and safety file that includes all the required Procedure 4. Register with Data as of: January 2015 documentation. the Compensation Fund at the Compensation office in Pretoria Procedure 1. Conduct pre-consultative Procedure 4*. Submit notification of Time: 30 days meeting with the municipal Town commencement of building work to the Planning authority municipal Building Control authority Cost: .Ť!.23 Time: 22 days Time: 1 day Comments: The applicant must submit form W.As.2 at the Compensation Fund office in Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Pretoria. The forms can be downloaded from the Comments: A person intending to erect a building Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť Department of Labor website. (including an architect or any other declared and 1977 requires developers to submit a notification After completing and submitting the documents, 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ of commencement of the work to the Municipality the company will receive the following documents can meet with the municipal Town Planning stating the date on which the construction will to complete periodically or as needed (although authority in order to ensure that the project commence. The notice must be submitted at these are not required for registration): complies with the town planning regulations. least 4 working days prior to the starting of the a. W.As.8, which must be filed within 30 days of +3'.4%'Ť-.3Ť,-"3.18ďŤ3'(2Ť/1#Ĭ!.-24+33(.-Ť construction (10 days in case of demolition). the financial year end and which must balance ,##3(-%Ť(2Ť!.,,.-Ť/1!3(!#Ť(-Ť4Ǫ+.Ť(38Ď The approved plan must be available on site and with the Employer’s CF account; remain available until an Occupancy Certificate Procedure 2. Obtain approval of the is issued. b. W.As.6a, which details the assessment of the Commissioner for premiums payable, less any building plans from the municipal During the construction phase, the owner must amounts paid in advance; and Building Control authority ensure that the building is erected within the surveyed boundaries and prescribed building lines c. WG30, W.As.2, and W.Acl (E), which are claim Time: 33 days of the site, and that it is in full accordance with forms. Cost: ZAR 25,738 (ZAR 3,957.89 per square meĬ the approved building plans. The Municipality ter of the property multiplied by a factor of 0.5) must be notified of any modifications to the Procedure 5*. Register for VAT at the originally approved plans, and it may require the SARS office in Pretoria Comments: The applicant submits the draft 4(+"(-%Ť/+-2Ť3.Ť3'#Ť,4-(!(/+Ť4(+"(-%Ť.-31.+Ť submission of a new set of plans and the payment Time: 7 days authority. Several sets of building plans are requiĬ of additional building plan submission fees. Cost: .Ť!.23 red. The application is then circulated internally within the Municipality, allowing each relevant Procedure 5. Receive inspection from Comments: The applicant must submit the VAT the provincial Department of Labour department (e.g., Health, Water and Sanitation, 101 form in person at the closest local SARS 1-!'Ťǭ!#Ď Fire, Traffic, Roads, Electricity, Environmental) Time: 1 day to evaluate it. At this stage, the applicant also 1#!#(5#2Ť3'#Ť(1#Ť$#38Ť/1#Ĭ//1.5+Ťij3'#Ťǫ-+Ť Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. 100 DOING BUSINESS IN SOUTH AFRICA 2015 Comments: The building site may be inspected Comments: The application for water and sewage Comments: The inspection is a prerequisite at any time during the construction phase by a connections is done prior to the start of consĬ to obtaining the Occupancy Certificate. The representative of the Department of Labour to truction, because the building company needs building company must confirm that the products, ensure compliance with the Constructions RegulaĬ a temporary water connection (a builder water materials, and systems comply with the South tions (OHASA). supply) during construction. $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť do so, developers must provide certificates Procedure 6. Receive inspection of all Procedure 11. Receive inspection from of compliance to the Municipality. Generally, foundation trenches from the municipal the municipal Water and Sanitation certificates of compliance for electrical, structural, Building Inspectorate Department %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ Others could be requested from the Municipality. Time: 1 day Time: 1 day The engineer or professional in charge of one Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ or several of these specific elements is allowed to provide the owner with such certificates. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Comments: Once the application has been A certificate of compliance is proof that the Act 1977 requires a mandatory inspection of all processed and the water and sewage systems are installations are safe and comply with the rules foundation trenches prior to placing of concrete. in place, an official inspects the property to ensure and regulations. that the construction work has been carried out Procedure 7. Receive inspection of in accordance with the approved building plans Procedure 16. Obtain Occupancy wastewater drainage systems from the and to provide a final quote for the connections. The communication pipes and the meter are also Certificate from the municipal Building municipal Building Inspectorate Control authority installed at this stage. Time: 1 day The building company is required to submit the Time: 7 days Cost: .Ť!.23ŤŤ official certificate, issued by a registered plumber, Cost: .Ť!.23ŤŤ Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť confirming that the plumbing work has been completed according to the applicable legislation Comments: This certificate is issued after the the construction site when wastewater drainage and standards. ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť systems are ready in order to test the sewage (and other relevant municipal departments if system connection point and drains prior to Procedure 12. Receive final water deemed necessary) has been carried out, and backfilling. The inspection of the wastewater connection from the municipal Water 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť drainage system takes place prior to the closing of law prescribes that an Occupancy Certificate may the work site.    and Sanitation Department only be issued at the written request of the owner Time: 14 days of the property being developed. The building Procedure 8. Receive inspection of cannot be used or occupied without the issuance damp proofing from the municipal Cost: .Ť!.23ŤŤ of the Occupancy Certificate. Building Inspectorate Comments: When the building is completed, the temporary connection is removed, and a new and Time: 1 day  Ť Ť Ť  definitive account is opened with the final water Cost: .Ť!.23ŤŤ connection.  Cape Town, Cape Town Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Warehouse value: ZAR 3,129,500 (US$ 359,500) the building site to check the general damp Procedure 13. Submit notification of Data as of: January 2015 proofing of the building. completion of building work to the municipal Building Control authority Procedure 1. Obtain approval from Procedure 9. Obtain certificate of Time: 1 day the municipal Planning and Building compliance (plumbing, sewage)  Development Management Cost: .Ť!.23ŤŤ Time: 1 day Time: 7 days Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Cost: .Ť!.23ŤŤ Act 1977 requires building companies to submit Cost: .Ť!.23ŤŤ Comments: The building company is required to a notification of completion of the work to the Comments: A person intending to erect a building submit an official certificate, issued by a registered Municipality. (including an architect or any other declared plumber, confirming that the plumbing work -"Ť43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť has been completed according to the applicable Procedure 14. Receive inspection from .6-#1ĴŤ!-Ť,##3Ť6(3'Ť3'#Ť+--(-%Ť-"Ť4(+"(-%Ť legislation and standards. The certification the municipal Fire and Rescue Service Development Management authority in order must be signed by a certified professional. The Time: 1 day to ensure that the project complies with town registered plumber conducts a pressure test /+--(-%Ť1#%4+3(.-2ĎŤŤ.-#Ĭ23./Ť2'./Ť/1.!#"41#Ť and certifies that the plumbing work has been Cost: .Ť!.23ŤŤ is in place that gathers different representatives done according to the appropriate standards. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť from the various departments. The pressure test and the plumber certification Act 1977 requires a fire safety clearance before are compulsory in order to obtain a certificate of . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ Procedure 2. Obtain approval of the compliance from the Municipality. residential buildings. building plans from the municipal The Fire and Rescue Service visits the site to Planning and Building Development Procedure 10*. Apply for water and check whether what was previously approved sewage connection at the municipal Management (during the building plan submission) has been Water and Sanitation Department and implemented in the building. The Municipality Time: 45 days pay connection fees will not issue an Occupancy Certificate without Cost: ZAR 26,571 (ZAR 578.95 as fixed cost for Time: 1 day clearance from the Fire and Rescue Service. All fire the first 25 square meters + ZAR 20.39 for each notes, fire equipment, and escape routes have to additional square meter) Cost: ZAR 9,533 (ZAR 7,316 for water connection: !.,/+8Ť6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤ ZAR 7,137 for connections up to 15 meters 10400 S and T. Comments: The applicant submits draft building $1.,Ť3'#Ť!.--#!3(.-Ť/.(-3ŤŖŤŤĄĎĉœŤ""Ĭ.-Ť$.1Ť /+-2Ť3.Ť3'#Ť,4-(!(/+Ť+--(-%Ť-"Ť4(+"(-%Ť connections in excess of 15 meters; ZAR 2,217 for Development Management authority. Several sets Procedure 15. Receive final inspection sewerage connection) of building plans are required. The application is from the municipal Building Control then circulated internally within the Municipality, authority allowing each relevant department (e.g., Health, Time: 1 day Water and Sanitation, Fire, Traffic, Roads, Electricity, Environmental) to evaluate it. At this Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. .) %')-'4O&#,!0#."),4.'-.#),%'+#.4 101 stage, the applicant also receives the Fire Safety Procedure 5. Receive inspection from Comments: The application for water and sewage /1#Ĭ//1.5+Ťij3'#Ťǫ-+Ť!+#1-!#Ť6(++Ť #Ť. 3(-#"Ť connections is done prior to the start of consĬ the provincial Department of Labour upon completion of the building and after the Fire truction, because the building company needs Department inspects the building). A Fire Safety Time: 1 day a temporary water connection (a builder water Plan should be included in the submission of the Cost: .Ť!.23ŤŤ supply) during construction. building plans. Comments: The building site may be inspected Procedure 11. Receive final water Once all approvals and comments are obtained, at any time during the construction phase by 3'#Ť+--(-%Ť-"Ť4(+"(-%Ť#5#+./,#-3Ť connection from the municipal Water a representative of the Department of Labour Management authority stamps the building plans to ensure compliance with the Constructions Department provided that all requirements have been met and Regulations (OHASA). Time: 1 day taking into consideration the other departments’ comments. The application is approved if Cost: .Ť!.23ŤŤ statutory compliance has been achieved. If not, Procedure 6. Receive inspection of all foundation trenches from the municipal Comments: Once the application has been the application is refused, and the reasons are processed and the water and sewage systems are given in writing.   Building Inspectorate in place, an official inspects the property to ensure When plans are submitted, a building inspector Time: 1 day that the construction work has been carried out inspects the site to ensure that the planned Cost: .Ť!.23ŤŤ in accordance with the approved building plans construction will fit on the plot of land and that and to provide a final quote for the connections. the construction will be within the allowed Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť The communication pipes and the meter are also building lines. Act 1977 requires a mandatory inspection of all installed at this stage. foundation trenches prior to placing of concrete. The local authority should grant or refuse its The building company is required to submit the approval in less than 30 days (for any building official certificate, issued by a registered plumber, where the architectural area is less than 500 Procedure 7. Receive inspection of confirming that the plumbing work has been square meters) and in less than 60 days (for any wastewater drainage systems from the completed according to the applicable legislation building where the architectural area is more than municipal Building Inspectorate and standards. 500 square meters). Time: 1 day Procedure 12. Receive final water Procedure 3. Submit notification of Cost: .Ť!.23ŤŤ connection the municipal Water commencement of building work to the Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Department provincial Department of Labour the construction site when wastewater drainage systems are ready in order to test the sewage Time: 14 days Time: 1 day system connection point and drains prior to Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ backfilling. The inspection of the wastewater Comments: When the building is completed, the drainage system takes place prior to the closing of Comments: According to the Occupational temporary connection is removed, and a new and the work site.   Health and Safety Act 1993 (OHASA) related to definitive account is opened with the final water Constructions Regulations, building companies connection.  must, at least 7 days before the construction work Procedure 8. Receive inspection of the starts, submit a notification of commencement of wall plate from the municipal Building Procedure 13. Submit notification of the work to the provincial Department of Labour. Inspectorate completion of building work to the The building company should also ensure that Time: 1 day municipal Building Control authority periodic health and safety audits and document verification are conducted, and also keep on site a Cost: .Ť!.23ŤŤ Time: 1 day health and safety file that includes all the required Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Cost: .Ť!.23ŤŤ documentation. the building site when roof plates are ready and go Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť up to the roof line. Act 1977 requires building companies to submit Procedure 4*. Submit notification of a notification of completion of the work to the commencement of building work to the Procedure 9. Obtain certificate of Municipality. municipal Building Control authority compliance (plumbing, sewage)  Time: 1 day Time: 1 day Procedure 14. Receive inspection from Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ the municipal Fire Department Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť Comments: The building company is required to Time: 1 day 1977 requires developers to submit a notification submit an official certificate, issued by a registered Cost: .Ť!.23ŤŤ of commencement of the work to the Municipality plumber, confirming that the plumbing work Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť stating the date on which the construction will has been completed according to the applicable Act 1977 requires a fire safety clearance before commence. The notice must be submitted at legislation and standards. The certification . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ least 4 working days prior to the starting of the must be signed by a certified professional. The residential buildings. construction (10 days in case of demolition). registered plumber conducts a pressure test The approved plan must be available on site and and certifies that the plumbing work has been The Fire Department visits the site to check remain available until an Occupancy Certificate done according to the appropriate standards. whether what was previously approved is issued. The pressure test and the plumber certification (during the building plan submission) has been are compulsory in order to obtain a certificate of implemented in the building. The Municipality During the construction phase, the owner must compliance from the Municipality. will not issue an Occupancy Certificate without ensure that the building is erected within the clearance from the Fire department. All fire notes, surveyed boundaries and prescribed building lines Procedure 10*. Apply for water and fire equipment, and escape routes have to comply of the site, and that it is in full accordance with sewage connection at the municipal 6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ the approved building plans. The Municipality and T. must be notified of any modifications to the Water Department originally approved plans, and it may require the Time: 1 day submission of a new set of plans and the payment Procedure 15. Receive final inspection of additional building plan submission fees. Cost: ZAR 6,734 (ZAR 5,662 for water connecĬ from the municipal Building Control tion + ZAR 1,072 for sewerage connection) authority Time: 1 day Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. 102 DOING BUSINESS IN SOUTH AFRICA 2015 Comments: The inspection is a prerequisite Comments: The applicant submits draft building originally approved plans, and it may require the to obtaining the Occupancy Certificate. The /+-2Ť3.Ť3'#Ť,4-(!(/+Ť4(+"(-%Ť.-31.+Ť43'.1(38ĎŤ submission of a new set of plans and the payment building company must confirm that the products, Several sets of building plans are required. The of additional building plan submission fees. materials, and systems comply with the South application is then circulated internally within the $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť Municipality, allowing each relevant department Procedure 5. Receive inspection from do so, developers must provide certificates (e.g., Health, Water and Sanitation, Fire, Traffic, the provincial Department of Labour of compliance to the Municipality. Generally, Roads, Electricity, Environmental) to evaluate it. certificates of compliance for electrical, structural, At this stage, the applicant also receives the Fire Time: 1 day %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ $#38Ť/1#Ĭ//1.5+Ťij3'#Ťǫ-+Ť!+#1-!#Ť6(++Ť #Ť. Ĭ Cost: .Ť!.23ŤŤ Others could be requested from the Municipality. tained upon completion of the building and after Comments: The building site may be inspected The engineer or professional in charge of one the Fire Department inspects the building). A Fire at any time during the construction phase by or several of these specific elements is allowed Safety Plan should be included in the submission a representative of the Department of Labour to provide the owner with such certificates. of the building plans. to ensure compliance with the Constructions A certificate of compliance is proof that the Once all approvals and comments are obtained, Regulations (OHASA). installations are safe and comply with the rules 3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť23,/2Ť3'#Ť and regulations. building plans provided that all requirements Procedure 6. Receive inspection of all have been met and taking into consideration the foundation trenches from the municipal Procedure 16. Obtain Occupancy other departments’ comments. The application Certificate from the municipal Building Building Inspectorate is approved if statutory compliance has been Control authority achieved. If not, the application is refused, and the Time: 1 day reasons are given in writing.   Cost: .Ť!.23ŤŤ Time: 5 days When plans are submitted, a building inspector Cost: .Ť!.23ŤŤ Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť inspects the site to ensure that the planned Act 1977 requires a mandatory inspection of all Comments: This certificate is issued after the construction will fit on the plot of land and that foundation trenches prior to placing of concrete. ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť the construction will be within the allowed (and other relevant municipal departments if building lines. Procedure 7. Receive inspection of first deemed necessary) has been carried out, and The local authority should grant or refuse its 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť floor slab from the municipal Building approval in less than 30 days (for any building law prescribes that an Occupancy Certificate may where the architectural area is less than 500 Inspectorate only be issued at the written request of the owner square meters) and in less than 60 days (for any Time: 1 day of the property being developed. The building building where the architectural area is more than Cost: .Ť!.23ŤŤ cannot be used or occupied without the issuance 500 square meters). of the Occupancy Certificate. Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Procedure 3. Submit notification of the building site when the first floor slab is ready.  Ť Ť Ť  commencement of building work to the provincial Department of Labour Procedure 8. Receive inspection of Ekurhuleni, Germiston wastewater drainage systems from the Warehouse value: ZAR 3,129,500 (US$ 359,500) Time: 1 day municipal Building Inspectorate Data as of: January 2015 Cost: .Ť!.23ŤŤ Time: 1 day Comments: According to the Occupational Cost: .Ť!.23ŤŤ Procedure 1. Obtain Site Development Health and Safety Act 1993 (OHASA) related to Plan (SDP) approval from the municipal Constructions Regulations, building companies Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Town Planning authority must, at least 7 days before the construction work the construction site when wastewater drainage starts, submit a notification of commencement of systems are ready in order to test the sewage Time: 27 days system connection point and drains prior to the work to the provincial Department of Labour. Cost: ZAR 600 The building company should also ensure that backfilling. The inspection of the wastewater Comments: A person intending to erect a building periodic health and safety audits and document drainage system takes place prior to the closing of (including an architect or any other declared and verification are conducted, and also keep on site a the work site.    43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ health and safety file that includes all the required can meet with the municipal Town Planning documentation. Procedure 9. Obtain certificate of authority in order to ensure that the project compliance (plumbing, sewage)  complies with the town planning regulations. Procedure 4*. Submit notification of Time: 1 day The application is then circulated internally to commencement of building work to the the various relevant departments within the Cost: .Ť!.23ŤŤ municipal Building Control authority Municipality for comments and approvals. The Comments: The building company is required to Time: 1 day applicant then receives a letter stating all the submit an official certificate, issued by a registered terms, conditions, and requirements attached Cost: .Ť!.23ŤŤ plumber, confirming that the plumbing work to the approbation of the building plans. The Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť has been completed according to the applicable purpose of this procedure is to evaluate the 1977 requires developers to submit a notification legislation and standards. The certification project in terms of general town planning of commencement of the work to the Municipality must be signed by a certified professional. The scheme requirements and services capacity (e.g., stating the date on which the construction will registered plumber conducts a pressure test municipal policy regarding traffic, environment, commence. The notice must be submitted at and certifies that the plumbing work has been water, and sewage).  least 4 working days prior to the starting of the done according to the appropriate standards. construction (10 days in case of demolition). The pressure test and the plumber certification Procedure 2. Obtain approval of the The approved plan must be available on site and are compulsory in order to obtain a certificate of building plans from the municipal remain available until an Occupancy Certificate compliance from the Municipality. Building Control authority is issued. Procedure 10*. Apply for water and Time: 30 days During the construction phase, the owner must ensure that the building is erected within the sewage connection at the municipal Cost: ZAR 17,168 (ZAR 13.20 per square meter of Water and Sewer Department surveyed boundaries and prescribed building lines the property) of the site, and that it is in full accordance with Time: 1 day the approved building plans. The Municipality Cost: ZAR 11,859 (ZAR 4,581 for water connecĬ must be notified of any modifications to the tion + ZAR 7,278 for sewerage connection) * This procedure can be completed simultaneously with previous procedures. .) %')-'4O&#,!0#."),4.'-.#),%'+#.4 103 Comments: The application for water and Comments: The inspection is a prerequisite Cost: ZAR 19,800 (Calculated based on a tier sewage connections is done prior to the start to obtaining the Occupancy Certificate. The 2823#,ĎŤĂĬččŤ2041#Ť,#3#12đŤŤčŤ/#1Ť2041#Ť of construction, because the building company building company must confirm that the products, ,#3#1ĒŤăĂĂĬčččŤ2041#Ť,#3#12đŤŤăČŤ/#1Ť needs a temporary water connection (a builder materials, and systems comply with the South square meter; 1,000 or more square meters: ZAR water supply) during construction. $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť 9 per square meter) do so, developers must provide certificates Comments: The applicant submits draft building Procedure 11. Receive inspection of compliance to the Municipality. Generally, plans to the municipal Development Application from the municipal Water and Sewer certificates of compliance for electrical, structural, 1-!'ĎŤ#5#1+Ť2#32Ť.$Ť 4(+"(-%Ť/+-2Ť1#Ť1#04(1#"ĎŤ Department %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ The application is then circulated internally Others could be requested from the Municipality. within the Municipality, allowing each relevant Time: 1 day The engineer or professional in charge of one department (e.g., Health, Water and Sanitation, Cost: .Ť!.23ŤŤ or several of these specific elements is allowed Fire, Traffic, Roads, Electricity, Environmental) to provide the owner with such certificates. Comments: Once the application has been to evaluate it. At this stage, the applicant also A certificate of compliance is proof that the 1#!#(5#2Ť3'#Ť(1#Ť$#38Ť/1#Ĭ//1.5+Ťij3'#Ťǫ-+Ť processed and the water and sewage systems are installations are safe and comply with the rules clearance will be obtained upon completion of the in place, an official inspects the property to ensure and regulations. building and after the Fire Department inspects that the construction work has been carried out in accordance with the approved building plans the building). A Fire Safety Plan should be and to provide a final quote for the connections. Procedure 16. Obtain Occupancy included in the submission of the building plans. The communication pipes and the meter are also Certificate from the municipal Building Once all approvals and comments are obtained, installed at this stage. Control authority 3'#Ť#5#+./,#-3Ť//+(!3(.-Ť1-!'Ť23,/2Ť The building company is required to submit the Time: 8 days the building plans provided that all requirements official certificate, issued by a registered plumber, have been met and taking into consideration the Cost: .Ť!.23ŤŤ confirming that the plumbing work has been other departments’ comments. The application completed according to the applicable legislation Comments: This certificate is issued after the is approved if statutory compliance has been and standards. ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť achieved. If not, the application is refused, and the (and other relevant municipal departments if reasons are given in writing.   Procedure 12. Receive final water deemed necessary) has been carried out, and When plans are submitted, a building inspector connection from the municipal Water 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť inspects the site to ensure that the planned law prescribes that an Occupancy Certificate may construction will fit on the plot of land and that and Sewer Department only be issued at the written request of the owner the construction will be within the allowed Time: 21 days of the property being developed. The building building lines. Cost: .Ť!.23ŤŤ cannot be used or occupied without the issuance of the Occupancy Certificate. The local authority should grant or refuse its Comments: When the building is completed, the approval in less than 30 days (for any building temporary connection is removed, and a new and where the architectural area is less than 500 definitive account is opened with the final water  Ť Ť Ť  square meters) and in less than 60 days (for any connection.  eThekwini, Durban building where the architectural area is more than 500 square meters). Warehouse value: ZAR 3,129,500 (US$ 359,500) Procedure 13. Submit notification of Data as of: January 2015 Procedure 3. Submit notification of completion of building work to the municipal Building Control authority commencement of building work to the Procedure 1. Apply for pre-scrutiny of provincial Department of Labour Time: 1 day draft plans at the municipal Land Use Management Branch Time: 1 day Cost: .Ť!.23ŤŤ Time: 30 days Cost: .Ť!.23ŤŤ Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Act 1977 requires building companies to submit Cost: .Ť!.23ŤŤ Comments: According to the Occupational a notification of completion of the work to the Health and Safety Act 1993 (OHASA) related to Municipality. Comments: A person intending to erect a building Constructions Regulations, building companies (including an architect or any other declared must, at least 7 days before the construction work -"Ť43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť starts, submit a notification of commencement of Procedure 14. Receive inspection from owner) submits draft plans to the municipal Land the work to the provincial Department of Labour. the municipal Fire Department 2#Ť1-!'ĎŤ'#Ť"1$3Ť/+-2Ť6(++Ť #Ť!(1!4+3#"Ť The building company should also ensure that Time: 1 day internally to the relevant municipal departments periodic health and safety audits and document Cost: .Ť!.23ŤŤ for comments and approvals. The applicant verification are conducted, and also keep on site a then receives a letter stating all the terms, health and safety file that includes all the required Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť conditions, and requirements attached to the documentation. Act 1977 requires a fire safety clearance before approbation of the building plans. The purpose of . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ this procedure is to evaluate the project in terms Procedure 4*. Submit notification of residential buildings. of requirements from the different municipal commencement of building work to the The Fire Department visits the site to check service providers (e.g., municipal policy regarding traffic, environment, water, and sewage) and municipal Building Control authority whether what was previously approved (during the building plan submission) has been town planning regulations. This submission is Time: 1 day implemented in the building. The Municipality not mandatory for all types of constructions, Cost: .Ť!.23ŤŤ will not issue an Occupancy Certificate without but it is strongly recommended and done as a clearance from the Fire department. All fire notes, common practice by developers in order to better Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť fire equipment, and escape routes have to comply understand formal requirements from the various 1977 requires developers to submit a notification 6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ municipal service providers.  of commencement of the work to the Municipality and T. stating the date on which the construction will Procedure 2. Obtain approval of the commence. The notice must be submitted at Procedure 15. Receive final inspection building plans from the municipal least 4 working days prior to the starting of the construction (10 days in case of demolition). from the municipal Building Control Development Application Branch The approved plan must be available on site and authority Time: 36 days remain available until an Occupancy Certificate Time: 1 day is issued. Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. 104 DOING BUSINESS IN SOUTH AFRICA 2015 During the construction phase, the owner must Procedure 10*. Apply for water and Procedure 15. Receive final inspection ensure that the building is erected within the sewage connection at the municipal from municipal authorities surveyed boundaries and prescribed building lines of the site, and that it is in full accordance with the Water and Waste Department Time: 1 day approved building plans. The Municipality must be Time: 1 day Cost: .Ť!.23ŤŤ notified of any modifications to the originally apĬ Cost: ZAR 11,906 (ZAR 5,628 for water connecĬ proved plans, and it may require the submission of Comments: The inspection is a prerequisite tion + ZAR 6,278 for sewerage connection) to obtaining the Occupancy Certificate. The a new set of plans and the payment of additional building plan submission fees. Comments: The application for water and building company must confirm that the products, sewage connections is done prior to the start materials, and systems comply with the South Procedure 5. Receive inspection from of construction, because the building company $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť needs a temporary water connection (a builder do so, developers must provide certificates the provincial Department of Labour water supply) during construction. of compliance to the Municipality. Generally, Time: 1 day certificates of compliance for electrical, structural, Cost: .Ť!.23ŤŤ Procedure 11. Receive inspection %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ from the municipal Water and Waste Others could be requested from the Municipality. Comments: The building site may be inspected The engineer or professional in charge of one at any time during the construction phase by Department or several of these specific elements is allowed a representative of the Department of Labour Time: 1 day to provide the owner with such certificates. to ensure compliance with the Constructions A certificate of compliance is proof that the Cost: .Ť!.23ŤŤ Regulations (OHASA). installations are safe and comply with the rules Comments: Once the application has been and regulations. Procedure 6. Receive inspection of all processed and the water and sewage systems are foundation trenches from the municipal in place, an official inspects the property to ensure Procedure 16. Obtain Occupancy Building Inspectorate that the construction work has been carried out in accordance with the approved building plans Certificate from the municipal Building Time: 1 day and to provide a final quote for the connections. Control authority Cost: .Ť!.23ŤŤ The communication pipes and the meter are also Time: 12 days installed at this stage. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Cost: .Ť!.23ŤŤ Act 1977 requires a mandatory inspection of all The building company is required to submit the official certificate, issued by a registered plumber, Comments: This certificate is issued after the foundation trenches prior to placing of concrete. ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť confirming that the plumbing work has been completed according to the applicable legislation (and other relevant municipal departments if Procedure 7. Receive inspection of deemed necessary) has been carried out, and and standards. wastewater drainage systems from the 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť municipal Building Inspectorate Procedure 12. Receive final water law prescribes that an Occupancy Certificate may Time: 1 day only be issued at the written request of the owner connection from the Water and Waste of the property being developed. The building Cost: .Ť!.23ŤŤ Department cannot be used or occupied without the issuance Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Time: 14 days of the Occupancy Certificate. the construction site when wastewater drainage Cost: .Ť!.23ŤŤ systems are ready in order to test the sewage  Ť Ť Ť  system connection point and drains prior to Comments: When the building is completed, the backfilling. The inspection of the wastewater temporary connection is removed, and a new and Johannesburg, Johannesburg drainage system takes place prior to the closing of definitive account is opened with the final water Warehouse value: ZAR 3,129,500 (US$ 359,500) the work site.    connection.  Data as of: January 2015 Procedure 8. Receive inspection of Procedure 13. Submit notification of Procedure 1. Obtain fire safety approval the roof from the municipal Building completion of building work to the from the Fire Department  Inspectorate municipal Building Control authority Time: 4 days Time: 1 day Time: 1 day Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Comments: .1Ť++Ť-.-Ĭ1#2("#-3(+Ť 4(+"(-%2ďŤ3'#Ť Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť plans must be approved by the Fire Department the building site when the roof is completed. Act 1977 requires building companies to submit before applying for the construction permit. a notification of completion of the work to the Procedure 9. Obtain certificate of Municipality. Procedure 2*. Obtain water and sewage compliance (plumbing, sewage)  approval from Johannesburg Water Procedure 14. Receive inspection from Time: 1 day the municipal Fire Department Time: 4 days Cost: .Ť!.23ŤŤ Time: 1 day Cost: .Ť!.23ŤŤ Comments: The building company is required to Cost: .Ť!.23ŤŤ Comments: Each agency has set aside 2 days per submit an official certificate, issued by a registered 6##*Ť3.Ť/1.!#22Ť/1#Ĭ//1.5+2Ď plumber, confirming that the plumbing work Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť has been completed according to the applicable Act 1977 requires a fire safety clearance before Procedure 3*. Obtain electricity legislation and standards. The certification . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ residential buildings. approval from City Power must be signed by a certified professional. The registered plumber conducts a pressure test The Fire Department visits the site to check Time: 4 days and certifies that the plumbing work has been whether what was previously approved (during Cost: .Ť!.23ŤŤ done according to the appropriate standards. the building plan submission) has been impleĬ Comments: Each agency has set aside 2 days per The pressure test and the plumber certification mented in the building. The Municipality will not 6##*Ť3.Ť/1.!#22Ť/1#Ĭ//1.5+2Ď are compulsory in order to obtain a certificate of issue an Occupancy Certificate without clearance compliance from the Municipality. from the Fire department. All fire notes, fire equipĬ ment, and escape routes have to comply with the 1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ-"ŤĎ * This procedure can be completed simultaneously with previous procedures. .) %')-'4O&#,!0#."),4.'-.#),%'+#.4 105 Procedure 4*. Obtain permission to verification are conducted, and also keep on site a Comments: The building company is required to health and safety file that includes all the required submit an official certificate, issued by a registeĬ hoard in footway from the municipal documentation. red plumber, confirming that the plumbing work Public Roads Department has been completed according to the applicable Time: 1 day Procedure 8*. Submit notification of legislation and standards. The certification must Cost: .Ť!.23ŤŤ completion of building work to the be signed by a certified professional. The registeĬ Municipality red plumber conducts a pressure test and certifies Comments: According to Article 21 (Permission that the plumbing work has been done according to hoard in footway) of the City of Johannesburg Time: 1 day to the appropriate standards. The pressure test Metropolitan Municipality Public Road and Cost: .Ť!.23ŤŤ and the plumber certification are compulsory in (2!#++-#.42Ť8Ĭ+62ďŤ 4(+"(-%Ť!.,/-(#2Ť,423Ť order to obtain a certificate of compliance from request a permission to hoard in the footway. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť the Municipality. The law requires that any person who intends to 1977 requires developers to submit a notification erect, remove, alter, repair, or paint any part of a of commencement of the work to the Municipality stating the date on which the construction will Procedure 13*. Apply for water and building or structure or carry out any excavation, sewage connection at the municipal on part of any land which is within 2 meters of a commence. The notice must be submitted at least 4 working days prior to the starting of the Building Inspectorate public road, must before commencing any such work enclose or cause to be enclosed a space construction (10 days in case of demolition). Time: 1 day in front of such part of the building, structure, The approved plan must be available on site and remain available until an Occupancy Certificate Cost: ZAR 13,386 (ZAR 13,386 for water or land by means of a hoarding, fence, or other !.--#!3(.-Ť-"Ť-.Ť!.23Ť$.1Ťǫ123Ĭ3(,#Ť2#6#1%#Ť enclosure or an enclosure specified in a permit is issued. connection) issued by the Municipality’s Council. The Council During the construction phase, the owner must may determine what portion of the public road ensure that the building is erected within the Comments: The application for water and is necessary for the purpose of carrying out any surveyed boundaries and prescribed building lines sewage connections is done prior to the start contemplated operations, and in each case where of the site, and that it is in full accordance with of construction, because the building company the Council determines that a portion of a public the approved building plans. The Municipality needs a temporary water connection (a builder road may be used for such purpose, it may grant a must be notified of any modifications to the water supply) during construction. permit in writing specifying the portion that may originally approved plans, and it may require the be occupied for such purpose and the conditions submission of a new set of plans and the payment Procedure 14. Receive inspection from under which such permit is granted. of additional building plan submission fees. Johannesburg Water Time: 1 day Procedure 5. Submit approvals and Procedure 9. Receive inspection from the provincial Department of Labour Cost: .Ť!.23ŤŤ obtain Site Development Plan (SDP) approval from the municipal Town Time: 1 day Comments: Once the application has been Planning Department processed and the water and sewage systems are Cost: .Ť!.23ŤŤ in place, an official inspects the property to ensure Time: 53 days that the construction work has been carried out Comments: The building site may be inspected Cost: ZAR 634 at any time during the construction phase by in accordance with the approved building plans a representative of the Department of Labour and to provide a final quote for the connections. Comments: The architect must submit the to ensure compliance with the Constructions The communication pipes and the meter are also approvals obtained in the previous procedures Regulations (OHASA). installed at this stage. to the Town Planning Department at the Municipality. The Municipality will then review The building company is required to submit the the approvals and issue a Site Development Plan Procedure 10. Receive inspection of all official certificate, issued by a registered plumber, (SDP). foundation trenches from the municipal confirming that the plumbing work has been Building Inspectorate completed according to the applicable legislation Procedure 6. Obtain approval of the and standards. Time: 1 day building plans from the municipal Office Cost: .Ť!.23ŤŤ Procedure 15. Receive final water of the Building Permit Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť connection from Johannesburg Water Time: 60 days Act 1977 requires a mandatory inspection of all Time: 10 days Cost: ZAR 19,208 foundation trenches prior to placing of concrete. Cost: .Ť!.23ŤŤ Comments: The architect submits the approved Ť-"Ť 4(+"(-%Ť/+-2Ť3.Ť3'#Ť,4-(!(/+Ť4(+"(-%Ť Procedure 11. Receive inspection of Comments: When the building is completed, the Inspectorate. The office sends the plans to all the wastewater drainage systems from the temporary connection is removed, and a new and agencies that issued the approvals to check the municipal Building Inspectorate definitive account is opened with the final water building plans, approve and stamp the building connection.  Time: 1 day plans. Cost: .Ť!.23ŤŤ Procedure 16. Submit notification of Procedure 7. Submit notification of Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť completion of building work to the commencement of building work to the the construction site when wastewater drainage municipal Building Inspectorate provincial Department of Labour systems are ready in order to test the sewage Time: 1 day system connection point and drains prior to Time: 1 day Cost: .Ť!.23ŤŤ backfilling. The inspection of the wastewater Cost: .Ť!.23ŤŤ drainage system takes place prior to the closing of Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Comments: According to the Occupational the work site.      Act 1977 requires building companies to submit Health and Safety Act 1993 (OHASA) related to a notification of completion of the work to the Constructions Regulations, building companies Procedure 12. Obtain certificate of Municipality. must, at least 7 days before the construction work compliance (plumbing, sewage)  starts, submit a notification of commencement of Procedure 17. Receive inspection from Time: 1 day the work to the provincial Department of Labour. the municipal Fire Department Cost: .Ť!.23ŤŤ The building company should also ensure that Time: 1 day periodic health and safety audits and document Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. 106 DOING BUSINESS IN SOUTH AFRICA 2015 Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Procedure 2*. Obtain approval from When plans are submitted, a building inspector Act 1977 requires a fire safety clearance before inspects the site to ensure that the planned consĬ the municipal Waste and Water . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ truction will fit on the plot of land and that the residential buildings. Department construction will be within the allowed building The Fire Department visits the site to check Time: 2 days lines. whether what was previously approved Cost: .Ť!.23ŤŤ The local authority should grant or refuse its (during the building plan submission) has been approval in less than 30 days (for any building implemented in the building. The Municipality Comments: A person intending to erect a building where the architectural area is less than 500 will not issue an Occupancy Certificate without (including an architect or any other declared and square meters) and in less than 60 days (for any clearance from the Fire department. All fire notes, 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ building where the architectural area is more than fire equipment, and escape routes have to comply should meet with municipal departments in order 500 square meters). 6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ to ensure that the application complies with the town planning regulations and is in accordance and T. Procedure 6. Submit notification of with the delivery of municipal services. commencement of building work to the Procedure 18. Receive final inspection provincial Department of Labour Procedure 3*. Obtain approval from the from municipal authorities municipal Health Department Time: 1 day Time: 1 day Time: 2 days Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Comments: According to the Occupational Comments: The inspection is a prerequisite Health and Safety Act 1993 (OHASA) related to to obtaining the Occupancy Certificate. The Comments: A person intending to erect a building Constructions Regulations, building companies building company must confirm that the products, (including an architect or any other declared and must, at least 7 days before the construction work materials, and systems comply with the South 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ starts, submit a notification of commencement of $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť should meet with municipal departments in order the work to the provincial Department of Labour. do so, developers must provide certificates to ensure that the application complies with the The building company should also ensure that of compliance to the Municipality. Generally, town planning regulations and is in accordance periodic health and safety audits and document certificates of compliance for electrical, structural, with the delivery of municipal services. verification are conducted, and also keep on site a %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ health and safety file that includes all the required Others could be requested from the Municipality. Procedure 4*. Obtain approval from the documentation. The engineer or professional in charge of one municipal Electricity Department or several of these specific elements is allowed Time: 2 days Procedure 7*. Submit notification of to provide the owner with such certificates. commencement of building work to the A certificate of compliance is proof that the Cost: .Ť!.23ŤŤ municipal Building Control authority installations are safe and comply with the rules Comments: A person intending to erect a building and regulations. (including an architect or any other declared and Time: 1 day 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ Cost: .Ť!.23ŤŤ Procedure 19. Obtain Occupancy should meet with municipal departments in order to ensure that the application complies with the Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť Certificate from the Municipality 1977 requires developers to submit a notification town planning regulations and is in accordance Time: 1 day with the delivery of municipal services. of commencement of the work to the Municipality Cost: .Ť!.23ŤŤ stating the date on which the construction will Procedure 5. Obtain approval of the commence. The notice must be submitted at Comments: This certificate is issued after the final least 4 working days prior to the starting of the inspection by the relevant municipal departments building plans from the municipal construction (10 days in case of demolition). has been carried out, and upon approval by the Building Control authority The approved plan must be available on site and '(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť+6Ť/1#2!1( #2Ť3'3Ť Time: 60 days remain available until an Occupancy Certificate an Occupancy Certificate may only be issued at is issued. the written request of the owner of the property Cost: ZAR 9,364 (ZAR 144 per unit, with the number of units calculated by dividing the total During the construction phase, the owner must being developed. The building cannot be used or surface of the property by 20: 1,300.6/20= 65.03 ensure that the building is erected within the occupied without the issuance of the Occupancy units) surveyed boundaries and prescribed building lines Certificate. of the site, and that it is in full accordance with Comments: The applicant submits the draft the approved building plans. The Municipality  Ť Ť Ť  4(+"(-%Ť/+-2Ť3.Ť3'#Ť,4-(!(/+Ť4(+"(-%Ť.-31.+Ť must be notified of any modifications to the authority. Several sets of building plans are originally approved plans, and it may require the Mangaung, Bloemfontein required. The application is then circulated submission of a new set of plans and the payment Warehouse value: ZAR 3,129,500 (US$ 359,500) internally within the Municipality, allowing of additional building plan submission fees. Data as of: January 2015 each relevant department (e.g., Health, Water and Sanitation, Fire, Traffic, Roads, Electricity, Procedure 8. Receive inspection from Procedure 1*. Obtain approval from the Environmental) to evaluate it. At this stage, the //+(!-3Ť+2.Ť1#!#(5#2Ť3'#Ť(1#Ť$#38Ť/1#Ĭ the provincial Department of Labour municipal Fire Department approval (the final clearance will be obtained Time: 1 day Time: 5 days upon completion of the building and after the Fire Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Department inspects the building). A Fire Safety Plan should be included in the submission of the Comments: The building site may be inspected Comments: A person intending to erect a building building plans. at any time during the construction phase by (including an architect or any other declared and a representative of the Department of Labour 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ Once all approvals and comments are obtained, to ensure compliance with the Constructions should meet with municipal departments in order 3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť23,/2Ť3'#Ť Regulations (OHASA). to ensure that the application complies with the building plans provided that all the requirements town planning regulations and is in accordance are met and taking into consideration the other departments’ comments. The application is Procedure 9. Receive inspection of all with the delivery of municipal services. foundation trenches from the municipal approved if statutory compliance has been achieved. If not, the application is refused, and the Building Inspectorate reasons are given in writing.    Time: 1 day Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. .) %')-'4O&#,!0#."),4.'-.#),%'+#.4 107 Comments: In Mangaung, the construction site Procedure 14. Receive monthly Comments: When the building is completed, the is inspected monthly. The inspections do not temporary connection is removed, and a new and inspection from the municipal Building depend on the stage of construction, and they definitive account is opened with the final water are not requested by the developer. They are Inspectorate connection. routine inspections with no prior notice. The case Time: 1 day study assumes that the construction work lasts Cost: .Ť!.23ŤŤ Procedure 19. Submit notification of 7 months. completion of building work to the Comments: There are monthly inspections. '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3ŤăčċċŤ municipal Building Control authority requires a mandatory inspection of all foundation The inspections do not depend on the stage of construction, and they are not requested by the Time: 1 day trenches prior to placing of concrete. developer. They are routine inspections with no Cost: .Ť!.23ŤŤ prior notice. The case study assumes that the Procedure 10. Receive inspection of Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť construction work lasts 7 months. underground wastewater drainage Act 1977 requires building companies to submit systems from the municipal Building Procedure 15. Obtain certificate of a notification of completion of the work to the Inspectorate Municipality. compliance (plumbing, sewage)  Time: 1 day Time: 1 day Procedure 20. Receive inspection from Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ the municipal Fire Department Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Comments: The building company is required to Time: 1 day the construction site when wastewater drainage submit an official certificate, issued by a registered systems are ready in order to test the sewage Cost: .Ť!.23ŤŤ plumber, confirming that the plumbing work system connection point and drains prior to has been completed according to the applicable Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť backfilling. The inspection of the wastewater legislation and standards. The certification Act 1977 requires a fire safety clearance before drainage system takes place prior to the closing must be signed by a certified professional. The . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ of the work site. This inspection concerns the registered plumber conducts a pressure test residential buildings. underground wastewater drainage systems. and certifies that the plumbing work has been The Fire Department visits the site to check done according to the appropriate standards. whether what was previously approved Procedure 11. Receive inspection of The pressure test and the plumber certification (during the building plan submission) has been aboveground wastewater drainage are compulsory in order to obtain a certificate of implemented in the building. The Municipality systems from the municipal Building compliance from the Municipality. will not issue an Occupancy Certificate without Inspectorate clearance from the Fire department. All fire notes, Procedure 16*. Apply for water and fire equipment, and escape routes have to comply Time: 1 day sewage connection at the municipal 6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ Cost: .Ť!.23ŤŤ Water and Sewage Office and T. Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Time: 1 day the construction site when wastewater drainage Procedure 21. Receive final inspection systems are ready in order to test the sewage Cost: ZAR 12,037 (ZAR 7,537 for water connecĬ from the municipal Building Control system connection point and drains prior to tion + ZAR 4,500 for sewerage connection) authority backfilling. The inspection of the wastewater Comments: The application for water and Time: 1 day drainage system takes place prior to the closing sewage connections is done prior to the start of the work site. This inspection concerns the Cost: .Ť!.23ŤŤ of construction, because the building company aboveground wastewater drainage systems. needs a temporary water connection (a builder Comments: The inspection is a prerequisite water supply) during construction. to obtaining the Occupancy Certificate. The Procedure 12. Receive monthly building company must confirm that the products, inspection from the municipal Building Procedure 17. Receive inspection from materials, and systems comply with the South Inspectorate the municipal Water and Sewage Office $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť do so, developers must provide certificates Time: 1 day Time: 1 day of compliance to the Municipality. Generally, Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ certificates of compliance for electrical, structural, Comments: There are monthly inspections. %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ Comments: Once the application has been The inspections do not depend on the stage of Others could be requested from the Municipality. processed and the water and sewage systems are construction, and they are not requested by the The engineer or professional in charge of one in place, an official inspects the property to ensure developer. They are routine inspections with no or several of these specific elements is allowed that the construction work has been carried out prior notice. The case study assumes that the to provide the owner with such certificates. in accordance with the approved building plans construction work lasts 7 months. A certificate of compliance is proof that the and to provide a final quote for the connections. installations are safe and comply with the rules The communication pipes and the meter are also Procedure 13. Receive monthly and regulations. installed at this stage. inspection from the municipal Building The building company is required to submit the Procedure 22. Obtain Occupancy Inspectorate official certificate, issued by a registered plumber, Certificate from the municipal Building Time: 1 day confirming that the plumbing work has been completed according to the applicable legislation Control authority Cost: .Ť!.23ŤŤ and standards. Time: 24 days Comments: There are monthly inspections. Cost: .Ť!.23ŤŤ The inspections do not depend on the stage of Procedure 18. Receive final water construction, and they are not requested by the connection from the municipal Water Comments: This certificate is issued after the developer. They are routine inspections with no ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť and Sewage Office prior notice. The case study assumes that the (and other relevant municipal departments if Time: 5 days deemed necessary) has been carried out, and construction work lasts 7 months. Cost: .Ť!.23ŤŤ 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť law prescribes that an Occupancy Certificate may only be issued at the written request of the owner * This procedure can be completed simultaneously with previous procedures. 108 DOING BUSINESS IN SOUTH AFRICA 2015 of the property being developed. The building Cost: .Ť!.23ŤŤ Procedure 8. Receive inspection of cannot be used or occupied without the issuance Comments: According to the Occupational wastewater drainage systems from the of the Occupancy Certificate. Health and Safety Act 1993 (OHASA) related to municipal Building Inspectorate Constructions Regulations, building companies must, at least 7 days before the construction work Time: 1 day  Ť Ť Ť  Msunduzi, Pietermaritzburg starts, submit a notification of commencement of Cost: .Ť!.23ŤŤ the work to the provincial Department of Labour. Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Warehouse value: ZAR 3,129,500 (US$ 359,500) The building company should also ensure that the construction site when wastewater drainage Data as of: January 2015 periodic health and safety audits and document systems are ready in order to test the sewage verification are conducted, and also keep on site a system connection point and drains prior to Procedure 1. Obtain Site Development health and safety file that includes all the required backfilling. The inspection of the wastewater Plan (SDP) approval from the municipal documentation. drainage system takes place prior to the closing of Town Planning authority the work site.   Procedure 4*. Submit notification of Time: 16 days commencement of building work to the Procedure 9. Obtain certificate of Cost: .Ť!.23ŤŤ municipal Building Control authority compliance (plumbing, sewage)  Comments: A person intending to erect a building Time: 1 day Time: 1 day (including an architect or any other declared and 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ submits an SDP to the Town Planning authority. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť Comments: The building company is required to The applicant then receives a letter stating all the 1977 requires developers to submit a notification submit an official certificate, issued by a registeĬ terms, conditions, and requirements attached to of commencement of the work to the MunicipaĬ red plumber, confirming that the plumbing work the approbation of the building plans. The purpose lity stating the date on which the construction has been completed according to the applicable of this procedure is to evaluate the project in will commence. The notice must be submitted legislation and standards. The certification must terms of requirements of the town planning at least 4 working days prior to the starting of be signed by a certified professional. The registeĬ regulations. the construction (10 days in case of demolition). red plumber conducts a pressure test and certifies The approved plan must be available on site and that the plumbing work has been done according Procedure 2. Obtain approval of the remain available until an Occupancy Certificate to the appropriate standards. The pressure test building plans from the municipal is issued. and the plumber certification are compulsory in Building Control authority During the construction phase, the owner must order to obtain a certificate of compliance from Time: 60 days ensure that the building is erected within the the Municipality. surveyed boundaries and prescribed building lines Cost: ZAR 12,279 (ZAR 375 for the first 20 square of the site, and that it is in full accordance with the Procedure 10*. Apply for water and meters + ZAR 93 for each additional 10 square approved building plans. The Municipality must be sewage connection at the municipal meters) notified of any modifications to the originally apĬ Water and Sanitation Unit Comments: The applicant submits the draft proved plans, and it may require the submission of a new set of plans and the payment of additional Time: 1 day 4(+"(-%Ť/+-2Ť3.Ť3'#Ť,4-(!(/+Ť4(+"(-%Ť.-31.+Ť authority. Several sets of building plans are requiĬ building plan submission fees. Cost: ZAR 9,841 (ZAR 6,896 for water connecĬ red. The application is then circulated internally tion + ZAR 2,945 for sewerage connection) within the Municipality, allowing each relevant Procedure 5. Receive inspection from Comments: The application for water and sewage department (e.g., Health, Water and Sanitation, the provincial Department of Labour connections is done prior to the start of consĬ Fire, Traffic, Roads, Electricity, Environmental) Time: 1 day truction, because the building company needs to evaluate it. At this stage, the applicant also a temporary water connection (a builder water 1#!#(5#2Ť3'#Ť(1#Ť$#38Ť/1#Ĭ//1.5+Ťij3'#Ťǫ-+Ť Cost: .Ť!.23ŤŤ supply) during construction. clearance will be obtained upon completion of the Comments: The building site may be inspected building and after the Fire Department inspects at any time during the construction phase by a Procedure 11. Receive inspection from the building). A Fire Safety Plan should be incluĬ representative of the Department of Labour to ded in the submission of the building plans. the municipal Water and Sanitation Unit ensure compliance with the Constructions RegulaĬ Once all approvals and comments are obtaiĬ tions (OHASA). Time: 1 day -#"ďŤ3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť23,/2Ť3'#Ť Cost: .Ť!.23ŤŤ building plans provided that all the requirements Procedure 6. Receive inspection of all Comments: Once the application has been are met and taking into consideration the other foundation trenches from the municipal processed and the water and sewage systems are departments’ comments. The application is apĬ Building Inspectorate in place, an official inspects the property to ensure proved if statutory compliance has been achieved. If not, the application is refused, and the reasons Time: 1 day that the construction work has been carried out in accordance with the approved building plans are given in writing.    Cost: .Ť!.23ŤŤ and to provide a final quote for the connections. When plans are submitted, a building inspector Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť The communication pipes and the meter are also inspects the site to ensure that the planned consĬ Act 1977 requires a mandatory inspection of all installed at this stage. truction will fit on the plot of land and that the foundation trenches prior to placing of concrete. The building company is required to submit the construction will be within the allowed building official certificate, issued by a registered plumber, lines. Procedure 7. Receive inspection of first confirming that the plumbing work has been The local authority should grant or refuse its floor slab from the municipal Building completed according to the applicable legislation approval in less than 30 days (for any building Inspectorate and standards. where the architectural area is less than 500 square meters) and in less than 60 days (for any Time: 1 day Procedure 12. Receive final water building where the architectural area is more than Cost: .Ť!.23ŤŤ connection from the Water and Sewage 500 square meters). Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Unit the building site when the first floor slab is ready. Procedure 3. Submit notification of Time: 18 days commencement of building work to the Cost: .Ť!.23ŤŤ provincial Department of Labour Time: 1 day * This procedure can be completed simultaneously with previous procedures. .) %')-'4O&#,!0#."),4.'-.#),%'+#.4 109 Comments: When the building is completed, the Comments: This certificate is issued after the proved if statutory compliance has been achieved. temporary connection is removed, and a new and ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť If not, the application is refused, and the reasons definitive account is opened with the final water (and other relevant municipal departments if are given in writing.    connection.  deemed necessary) has been carried out, and When plans are submitted, a building inspector 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť inspects the site to ensure that the planned Procedure 13. Receive inspection of roof law prescribes that an Occupancy Certificate may construction will fit on the plot of land and that trusses from the municipal Building only be issued at the written request of the owner the construction will be within the allowed Inspectorate of the property being developed. The building building lines. cannot be used or occupied without the issuance Time: 1 day The local authority should grant or refuse its of the Occupancy Certificate. approval in less than 30 days (for any building Cost: .Ť!.23ŤŤ where the architectural area is less than 500 Comments: Inspection of the roof trusses is  Ť Ť Ť  square meters) and in less than 60 days (for any carried out by the building inspectors. Nelson Mandela Bay, Port Elizabeth building where the architectural area is more than 500 square meters). Procedure 14. Submit notification of Warehouse value: ZAR 3,129,500 (US$ 359,500) completion of building work to the Data as of: January 2015 Procedure 3. Submit notification of municipal Building Control authority commencement of building work to the Procedure 1. Obtain Site Development provincial Department of Labour Time: 1 day Plan (SDP) approval from the municipal Time: 1 day Cost: .Ť!.23ŤŤ Town Planning authority Cost: .Ť!.23ŤŤ Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Time: 40 days Act 1977 requires building companies to submit Comments: According to the Occupational Cost: .Ť!.23ŤŤ a notification of completion of the work to the Health and Safety Act 1993 (OHASA) related to Municipality. Comments: A person intending to erect a building Constructions Regulations, building companies (including an architect or any other declared and must, at least 7 days before the construction work Procedure 15. Receive inspection from 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ starts, submit a notification of commencement of the municipal Fire Department can meet with the municipal Town Planning the work to the provincial Department of Labour. authority in order to ensure that the project The building company should also ensure that Time: 1 day complies with the town planning regulations. periodic health and safety audits and document Cost: ZAR 159 (ZAR 250 per working hour) The application is then circulated internally to verification are conducted, and also keep on site a the various relevant departments within the health and safety file that includes all the required Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Municipality for comments and approvals. The documentation. Act 1977 requires a fire safety clearance before applicant then receives a letter stating all the . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ terms, conditions, and requirements attached residential buildings. Procedure 4*. Submit notification of to the approbation of the building plans. The commencement of building work to the The Fire Department visits the site to check purpose of this procedure is to evaluate the whether what was previously approved municipal Building Control authority project in terms of general town planning (during the building plan submission) has been scheme requirements and services capacity (e.g., Time: 1 day implemented in the building. The Municipality municipal policy regarding traffic, environment, Cost: .Ť!.23ŤŤ will not issue an Occupancy Certificate without water, and sewage).  clearance from the Fire department. All fire notes, Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť fire equipment, and escape routes have to comply Procedure 2. Obtain approval of the 1977 requires developers to submit a notification 6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ of commencement of the work to the Municipality building plans from the municipal stating the date on which the construction will and T. Building Control authority commence. The notice must be submitted at Procedure 16. Receive final inspection Time: 14 days least 4 working days prior to the starting of the from municipal authorities construction (10 days in case of demolition). Cost: ZAR 37,844 (ZAR 3,233 per square meter The approved plan must be available on site and Time: 1 day of the property multiplied by 0.9%) remain available until an Occupancy Certificate Cost: .Ť!.23ŤŤ Comments: The applicant submits the draft is issued. 4(+"(-%Ť/+-2Ť3.Ť3'#Ť,4-(!(/+Ť4(+"(-%Ť.-31.+Ť During the construction phase, the owner must Comments: The inspection is a prerequisite authority. Several sets of building plans are requiĬ to obtaining the Occupancy Certificate. The ensure that the building is erected within the red. The application is then circulated internally surveyed boundaries and prescribed building lines building company must confirm that the products, within the Municipality, allowing each relevant materials, and systems comply with the South of the site, and that it is in full accordance with department (e.g., Health, Water and Sanitation, the approved building plans. The Municipality $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť Fire, Traffic, Roads, Electricity, Environmental) do so, developers must provide certificates must be notified of any modifications to the to evaluate it. At this stage, the applicant also originally approved plans, and it may require the of compliance to the Municipality. Generally, 1#!#(5#2Ť3'#Ť(1#Ť$#38Ť/1#Ĭ//1.5+Ťij3'#Ťǫ-+Ť certificates of compliance for electrical, structural, submission of a new set of plans and the payment clearance will be obtained upon completion of the of additional building plan submission fees. %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ building and after the Fire Department inspects Others could be requested from the Municipality. the building). A Fire Safety Plan should be incluĬ The engineer or professional in charge of one Procedure 5. Receive inspection from ded in the submission of the building plans. or several of these specific elements is allowed the provincial Department of Labour Once all approvals and comments are obtaiĬ to provide the owner with such certificates. Time: 1 day -#"ďŤ3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť23,/2Ť3'#Ť A certificate of compliance is proof that the installations are safe and comply with the rules building plans provided that all the requirements Cost: .Ť!.23ŤŤ are met and taking into consideration the other and regulations. Comments: The building site may be inspected departments’ comments. The application is apĬ at any time during the construction phase by a Procedure 17. Obtain Occupancy representative of the Department of Labour to Certificate from the municipal Building ensure compliance with the Constructions RegulaĬ Control authority tions (OHASA). Time: 10 days Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. 110 DOING BUSINESS IN SOUTH AFRICA 2015 Procedure 6. Receive inspection of all The building company is required to submit the Procedure 15. Obtain Occupancy official certificate, issued by a registered plumber, foundation trenches from the municipal Certificate from the municipal Building confirming that the plumbing work has been Building Inspectorate completed according to the applicable legislation Control authority Time: 1 day and standards. Time: 5 days Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Procedure 11. Receive final water Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť connection from the municipal Water Comments: This certificate is issued after the Act 1977 requires a mandatory inspection of all ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť Department foundation trenches prior to placing of concrete. (and other relevant municipal departments if Time: 18 days deemed necessary) has been carried out, and Procedure 7. Receive inspection of Cost: .Ť!.23ŤŤ 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť wastewater drainage systems from the law prescribes that an Occupancy Certificate may Comments: When the building is completed, the only be issued at the written request of the owner municipal Building Inspectorate temporary connection is removed, and a new and of the property being developed. The building Time: 1 day definitive account is opened with the final water cannot be used or occupied without the issuance Cost: .Ť!.23ŤŤ connection.  of the Occupancy Certificate. Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť Procedure 12. Submit notification of the construction site when wastewater drainage completion of building work to the  Ť Ť Ť  systems are ready in order to test the sewage Tshwane, Pretoria municipal Building Control authority system connection point and drains prior to backfilling. The inspection of the wastewater Time: 1 day Warehouse value: ZAR 3,129,500 (US$ 359,500) drainage system takes place prior to the closing of Cost: .Ť!.23ŤŤ Data as of: January 2015 the work site. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Procedure 1. Obtain Site Development Procedure 8. Obtain certificate of Act 1977 requires building companies to submit Plan (SDP) approval from the municipal a notification of completion of the work to the Town Planning authority compliance (plumbing, sewage)  Municipality. Time: 1 day Time: 60 days Cost: .Ť!.23ŤŤ Procedure 13. Receive inspection from Cost: ZAR 5,853 (ZAR 4.5 per square meter of the municipal Fire Department the property) Comments: The building company is required to submit an official certificate, issued by a registered Time: 1 day Comments: A person intending to erect a building plumber, confirming that the plumbing work Cost: .Ť!.23ŤŤ (including an architect or any other declared and has been completed according to the applicable 43'.1(9#"Ť/#12.-Ť!3(-%Ť.-Ť #'+$Ť.$Ť3'#Ť.6-#1ĴŤ legislation and standards. The certification Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť can meet with the municipal Town Planning must be signed by a certified professional. The Act 1977 requires a fire safety clearance before authority in order to ensure that the project registered plumber conducts a pressure test . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ complies with the town planning regulations. and certifies that the plumbing work has been residential buildings. The application is then circulated internally to done according to the appropriate standards. The Fire Department visits the site to check the various relevant departments within the The pressure test and the plumber certification whether what was previously approved Municipality for comments and approvals. The are compulsory in order to obtain a certificate of (during the building plan submission) has been applicant then receives a letter stating all the compliance from the Municipality. implemented in the building. The Municipality terms, conditions, and requirements attached will not issue an Occupancy Certificate without to the approbation of the building plans. The Procedure 9*. Apply for water and clearance from the Fire department. All fire notes, purpose of this procedure is to evaluate the sewage connection at the municipal fire equipment, and escape routes have to comply project in terms of general town planning Water Department 6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ scheme requirements and services capacity (e.g., and T. municipal policy regarding traffic, environment, Time: 1 day water, and sewage).  Cost: ZAR 12,080 (ZAR 5,176 for water connecĬ Procedure 14. Receive final inspection tion + ZAR 6,904 for sewerage connection) from the municipal authorities Procedure 2. Obtain approval of the Comments: The application for water and Time: 1 day building plans from the municipal sewage connections is done prior to the start Building Control authority Cost: .Ť!.23ŤŤ of construction, because the building company Time: 60 days needs a temporary water connection (a builder Comments: The inspection is a prerequisite to obtaining the Occupancy Certificate. The Cost: ZAR 16,388 (ZAR 12.6 per square meter of water supply) during construction. building company must confirm that the products, the property) Procedure 10. Receive inspection from materials, and systems comply with the South Comments: The applicant submits the draft the municipal Water Department $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť 4(+"(-%Ť/+-2Ť3.Ť3'#Ť,4-(!(/+Ť4(+"(-%Ť.-31.+Ť do so, developers must provide certificates authority. Several sets of building plans are Time: 1 day of compliance to the Municipality. Generally, required. The application is then circulated Cost: .Ť!.23ŤŤ certificates of compliance for electrical, structural, internally within the Municipality, allowing %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ each relevant department (e.g., Health, Water Comments: Once the application has been Others could be requested from the Municipality. and Sanitation, Fire, Traffic, Roads, Electricity, processed and the water and sewage systems are The engineer or professional in charge of one Environmental) to evaluate it. At this stage, the in place, an official inspects the property to ensure or several of these specific elements is allowed //+(!-3Ť+2.Ť1#!#(5#2Ť3'#Ť(1#Ť$#38Ť/1#Ĭ that the construction work has been carried out to provide the owner with such certificates. approval (the final clearance will be obtained in accordance with the approved building plans A certificate of compliance is proof that the upon completion of the building and after the Fire and to provide a final quote for the connections. installations are safe and comply with the rules Department inspects the building). A Fire Safety The communication pipes and the meter are also and regulations. Plan should be included in the submission of the installed at this stage. building plans. * This procedure can be completed simultaneously with previous procedures. .) %')-'4O&#,!0#."),4.'-.#),%'+#.4 111 Once all approvals and comments are obtaiĬ Comments: The building site may be inspected and to provide a final quote for the connections. -#"ďŤ3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť23,/2Ť3'#Ť at any time during the construction phase by a The communication pipes and the meter are also building plans provided that all the requirements representative of the Department of Labour to installed at this stage. are met and taking into consideration the other ensure compliance with the Constructions RegulaĬ The building company is required to submit the departments’ comments. The application is apĬ tions (OHASA). official certificate, issued by a registered plumber, proved if statutory compliance has been achieved. confirming that the plumbing work has been If not, the application is refused, and the reasons Procedure 6. Receive inspection of all completed according to the applicable legislation are given in writing.    foundation trenches from the municipal and standards. When plans are submitted, a building inspector Building Inspectorate inspects the site to ensure that the planned consĬ Time: 1 day Procedure 11. Receive final water truction will fit on the plot of land and that the connection from the municipal Water construction will be within the allowed building Cost: .Ť!.23ŤŤ Department lines. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Time: 30 days The local authority should grant or refuse its Act 1977 requires a mandatory inspection of all approval in less than 30 days (for any building foundation trenches prior to placing of concrete. Cost: .Ť!.23ŤŤ where the architectural area is less than 500 Comments: When the building is completed, the square meters) and in less than 60 days (for any Procedure 7. Receive inspection of temporary connection is removed, and a new and building where the architectural area is more than wastewater drainage systems from the definitive account is opened with the final water 500 square meters). municipal Building Inspectorate connection.  Procedure 3. Submit notification of Time: 1 day Procedure 12. Submit notification of commencement of building work to the Cost: .Ť!.23ŤŤ completion of building work to the provincial Department of Labour Comments: '#Ť4(+"(-%Ť -2/#!3.13#Ť(-2/#!32Ť municipal Building Control authority Time: 1 day the construction site when wastewater drainage Time: 1 day systems are ready in order to test the sewage Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ system connection point and drains prior to Comments: According to the Occupational backfilling. The inspection of the wastewater Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť Health and Safety Act 1993 (OHASA) related to drainage system takes place prior to the closing of Act 1977 requires building companies to submit Constructions Regulations, building companies the work site.   a notification of completion of the work to the must, at least 7 days before the construction work Municipality. starts, submit a notification of commencement of Procedure 8. Obtain certificate of the work to the provincial Department of Labour. compliance (plumbing, sewage)  Procedure 13. Receive inspection of roof The building company should also ensure that Time: 1 day trusses from the municipal Building periodic health and safety audits and document verification are conducted, and also keep on site a Cost: .Ť!.23ŤŤ Inspectorate health and safety file that includes all the required Time: 1 day Comments: The building company is required to documentation. Cost: .Ť!.23ŤŤ submit an official certificate, issued by a registered plumber, confirming that the plumbing work Comments: Inspection of the roof trusses is Procedure 4*. Submit notification of has been completed according to the applicable commencement of building work to the carried out by the building inspectors. legislation and standards. The certification municipal Building Control authority must be signed by a certified professional. The Procedure 14. Receive inspection from Time: 1 day registered plumber conducts a pressure test and certifies that the plumbing work has been the municipal Fire Department Cost: .Ť!.23ŤŤ done according to the appropriate standards. Time: 1 day Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť!3Ť The pressure test and the plumber certification Cost: .Ť!.23ŤŤ 1977 requires developers to submit a notification are compulsory in order to obtain a certificate of of commencement of the work to the Municipality compliance from the Municipality. Comments: '#Ť3(.-+Ť4(+"(-%Ť#%4+3(.-2Ť stating the date on which the construction will Act 1977 requires a fire safety clearance before commence. The notice must be submitted at Procedure 9*. Apply for water and . 3(-(-%Ť-Ť!!4/-!8Ť#13(ǫ!3#Ť$.1Ť++Ť-.-Ĭ least 4 working days prior to the starting of the sewage connection at the municipal residential buildings. construction (10 days in case of demolition). Water Department The Fire Department visits the site to check The approved plan must be available on site and whether what was previously approved remain available until an Occupancy Certificate Time: 1 day (during the building plan submission) has been is issued. Cost: ZAR 9,900 (ZAR 5,400 for water connecĬ implemented in the building. The Municipality During the construction phase, the owner must tion: ZAR 3,000 for the meter + ZAR 2,400 conĬ will not issue an Occupancy Certificate without ensure that the building is erected within the nection fee; ZAR 4,500 for sewerage connection) clearance from the Fire department. All fire notes, surveyed boundaries and prescribed building lines fire equipment, and escape routes have to comply Comments: The application for water and of the site, and that it is in full accordance with 6(3'Ť3'#Ť1#%4+3(.-2Ť+("Ť".6-Ť(-ŤŤăĂćĂĂŤŤ sewage connections is done prior to the start the approved building plans. The Municipality and T. of construction, because the building company must be notified of any modifications to the needs a temporary water connection (a builder originally approved plans, and it may require the water supply) during construction. Procedure 15. Receive final inspection submission of a new set of plans and the payment from the municipal Building Control of additional building plan submission fees. Procedure 10. Receive inspection from authority the municipal Water Department Time: 1 day Procedure 5. Receive inspection from the provincial Department of Labour Time: 1 day Cost: .Ť!.23ŤŤ Time: 1 day Cost: .Ť!.23ŤŤ Comments: The inspection is a prerequisite Comments: Once the application has been to obtaining the Occupancy Certificate. The Cost: .Ť!.23ŤŤ building company must confirm that the products, processed and the water and sewage systems are in place, an official inspects the property to ensure materials, and systems comply with the South that the construction work has been carried out $1(!-Ť3(.-+Ť3-"1"ŤijăĂćĂĂĴĎŤ.Ť in accordance with the approved building plans do so, developers must provide certificates of compliance to the Municipality. Generally, * This procedure can be completed simultaneously with previous procedures. 112 DOING BUSINESS IN SOUTH AFRICA 2015 certificates of compliance for electrical, structural, Cost: ZAR 156,119 (Connection fee + cost for 50  Ť    %+9(-%ďŤ1..$ďŤ-"Ť/+4, (-%Ť6.1*Ť1#Ť1#04(1#"ĎŤ meters of cable. The connection fee includes the Cape Town, Cape Town Others could be requested from the Municipality. cost of the materials needed for the connection, The engineer or professional in charge of one including 100 meters of cable and the meter box) Name of Utility: City Electricity Services Department or several of these specific elements is allowed (ESD) Comments: At this stage, the project file is to provide the owner with such certificates. Data as of: January 2015 ./#-#"ďŤ-"Ť3'#Ť"16(-%Ť.ǭ!#Ť.$Ť3'#Ť Ť A certificate of compliance is proof that the Electricity Department completes the drawing installations are safe and comply with the rules Procedure 1. Submit an application for of the cable route. Applications are made to the and regulations. Roads Department, the Water and Sanitation electricity connection to the Electricity Department, Telkom, and other relevant utility Services Department of the City of Cape Procedure 16. Obtain Occupancy providers for a way leave to perform work in the Town (ESD) and obtain a connection fee Certificate from the municipal Building road reserve. After the approvals are obtained, estimate Control authority the required equipment is ordered, and a date Time: 31 days Time: 7 days is set for the installation of the cable and the transformer. Once the equipment—including Cost: ZAR 307 (application fee) Cost: .Ť!.23ŤŤ 3'#Ť#+#!31(!(38Ť,#3#1Į(2Ť5(+ +#ďŤ3'#Ť Ť Comments: The property owner completes and Comments: This certificate is issued after the Electricity Department will proceed with the instaĬ signs the City of Cape Town’s Standard Electricity ǫ-+Ť(-2/#!3(.-Ť 8Ť3'#Ť4(+"(-%Ť.-31.+Ť43'.1(38Ť llation. The customer’s contractor must supply a 4//+8Ť//+(!3(.-Ť$.1,ďŤ-"Ť#(3'#1Ť'-"Ĭ"#+(5#12Ť (and other relevant municipal departments if Certificate of Internal Wiring Compliance (COC) (3Ť.1Ť2!-2Ť-"Ť#Ĭ,(+2Ť(3Ť3.Ť3'#ŤŤ6(3'ŤŤ!./8Ť deemed necessary) has been carried out, and for the internal reticulation and for the building of his/her ID. The Customer Support Services 4/.-Ť//1.5+Ť 8Ť3'#Ť'(#$Ť4(+"(-%Ť -2/#!3.1ĎŤ'#Ť installation. Once the customer provides a proof section (CSS) of the ESD creates a notification in law prescribes that an Occupancy Certificate may of payment of the security deposit, the electricity SAP. The Distribution System Development secĬ only be issued at the written request of the owner supply is switched on. tion (DSD) reviews the application and provides of the property being developed. The building a quotation. Depending on the capacity of the cannot be used or occupied without the issuance Procedure 4. Obtain the Certificate connection, the customer’s consultant or electriĬ of the Occupancy Certificate. of Internal Wiring Compliance (COC) cian must prepare an energy conservation plan and submit it to the BCMM Electricity ij/22(5#Ť-"Ť!3(5#Ť,#241#2Ť3.Ť,7(,(9#Ť3'#Ť Department customer’s facility energy efficiency) and a power LIST OF PROCEDURES requirement calculation. DSD will issue a quotaĬ GETTING ELECTRICITY Time: 1 day tion letter via CSS. The customer has 3 months Cost: .Ť!.23ŤŤ from the date of the quotation letter to make the Buffalo City, East London payment, otherwise the quotation lapses, and a Comments: The customer’s electrical contractor Name of Utility: Buffalo City Municipal Metro new application is required. submits a COC regarding the internal wiring to (BCMM)  3'#Ť Ť+#!31(!+Ť#/13,#-3ĎŤ'#Ť#+#!31(!+Ť Data as of: January 2015 contractor signing the COC must be certified and Procedure 2*. Receive an external site registered. inspection from the City of Cape Town Procedure 1. Submit an application for ESD electricity connection to the Buffalo City Procedure 5*. Sign a supply contract Time: 12 days Municipal Metro (BCMM) Electricity with the BCMM Electricity Department Cost: .Ť!.23ŤŤ Department and obtain a connection fee Time: 1 day estimate Comments: The ESD inspects the site and conĬ Cost: ZAR 4,873 (Equal to the present value of firms the proposed location with the customer’s Time: 30 days the lost interest earnings of the security deposit of consultant or electrical contractor. Cost: .Ť!.23ŤŤ ZAR 64,540) Comments: The client can sign the supply conĬ Procedure 3. Await completion of the Comments: The application must be submitted "(1#!3+8Ť3.Ť3'#Ť Ť+#!31(!(38Ť#/13,#-3ĎŤŤ 31!3Ť6(3'Ť3'#Ť Ť+#!31(!+Ť#/13,#-3Ť)423Ť external connection work by the City of letter is then issued indicating the cost of the conĬ #$.1#Ť3'#Ť#73#1-+Ť6.1*Ť(2Ťǫ-+(9#"ĎŤŤ/1..$Ť.$Ť/Ĭ Cape Town ESD nection and the network charges. The customer yment of the security deposit must be submitted Time: 50 days pays the connection fee and network charges at 3.Ť3'#Ť Ť+#!31(!(38Ť#/13,#-3Ť #$.1#Ť3'#Ť supply is switched on. Cost: ZAR 396,771 (ZAR 321,632 Capital DeveloĬ the Finance Department. All connection fees must pment Charge + ZAR 75,139 connection fee) be paid in full before equipment can be ordered and work can be commenced. Procedure 6. Submit proof of payment Comments: The customer pays the quoted CapiĬ of the security deposit to the BCMM tal Development and connection fee. In parallel, Procedure 2*. Receive external site Electricity Department and obtain final the DSD applies for way leaves and excavation inspection from the BCMM Electricity connection /#1,(32ĎŤ.Ť.3'#1Ť".!4,#-3Ť(2Ť1#04(1#"Ť$.1Ť Department supplies that are less than 500 kVA. The payment Time: 1 day constitutes acceptance of the conditions specified Time: 7 days Cost: .Ť!.23ŤŤ in the quotation letter and therefore automaticaĬ Cost: .Ť!.23ŤŤ Comments: #$.1#Ť3'#Ť#+#!31(!(38Ť24//+8Ť!-Ť #Ť lly becomes a contract. The Municipal Finance Management Act requires full payment of the fee Comments: '#Ť Ť+#!31(!(38Ť#/13,#-3Ť switched on, the client must pay the security prior to commencement of the site work. Once conducts a site inspection to verify and ensure "#/.2(3Ť3.Ť3'#Ť Ť(--!#Ť#/13,#-3ďŤ24 Ĭ payment is made and all way leaves have been that the site development plan corresponds to the ,(3ŤŤ/1..$Ť.$Ť/8,#-3Ť3.Ť3'#Ť Ť+#!31(!(38Ť obtained, the project is handed over to the City drawing submitted and to the costs associated Department, and sign the service level agreement of Cape Town Electricity Services Department with the installation. 6(3'Ť3'#Ť Ť+#!31(!(38Ť#/13,#-3ĎŤ (231( 43(.-Ť2#!3(.-ŤijĴŤ$.1Ť(,/+#,#-33(.-ďŤ including the outsourcing of the excavation and Procedure 3. Await completion of the cable installation work. Upon completion of the external connection work by the BCMM installation and termination of the cable, the Electricity Department electricity meter is installed. Time: 33 days * This procedure can be completed simultaneously with previous procedures. .) %')-'4O!..#,!&.'##.2 113 Procedure 4. Obtain a Certificate of Procedure 5. Await completion of Comments: The application is assessed after a site visit, during which the capacity availability, Internal Wiring Compliance (COC) and the external connection work by the the site conditions, and the connection points submit it to the City of Cape Town ESD Ekurhuleni Metropolitan Municipality are verified. A sketch is then produced together to obtain final connection Time: 60 days with a quotation according to the standard tariff Time: 6 days Cost: ZAR 161,770 (ZAR 98,000 transformer structure for the new connection. The cable distances and meter requirements are verified on Cost: ZAR 3,473 (Equal to the present value of capacity fee, calculated as ZAR 700 * 140kVa + ZAR 40,000 connection fee, which includes 2(3#ĎŤ'#Ť04.33(.-Ť(2Ť1#5(#6#"Ť-"Ť43'.1(9#"Ť the lost interest earnings of the security deposit of material costs, such as meter box and cables + prior to being submitted to Customer Services ZAR 10,370) security deposit) for payment. The quotation is then posted to the Comments: The customer’s registered electrician customer for payment. An external inspection issues the COC to the customer and submits a Comments: The Ekurhuleni Metropolitan MuniciĬ is completed to verify site conditions, and a !./8Ť.$Ť(3Ť3.Ť3'#Ť(38Ť.$Ť/#Ť.6-ŤĎŤ-!#Ť3'#Ť pality installs the cable, circuit breakers, metering representative must verify metering position for (-23++3(.-Ť(-2/#!3.1Ť.$ŤŤ1#!#(5#2Ť3'#Ť!./8Ť.$Ť equipment, glands, labeling, and lock (everything cost purposes. the COC, the electrical supply is switched on. outside the stand boundary, as well as the equiĬ pment in the stand boundary connection box). Procedure 3. Await completion of the The private electrical contractor is responsible external connection work by eThekwini  Ť    for all electrical work from this point in the stand Ekurhuleni, Germiston Electricity boundary. Time: 68 days Name of Utility: Ekurhuleni Metropolitan Munici- pality Procedure 6. Obtain a Certificate of Cost: ZAR 202,631 (ZAR 111,965 connection fee + Data as of: January 2015 Internal Wiring Compliance (COC) and ŤąďčćĂŤ$.1ŤŤąĬ/'2#Ť,#3#1ŤŖŤŤćĉďčĂĂŤ$.1Ť submit it to the Ekurhuleni Metropolitan cables + ZAR 4,000 for excavation + ZAR 1,404 Procedure 1. Submit an application for Municipality to obtain final connection + ZAR 100,000 for a transformer, for which the electricity connection to the Ekurhuleni customer receives a rebate of ZAR 64,578.07) Time: 3 days Metropolitan Municipality and obtain a Comments: The distribution utility is in charge of Cost: .Ť!.23ŤŤ connection fee estimate the installation process up to the metering kiosk. It Comments: The customer schedules an is also responsible for installing a 150mm LV 4c Al Time: 25 days appointment with the utility. The customer’s PVC cable to the consumer’s metering kiosk. The Cost: .Ť!.23ŤŤ electrical contractor and the Ekurhuleni MetropoĬ rest of the installation work must be completed litan Municipality need to be present during the by the customer’s electrical contractor. The distriĬ Comments: The customer completes the appointment to inspect the surroundings. Once bution utility requests permissions from various application form and submits it to the Ekurhuleni the power is switched on, the electrical contractor agencies that have services installed in the ground Metropolitan Municipality. conducts the internal wiring test and completes in the area where the work will be conducted. The the COC form. The electrical contractor submits owner is required to sign a contract with eTheĬ Procedure 2*. Receive external site the original COC to the customer and a copy of it kwini Electricity for the payment of consumption inspection from the Ekurhuleni to the Ekurhuleni Metropolitan Municipality. of electricity. Metropolitan Municipality Time: 14 days  Ť    Procedure 4. Obtain a Certificate of Cost: .Ť!.23ŤŤ Internal Wiring Compliance (COC) and eThekwini, Durban submit it to eThekwini Electricity to Comments: Representatives of the Ekurhuleni Name of Utility: eThekwini Electricity obtain final connection Metropolitan Municipality conduct a site visit and Data as of: January 2015 thereafter issue a cost estimate. Time: 7 days Procedure 1. Submit an application for Cost: .Ť!.23ŤŤ Procedure 3. Sign a supply contract electricity connection to eThekwini Comments: Within 48 hours of the electrical with the Ekurhuleni Metropolitan Electricity and obtain a connection fee (-23++3(.-Ť #(-%Ť#-#1%(9#"Ť 8Ť3'#Ť43(+(38ďŤ3'#Ť Municipality estimate electrical contractor responsible for all the internal Time: 2 days wiring of the installation has to submit a COC to Time: 22 days Cost: .Ť!.23ŤŤ the utility. The electrical contractors in the Durban Cost: .Ť!.23ŤŤ area have to be registered with the Department of Comments: The customer pays the fees, which Labour (DoL) and be accredited by the Electrician Comments: The customer submits an application include the connection cost and the security Contractors Association of South Africa (ECASA). for a new electricity connection to the CustoĬ deposit, and signs the supply agreement contract mer Services of eThekwini Electricity. Currently, at the Finance Department of the Ekurhuleni Procedure 5*. Sign a supply contract applications are submitted in hard copies (an Metropolitan Municipality. The customer must with eThekwini Electricity .-Ĭ+(-#Ť2823#,Ť3.Ť24 ,(3Ť//+(!3(.-2Ť'2Ť ##-Ť submit proof of payment and the signed contract introduced, but it is still not operative). The cusĬ Time: 7 days to the Electricity Department of the Ekurhuleni tomer must attach to the application supporting Metropolitan Municipality. documents, such as approved building plans Cost: ZAR 35,347 (Equal to the present value of indicating the proposed meter position, a copy of the lost interest earnings of the security deposit of Procedure 4*. Obtain a meter box from the property owner’s ID, and proof of ownership of ZAR 105,529) a council store and install it the property. The application will then be procesĬ Comments: The customer opens an account with Time: 1 day sed through a software system by the Customer the utility for billing purposes. This can be done Service section and assigned electronically to the before the actual electrical connection and enerĬ Cost: .Ť!.23ŤŤ eThekwini Electricity Planning Division. %(9(-%Ť.$Ť3'#Ť#+#!31(!+Ť(-23++3(.-Ť(2Ť".-#ďŤ.1Ť$3#1Ť Comments: The customer must obtain a meter 3'#Ť#+#!31(!+Ť(-23++3(.-Ť'2Ť ##-Ť#-#1%(9#"Ť-"Ť box from a council store and install it. When paĬ Procedure 2*. Receive external site the COC has been submitted to the utility. ying the connection fee, the customer is referred inspection from eThekwini Electricity to the (council?) stores with a request and coĬ llects the meter box. The Ekurhuleni Metropolitan Time: 14 days Municipality inspects the meter box before the Cost: .Ť!.23ŤŤ external connection work can start. * This procedure can be completed simultaneously with previous procedures. 114 DOING BUSINESS IN SOUTH AFRICA 2015  Ť    of the work and the materials, the customer must Procedure 2. Await completion of the Johannesburg, Johannesburg pay a security deposit, which is refundable upon external connection work by Centlec the termination of the supply. While the supply Name of Utility: Eskom is active, Eskom has the right to revise existing Time: 45 days Data as of: January 2015 deposits as per the specific supply agreement betĬ Cost: ZAR 239,866 (ZAR 228,680 for connection ween the individual customer and Eskom. Eskom + ZAR 11,186 for energy account deposit) Procedure 1. Submit an application for pays interest rate on the security deposits equal electricity connection to Eskom and 3.Ť3'#Ť13#Ť.$Ť3'#Ť3(.-+Ť-*ĎŤ.6#5#1ďŤ(-Ť,.23Ť Comments: Centlec provides the meter and obtain a connection fee estimate cases, the security deposit against consumption installs the connection. The connection work (2Ť424++8Ť 8Ť,#-2Ť.$ŤŤ-*Ť41-3##ďŤ(Ď#ĎďŤ-.3Ť includes installing a 185mm2 Al PVC cable from Time: 60 days the nearby substation, crossing a road toward the cash. Once the electrical connection part of the Cost: .Ť!.23ŤŤ work has been completed, an arrangement for ćĬ68Ť,#3#1Ť .7Ť.-Ť3'#Ť23-"Ť .4-"18ĎŤŤ Comments: Applications can be completed online outage (process which includes quality check and testing) will be made. The cost of the inspection Procedure 3. Obtain a Certificate of through the Customer Service Online system, or by fax. Certified copies of an ID, as well as a is included in the costs of the external connection Internal Wiring Compliance (COC) payment guarantee, are submitted to the servicing work. and submit it to Centlec to obtain final +*Ĭ -Ĭ#-31#Ť4/.-Ť2(%-(-%Ť.$Ť3'#Ť.1(%(-+Ť!.-Ĭ connection 31!3Ť 8Ť3'#Ť!423.,#1ĎŤ4"%#3Ť04.3#2Ť1#Ť(224#"Ť Procedure 4*. Obtain and submit Time: 11 days based on actual costs, to which the applicant can a Certificate of Internal Wiring respond. When the customer accepts the budget Compliance to Eskom Cost: .Ť!.23ŤŤ quote, the customer submits the acceptance letter Time: 1 day Comments: Upon receipt of the proof of payment (usually attached to the quote) together with the of the connection fees and the security deposit, necessary payment or proof thereof to the CustoĬ Cost: .Ť!.23ŤŤ as well as a copy of the COC signed by the mer Executive dealing with the application. Comments: An electrician issues a COC regarding customer’s electrical contractor, the Metering the internal wiring to Eskom. The internal wiring Section of Centlec installs a bulk meter board. Procedure 2*. Receive external site is not Eskom’s responsibility. An electrician does inspection from Eskom the inspection, issues the COC, and submits it to Procedure 4*. Sign a supply contract Time: 1 day Eskom. Eskom requires that a COC be signed by and open account with Centlec a registered electrical contractor. The applicant’s Time: 1 day Cost: .Ť!.23ŤŤ electrician has to be licensed/accredited by the Comments: An external site inspection is carried Electrician Contractors Association of South AfriĬ Cost: .Ť!.23ŤŤ out by Eskom to confirm the site layout and to ca (ECASA). All electricians working with Eskom Comments: The customer fills out a supply conĬ compare it with the drawing for cost purposes. have to be accredited by ECASA. tract with Centlec. Procedure 3. Await completion of the Procedure 5. Sign a supply contract with  Ť    external connection work by Eskom Eskom and obtain a final connection Msunduzi, Pietermaritzburg Time: 165 days Time: 1 day Name of Utility: Msunduzi Municipality Cost: ZAR 456,625 (Material cost) Cost: .Ť!.23ŤŤ Data as of: January 2015 Comments: Eskom is in charge of the connection Comments: The supply contract can be signed work up to the meter kiosk. Any work necessary just before the external connection work is ready, Procedure 1. Submit an application for beyond the meter kiosk is the responsibility of the and the power is turned on the day after the electricity connection to the Msunduzi internal reticulation of the customer. The utility external connection work is completed. Eskom Municipality Electricity Department obtains an excavation permit at the Route Agency. only provides the final connection after the COC is received. (MMED) and obtain a connection fee Meter installation will be done irrespective of estimate whether the customer’s internal reticulate is done. However, the final connection is done after Eskom  Ť    Time: 53 days have received the Certificate of Internal Wiring Cost: .Ť!.23ŤŤ Compliance (COC). The following technical speciĬ Mangaung, Bloemfontein fications of connection apply: Name of Utility: Centlec Comments: The customer submits an application $.1Ť-Ť#+#!31(!(38Ť!.--#!3(.-Ť3.Ť3'#Ť 24-"49(Ť ĎŤ 4//+8Ť(9#đŤăĉĂ*Ť(2Ť3'#Ť23-"1"Ť2(9#Ť Data as of: January 2015 Municipality Electricity Department (MMED), closest to 140kVA; attaching a copy of his/her ID. b. Feeder Voltage: 11kV, with the customer taking Procedure 1. Submit an application for supply at 400Volts; and electricity connection to Centlec and Procedure 2*. Receive external site !ĎŤ #36.1*Ť8/#đŤ-"#1%1.4-"Ď obtain a connection fee estimate inspection from MMED The scope of the work carried out by Eskom Time: 24 days Time: 14 days includes the mounting of a new 150kVA 11kV Cost: .Ť!.23ŤŤ transformer on pole; labeling the new transformer; Cost: .Ť!.23ŤŤ Comments: The customer must submit an installing MV fused links; installing a new LPU Comments: MMED performs a site inspection to ăĉĂ*Ť,#3#1Ĭ*(.2*Ť3Ť3'#Ť!423.,#1ġ2Ť .4-"18ĒŤ application form—available on Centlec website or confirm the site layout and to compare it with the terminating a 150mm sq. 4C Cu cable onto the at the two points of payment—either in person, drawing in order to provide a cost estimate. Ť2("#Ť.$Ť3'#Ť31-2$.1,#1Ť3.Ť3'#Ť,#3#1Ĭ*(.2*ĒŤ-"Ť 8Ť$7ďŤ.1Ť 8Ť#Ĭ,(+ĎŤ'#Ť#5#+./,#-3Ť#!3(.-Ť laying 15m of 150mm sq. 4C Cu cable from the of Centlec will perform a site survey, design the supply network, estimate the cost, and generate Procedure 3. Sign a supply contract with 31-2$.1,#1Ť-"Ť3#1,(-3(-%Ť(3Ť3.Ť3'#Ť-#6Ť,#3#1Ĭ MMED kiosk. The customer is responsible for laying its an official quotation with a formal letter stating own cable from its distribution kiosk to Eskom’s the details and costs of, as well as the requireĬ Time: 1 day ments for the connection. The customer pays the meter kiosk and for providing a termination kit. Cost: ZAR 27,606 (Equal to the present value of Eskom only provides the meter and meter kiosk connection fees and the security deposit (or alterĬ the lost interest earnings of the security deposit of free of charge. The rest of the fees are based on natively supplies a bank guarantee). The customer ZAR 82,416) actual costs. Eskom also provides the materials. If then submits proof of these payments and the for any reason the customer has to purchase the account number to the Engineering Department materials from someone other than Eskom, speĬ of Centlec. cifications will be provided. In addition to the cost * This procedure can be completed simultaneously with previous procedures. .) %')-'4O!..#,!&.'##.2 115 Comments: #$.1#Ť3'#Ť!.,,#-!#,#-3Ť.$Ť3'#Ť Comments: The customer signs the supply conĬ Comments: The customer is responsible to external connection work, the customer signs tract and makes the payment. The acceptance and provide the maximum demand meter box. The a supply contract. The customer is required to signature of the quotation represents a contract customer receives design specifications approved accept the quotation and to provide a receipt of between the customer and the utility. The security by the Supply Authority to obtain the maximum the payment. deposit is also paid at this stage. demand box. Procedure 4. Await completion of the Procedure 4. Await completion of Procedure 3. Await completion of external connection work by MMED the external connection work by the the external connection work by Time: 129 days distribution utility distribution utility Cost: ZAR 251,528 (ZAR 28,814 basic charge + Time: 150 days Time: 68 days ZAR 222,714 for materials and meter) Cost: .Ť!.23ŤŤ Cost: ZAR 353,920 (ZAR 2,528 * 140 kVA) Comments: MMED is in charge of the external Comments: The distribution utility performs all Comments: The external connection work connection work. The customer does not have to the work and provides all materials. The meter is requires a minisub station (if none is available in buy material; instead, the customer provides the installed at the same time when the connection the vicinity to supply the connection), a circuit kiosk, metering panel, main breaker, and internal is done. breaker, a low voltage cable, and the maximum wiring. The meter is installed at the same time demand meter.  when the connection is done. Electricity starts Procedure 5. Obtain a Certificate of flowing immediately. Internal Wiring Compliance (COC) and Procedure 4. Open a customer account submit it to the distribution utility to with the Energy and Electricity Division Procedure 5. Obtain a Certificate of obtain final connection of the City of Tshwane Internal Wiring Compliance (COC) Time: 2 days Time: 1 day and submit it to MMED to obtain final connection Cost: .Ť!.23ŤŤ Cost: .Ť!.23ŤŤ Time: 1 day Comments: At the end of the connection work, Comments: The customer has to open an account the distribution utility provides and installs the with Customer Care of the Energy and Electricity Cost: .Ť!.23ŤŤ Division. Afterwards a meter can be coupled to meter, the connection is turned on, and the elecĬ Comments: An electrical contractor issues a COC trical contractor performs the testing and issues the stand and then placed on site. to the MMED. the Certificate of Internal Wiring Compliance (COC). Once power is connected, the electrical Procedure 5. Receive final site  Ť    contractor has 2 days to test and issue a COC. inspection from the distribution utility The distribution utility requires the COC to be and submit the Certificate of Internal Nelson Mandela Bay, Port Elizabeth signed by a registered electrical contractor. The Wiring Compliance (COC) Name of Utility: Nelson Mandela Bay Municipality applicant’s electrical contractor must therefore be licensed and accredited by the Electrician ConĬ Time: 2 days Data as of: January 2015 tractors Association of South Africa (ECASA). Cost: .Ť!.23ŤŤ Procedure 1. Submit an application for Comments: The customer’s electrical contracĬ electricity connection to the distribution  Ť    tor (who must be accredited by the Electrician utility and obtain a connection fee Tshwane, Pretoria Contractors Association of South Africa) arranges estimate a site inspection with the Installation Inspector. Name of Utility: The City of Tshwane Energy & The Installation Inspector visually inspects the Time: 180 days Electricity Division premises and switches on the supply to enable Cost: .Ť!.23ŤŤ Data as of: January 2015 the contractor to carry out the tests requiring Comments: The customer submits an application electricity. Upon completion of the tests, the $.1ŤŤ-#6Ť#+#!31(!(38Ť!.--#!3(.-ĎŤ'#Ť#+2.-Ť -Ĭ Procedure 1. Submit an application for supply is switched off. The contractor issues the "#+Ť8Ť 4-(!(/+(38Ť(224#2Ť3'#Ť 4"%#3Ť04.3#2Ť electricity connection to the Energy COC to the Inspector. The Inspector in turn issues based on the maximum demand stated on the and Electricity Division of the City of a “pink slip” that enables the consumer to pay a application form. The customer submits an accepĬ Tshwane and obtain a connection fee deposit for the consumption of electricity. tance letter of the budget quote together with the estimate necessary payment—or proof of payment—to the Procedure 6. Obtain a final connection Time: 30 days #+2.-Ť -"#+Ť8Ť 4-(!(/+(38Ď Time: 2 days Cost: .Ť!.23ŤŤ Cost: ZAR 201 (Present value of the lost interest Procedure 2*. Receive external site Comments: Applications can be done at any of earnings of the amount of ZAR 601 of the security inspection from the distribution utility 3'#Ť6+*Ĭ(-Ť.ǭ!#2Ť2(343#"Ť1.4-"Ť3'#Ť!(38ďŤ2Ť deposit) Time: 1 day 6#++Ť2Ť5(Ť#Ĭ,(+Ť-"Ť$7ĎŤ'#Ť!423.,#1Ť+2.Ť'2Ť the option of paying at one of the several points Comments: The customer takes the “pink slip” Cost: .Ť!.23ŤŤ of payment. An external inspection is carried out that has been issued by the Inspector to Customer Services and pays the required deposit for electriĬ Comments: An external site inspection is carried by the Functional Unit of the Supply Authority, which consequently calculates a cost estimate for city. Customer Care initiates a request to the ElecĬ out by the distribution utility to confirm the site the connection, the quota charge, and the council 31(!(38Ť.-31.+Ť1..,Ť3.Ť#-#1%(9#Ť3'#Ť!.--#!3(.-ĎŤ layout and to compare it with the drawing for cost. A letter that includes this quotation and the An electrician is dispatched to arrange the switch cost purposes. The customer, or a representative, conditions of supply is issued to the customer. on for the customer. should preferably be present. Procedure 3. Open a customer account Procedure 2. Purchase maximum with the distribution utility demand meter box Time: 1 day Time: 1 day Cost: ZAR 367,867 (ZAR 352,940 Capital Cost: ZAR 4,250 (meter box) Contribution Charge, calculated as 140 kVA * ZAR 2,521 + ZAR 5,000 for 10 meters of installation (ZAR 500 per meter) + ZAR 1,400 meter + ZAR ćĂĂŤ,#3#1Ť*(.2*ŤŖŤŤĄďĉĂĂŤ(1!4(3Ť1#*#1ŤŖŤ security deposit) * This procedure can be completed simultaneously with previous procedures. 116 DOING BUSINESS IN SOUTH AFRICA 2015 c. Ensure compliance with the Financial IntelliĬ Comments: The transferring conveyancer obtains LIST OF PROCEDURES gence Center Act by obtaining proof from the a transfer duty receipt/exemption certificate REGISTERING PROPERTY companies of the physical/business address from the South African Revenue Services. As and the Tax/VAT registration number with of February 23, 2011, the distinction drawn in Buffalo City, East London the South African Revenue Services. The conveĬ calculating the transfer duties for legal entities and Property value: ZAR 3,129,500 (US$ 359,500) yancer will also request this information from -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť Data as of: January 2015 the clients before proceeding, and the check entities and natural persons now pay the transfer is done automatically at the time the transfer duty based on a sliding scale. The scale is as Procedure 1. Obtain a rates clearance duty is paid. If a company does not have or $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ certificate from the Buffalo City quotes an incorrect Tax/VAT number, it will be ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť unable to pay the transfer duty, and the process above ZAR 600,000, but not exceeding ZAR Municipality’s Directorate of Financial will come to a halt. 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 Services – ZAR 12,000 plus 5% on the value above ZAR Time: 10 days Procedure 3*. Obtain an electrical 1,000,000, but not exceeding ZAR 1,500,000; compliance certificate from a certified ZAR 1,500,001 and above – ZAR 37,000 plus 8% Cost: ZAR 169 (ZAR 33.33 financial statements electrician on the value above ZAR 1,500,000. fee + ZAR 104.39 issuing fee + ZAR 31.58 search fee) Time: 7 days Procedure 7. Parties sign all the Comments: The transferring conveyancer Cost: ZAR 1,250 documentation at the conveyancer’s obtains a rates clearance certificate from the office +.!+Ť,4-(!(/+(38ĎŤ -Ť4Ǫ+.Ť(38ďŤ!.-5#8-!#12Ť Comments: This certificate is not required by the can request the certificate through http://www. land registry. The Health and Environment Act Time: 1 day ratesclearance.com. The municipality requires 3 of 1993 makes it mandatory for anyone selling anything that includes electrical wiring to have an Cost: ZAR 27,310 (for properties valued between months of advance payments of utilities and taxes ZAR 3,100,000.01 and ZAR 3,200,000.00) 3.Ť#-241#Ť3'3Ť3'#Ť!!.4-3Ť1#,(-2Ť4/Ĭ3.Ĭ"3#Ť Electrical Certificate of Compliance. It is common throughout the transfer transaction. practice for the seller to obtain this clearance Comments: The conveyancer will collect all certificate. However, a sale agreement includes the documentation signed by the seller and Procedure 2*. Prepare and collect all the a clause that refers to the Act, specifying who the purchaser and obtain guarantees for the should obtain the clearance certificate and who purchase price. The documents to be signed by required documentation will bear the cost. the parties are as follows: Time: 10 days a. Seller Cost: .Ť!.23Ť Procedure 4*. Obtain an entomologist’s ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" certificate from a certified entomologist Comments: A conveyancer prepares the deed of ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 sale and drafts the transfer deed. The conveyancer Time: 7 days ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť obtains power of attorney, appointing him/her to Cost: ZAR 600 Centre Act (FICA)) appear before the Registrar. The conveyancer’s b. Purchaser services are mandatory for the registration of land Comments: .-31!34+Ť/1!3(!#Ť(-Ť4Ǫ+.Ť(38Ť in South Africa. A conveyancer is an attorney requires an entomologist’s certificate proving that ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť there are no infestations on the property. ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť of immovable property. The Deeds Registries Act Procedure 5*. Obtain an ownership Procedure 8. Register the deed with the 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť certificate King William’s Town Deeds Registry transfer, and thus the conveyancer is responsible Time: 0.5 day Time: 12 days for certain facts set out in the deed and other documents. Conveyancing fees, which depend on Cost: .Ť!.23ŤŤ Cost: ZAR 1,100 the property value, are set by the Law Society. Comments: The conveyancer performs a title Comments: The conveyancer registers the deed The conveyancer, before submitting the docuĬ 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ with the Deeds Registry. The Registrar compares mentation to the deeds registry to transfer the GhostConvey, WinDeed, Korbitec, WinDeed, the draft deed with data in the register. The deed property to the new company, must also conduct Searchworks, etc.) to ensure that the property is examined to (1) ensure compliance with the a company search at the Companies and IntellecĬ exists and that the seller is the rightful owner. The conditions of transfer, (2) check the legality of the tual Property Commission Office to ascertain the search can also be conducted using the Deeds transfer, and (3) verify that the proper standards directors of both companies. Registry’s own platform, DeedsWeb (http://www. of examination were applied. Once the criteria All conveyancers have access to this authority via "##"2Ď%.5Ď9İ ##"2# İ"##"26# İ6#+Ĭ are met, the deed is prepared for registration and the Internet and can perform the check online. come.jsp). DeedsWeb’s coverage is countrywide, execution. The registration fee, which depends Usually conveyancers will also ask clients to and a user can access information on any property on the value of the property and is obtained from provide the requisite documents. In so doing, the throughout the country. the Transfer Cost table available at http://www. conveyancer will: A small number of conveyancers still conduct the %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť a. Review the companies’ memorandum and search in person, but the majority has a subscripĬ column), is then paid. The Registrar executes the articles of association to confirm the authority 3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť2#1!'#2ĎŤ deed, and the conveyancer signs the transfer deed to acquire and alienate immovable property. The small fee associated with this procedure is at the Deeds Registry in front of the registrar or a The founding documents of the seller will be included in the conveyancer’s fees. deputy. The Deeds Registry subsequently updates the Memorandum and Articles of Association. the register and archives a copy. If the buyer company was formed before May Procedure 6*. Obtain a transfer duty 1, 2011, its Memorandum and Articles of AssoĬ receipt from the South African Revenue   Ť ciation will be examined. If the buyer company Services Cape Town, Cape Town was formed after May 1, 2011, only its MemoĬ Time: 0.5 day randum of Incorporation will be examined. Property value: ZAR 3,129,500 (US$ 359,500) Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the Data as of: January 2015 b. Review the necessary resolutions. Section 115 value above ZAR 1,500 for a property valued at of the Companies Act 71 2008 states that a ZAR 1,500,000 or more) Procedure 1. Obtain a rates clearance company may not dispose of all or the greater part of its assets except through a special certificate from the City of Cape Town resolution. Municipality Time: 14 days * This procedure can be completed simultaneously with previous procedures. .) %')-'4O'!#4.'#,!%')%'.2 117 Cost: ZAR 62 (electronic rates clearance) Procedure 3*. Obtain an electrical entities and natural persons now pay the transfer Comments: The transferring conveyancer obtains duty based on a sliding scale. The scale is as compliance certificate from a certified a rates clearance certificate from the local $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ electrician ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť municipality. The City of Cape Town Municipality '2Ť"#5#+./#"Ť-ŤĬ 2#"Ť231#,+(-#"Ť/1.!#22Ť Time: 7 days above ZAR 600,000, but not exceeding ZAR for obtaining clearance certificates through Cost: ZAR 1,250 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 the licensed software Korbitec. Conveyancers – ZAR 12,000 plus 5% on the value above ZAR Comments: This certificate is not required by the 1,000,000, but not exceeding ZAR 1,500,000; can obtain the rates clearance certificate land registry. The Health and Environment Act electronically. The municipality requires 4 months ZAR 1,500,001 and above – ZAR 37,000 plus 8% of 1993 makes it mandatory for anyone selling on the value above ZAR 1,500,000. of advance payments of utilities and taxes to anything that includes electrical wiring to have an #-241#Ť3'3Ť3'#Ť!!.4-3Ť1#,(-2Ť4/Ĭ3.Ĭ"3#Ť Electrical Certificate of Compliance. It is common throughout the transfer transaction. Procedure 8. Parties sign all the practice for the seller to obtain this clearance documentation at the conveyancer’s certificate. However, a sale agreement includes Procedure 2*. Prepare and collect all the office a clause that refers to the Act, specifying who required documentation should obtain the clearance certificate and who Time: 1 day Time: 10 days will bear the cost. Cost: ZAR 27,310 (for properties valued between Cost: .Ť!.23ŤŤ ZAR 3,100,000.01 and ZAR 3,200,000.00) Procedure 4*. Obtain a plumbing Comments: A conveyancer prepares the deed of Comments: The conveyancer will collect all certificate from a certified plumber sale and drafts the transfer deed. The conveyancer the documentation signed by the seller and the obtains power of attorney, appointing him/her to Time: 7 days purchaser and obtain guarantees for the purchase appear before the Registrar. The conveyancer’s Cost: ZAR 600 price. The documents to be signed by the parties services are mandatory for the registration of land are as follows: Comments: Per Section 14 of the City of Cape in South Africa. A conveyancer is an attorney a. Seller .6-Ť3#1Ť 8Ĭ+6ŤĄĂăĂŤ!#13(ǫ!3#Ť.$Ť 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť compliance (plumbing certificate) is required for ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť the water installation for property within the City ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 of immovable property. The Deeds Registries Act of Cape Town Municipality. 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť transfer, and thus the conveyancer is responsible Centre Act (FICA)) Procedure 5*. Obtain an entomologist’s b. Purchaser for certain facts set out in the deed and other documents. Conveyancing fees, which depend on certificate from a certified entomologist ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 the property value, are set by the Law Society. Time: 7 days ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ The conveyancer, before submitting the Cost: ZAR 600 documentation to the deeds registry to transfer Procedure 9. Register the deed with the the property to the new company, must also Comments: Contractual practice in Cape Town requires an entomologist’s certificate proving that Cape Town Deeds Registry conduct a company search at the Companies and Intellectual Property Commission Office to there are no infestations on the property. Time: 14 days ascertain the directors of both companies. Cost: ZAR 1,100 Procedure 6*. Obtain an ownership All conveyancers have access to this authority via Comments: The conveyancer registers the deed the Internet and can perform the check online. certificate with the Deeds Registry. The Registrar compares Usually conveyancers will also ask clients to Time: 0.5 day the draft deed with data in the register. The deed provide the requisite documents. In so doing, the Cost: .Ť!.23ŤŤ is examined to (1) ensure compliance with the conveyancer will: conditions of transfer, (2) check the legality of the Comments: The conveyancer performs a title a. Review the companies’ memorandum and transfer, and (3) verify that the proper standards 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ articles of association to confirm the authority of examination were applied. Once the criteria GhostConvey, WinDeed, Korbitec, WinDeed, to acquire and alienate immovable property. are met, the deed is prepared for registration and Searchworks, etc.) to ensure that the property The founding documents of the seller will be execution. The registration fee, which depends exists and that the seller is the rightful owner. the Memorandum and Articles of Association. on the value of the property and is obtained from The search can also be conducted using the If the buyer company was formed before May the Transfer Cost table available at http://www. Deeds Registry’s own platform, DeedsWeb 1, 2011, its Memorandum and Articles of AssoĬ %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť ij'33/đİİ666Ď"##"2Ď%.5Ď9İ ##"2# İ ciation will be examined. If the buyer company column), is then paid. The Registrar executes the deedsweb/welcome.jsp). DeedsWeb’s coverage was formed after May 1, 2011, only its MemoĬ deed, and the conveyancer signs the transfer deed is countrywide, and a user can access information randum of Incorporation will be examined. at the Deeds Registry in front of the registrar or a on any property throughout the country.A small b. Review the necessary resolutions. Section 115 deputy. The Deeds Registry subsequently updates number of conveyancers still conduct the search of the Companies Act 71 2008 states that a the register and archives a copy. in person, but the majority has a subscription to a company may not dispose of all or the greater 3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť2#1!'#2ĎŤ'#Ť2,++Ť part of its assets except through a special fee associated with this procedure is included in   Ť resolution. the conveyancer’s fees. Ekurhuleni, Germiston c. Ensure compliance with the Financial IntelliĬ gence Center Act by obtaining proof from the Procedure 7*. Obtain a transfer duty Property value: ZAR 3,129,500 (US$ 359,500) companies of the physical/business address receipt from the South African Revenue Data as of: January 2015 and the Tax/VAT registration number with Services the South African Revenue Services. The conveĬ Procedure 1. Obtain a rates clearance yancer will also request this information from Time: 0.5 day certificate from the Ekurhuleni the clients before proceeding, and the check Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the Municipality is done automatically at the time the transfer value above ZAR 1,500 for a property valued at duty is paid. If a company does not have or Time: 21 days ZAR 1,500,000 or more) quotes an incorrect Tax/VAT number, it will be Cost: ZAR 172 unable to pay the transfer duty, and the process Comments: The transferring conveyancer obtains a transfer duty receipt/exemption certificate Comments: The transferring conveyancer obtains will come to a halt. from the South African Revenue Services. As a rates clearance certificate from the local of February 23, 2011, the distinction drawn in municipality. In Ekurhuleni, there is no direct calculating the transfer duties for legal entities and .-Ĭ+(-#Ť+(-*Ť3.Ť3'#Ť,4-(!(/+(38Ť3.Ť1#04#23Ť-"Ť -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť obtain the certificate. Conveyancers fill out the * This procedure can be completed simultaneously with previous procedures. 118 DOING BUSINESS IN SOUTH AFRICA 2015 request manually at the municipality, or they use Comments: This certificate is not required by the ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť software such as E4 to enter information about land registry. The Health and Environment Act Centre Act (FICA)) the property and deliver the documents to the of 1993 makes it mandatory for anyone selling b. Purchaser municipality via the E4 software. anything that includes electrical wiring to have an ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 Electrical Certificate of Compliance. It is common Procedure 2*. Prepare and collect all the practice for the seller to obtain this clearance ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ required documentation certificate. However, a sale agreement includes a clause that refers to the Act, specifying who Procedure 7. Register the deed with the Time: 10 days should obtain the clearance certificate and who Johannesburg Deeds Registry Cost: .Ť!.23ŤŤ will bear the cost. Time: 11 days Comments: A conveyancer prepares the deed of Cost: ZAR 1,100 sale and drafts the transfer deed. The conveyancer Procedure 4*. Obtain an ownership obtains power of attorney, appointing him/her to certificate Comments: The conveyancer registers the deed with the Deeds Registry. The Registrar compares appear before the Registrar. The conveyancer’s Time: 0.5 day services are mandatory for the registration of land the draft deed with data in the register. The deed in South Africa. A conveyancer is an attorney Cost: .Ť!.23ŤŤ is examined to (1) ensure compliance with the 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť Comments: The conveyancer performs a title conditions of transfer, (2) check the legality of the 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ transfer, and (3) verify that the proper standards of immovable property. The Deeds Registries Act GhostConvey, WinDeed, Korbitec, WinDeed, of examination were applied. Once the criteria 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť Searchworks, etc.) to ensure that the property are met, the deed is prepared for registration and transfer, and thus the conveyancer is responsible exists and that the seller is the rightful owner. execution. The registration fee, which depends for certain facts set out in the deed and other The search can also be conducted using the on the value of the property and is obtained from documents. Conveyancing fees, which depend on Deeds Registry’s own platform, DeedsWeb the Transfer Cost table available at http://www. the property value, are set by the Law Society. ij'33/đİİ666Ď"##"2Ď%.5Ď9İ ##"2# İ %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť deedsweb/welcome.jsp). DeedsWeb’s coverage column), is then paid. The Registrar executes the The conveyancer, before submitting the is countrywide, and a user can access information deed, and the conveyancer signs the transfer deed documentation to the deeds registry to transfer on any property throughout the country. at the Deeds Registry in front of the registrar or a the property to the new company, must also deputy. The Deeds Registry subsequently updates conduct a company search at the Companies A small number of conveyancers still conduct the register and archives a copy. and Intellectual Property Commission Office to the search in person, but the majority has a ascertain the directors of both companies. 24 2!1(/3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť All conveyancers are have access to this authority searches. The small fee associated with this   Ť via the Internet and can perform the check online. procedure is included in the conveyancer’s fees. eThekwini, Durban Usually conveyancers will also ask clients to Procedure 5*. Obtain a transfer duty Property value: ZAR 3,129,500 (US$ 359,500) provide the requisite documents. In so doing, the conveyancer will: receipt from the South African Revenue Data as of: January 2015 a. Review the companies’ memorandum and Services Procedure 1. Obtain a rates clearance articles of association to confirm the authority Time: 0.5 day to acquire and alienate immovable property. certificate from the eThekwini The founding documents of the seller will be Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the Municipality the Memorandum and Articles of Association. value above ZAR 1,500 for a property valued at Time: 14 days If the buyer company was formed before May ZAR 1,500,000 or more) Cost: ZAR 129 1, 2011, its Memorandum and Articles of AssoĬ Comments: The transferring conveyancer obtains ciation will be examined. If the buyer company a transfer duty receipt/exemption certificate Comments: The transferring conveyancer obtains was formed after May 1, 2011, only its MemoĬ from the South African Revenue Services. As a rates clearance certificate from the local randum of Incorporation will be examined. of February 23, 2011, the distinction drawn in municipality. eThekwini’s Interim Rates Clearance b. Review the necessary resolutions. Section 115 calculating the transfer duties for legal entities and Application Management (IRCAM) is a unique of the Companies Act 71 2008 states that a -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť system for rates clearance issuance that the company may not dispose of all or the greater entities and natural persons now pay the transfer ,4-(!(/+(38Ť"#5#+./#"Ť(-Ĭ'.42#ŤĎŤ'#Ť1#!#(/3Ť.$Ť part of its assets except through a special duty based on a sliding scale. The scale is as the applications and the forwarding of certificates resolution. $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ are outsourced to service providers managed by ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť the municipality. c. Ensure compliance with the Financial Intelligence Center Act by obtaining proof above ZAR 600,000, but not exceeding ZAR 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 Procedure 2*. Prepare and collect all the from the companies of the physical/business address and the Tax/VAT registration number – ZAR 12,000 plus 5% on the value above ZAR required documentation with the South African Revenue Services. The 1,000,000, but not exceeding ZAR 1,500,000; Time: 10 days conveyancer will also request this information ZAR 1,500,001 and above – ZAR 37,000 plus 8% on the value above ZAR 1,500,000. Cost: .Ť!.23ŤŤ from the clients before proceeding, and the check is done automatically at the time the Comments: A conveyancer prepares the deed of transfer duty is paid. If a company does not Procedure 6. Parties sign all the sale and drafts the transfer deed. The conveyancer have or quotes an incorrect Tax/VAT number, it documentation at the conveyancer’s obtains power of attorney, appointing him/her to will be unable to pay the transfer duty, and the office appear before the Registrar. The conveyancer’s process will come to a halt. services are mandatory for the registration of land Time: 1 day in South Africa. A conveyancer is an attorney Procedure 3*. Obtain an electrical Cost: ZAR 27,310 (for properties valued between 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť ZAR 3,100,000.01 and ZAR 3,200,000.00) 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť compliance certificate from a certified Comments: The conveyancer will collect all of immovable property. The Deeds Registries Act electrician the documentation signed by the seller and the 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť Time: 7 days purchaser and obtain guarantees for the purchase transfer, and thus the conveyancer is responsible Cost: ZAR 1,250 price. The documents to be signed by the parties for certain facts set out in the deed and other are as follows: documents. Conveyancing fees, which depend on the property value, are set by the Law Society. a. Seller ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 * This procedure can be completed simultaneously with previous procedures. .) %')-'4O'!#4.'#,!%')%'.2 119 The conveyancer, before submitting the docuĬ Comments: The conveyancer performs a title Comments: The conveyancer registers the deed mentation to the deeds registry to transfer the 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ with the Deeds Registry. The Registrar compares property to the new company, must also conduct GhostConvey, WinDeed, Korbitec, WinDeed, the draft deed with data in the register. The deed a company search at the Companies and IntellecĬ Searchworks, etc.) to ensure that the property is examined to (1) ensure compliance with the tual Property Commission Office to ascertain the exists and that the seller is the rightful owner. The conditions of transfer, (2) check the legality of the directors of both companies. search can also be conducted using the Deeds transfer, and (3) verify that the proper standards All conveyancers have access to this authority via Registry’s own platform, DeedsWeb (http://www. of examination were applied. Once the criteria the Internet and can perform the check online. "##"2Ď%.5Ď9İ ##"2# İ"##"26# İ6#+Ĭ are met, the deed is prepared for registration and Usually conveyancers will also ask clients to come.jsp). DeedsWeb’s coverage is countrywide, execution. The registration fee, which depends provide the requisite documents. In so doing, the and a user can access information on any property on the value of the property and is obtained from conveyancer will: throughout the country. the Transfer Cost table available at http://www. A small number of conveyancers still conduct %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť a. Review the companies’ memorandum and the search in person, but the majority has a column), is then paid. The Registrar executes the articles of association to confirm the authority 24 2!1(/3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť deed, and the conveyancer signs the transfer deed to acquire and alienate immovable property. searches. The small fee associated with this at the Deeds Registry in front of the registrar or a The founding documents of the seller will be procedure is included in the conveyancer’s fees. deputy. The Deeds Registry subsequently updates the Memorandum and Articles of Association. the register and archives a copy. If the buyer company was formed before May 1, 2011, its Memorandum and Articles of AssoĬ Procedure 6*. Obtain a transfer duty ciation will be examined. If the buyer company receipt from the South African Revenue   Ť was formed after May 1, 2011, only its MemoĬ Services Johannesburg, Johannesburg randum of Incorporation will be examined. Time: 0.5 day Property value: ZAR 3,129,500 (US$ 359,500) b. Review the necessary resolutions. Section 115 of the Companies Act 71 2008 states that a Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the Data as of: January 2015 company may not dispose of all or the greater value above ZAR 1,500 for a property valued at part of its assets except through a special ZAR 1,500,000 or more) Procedure 1. Obtain a rates clearance resolution. Comments: The transferring conveyancer obtains certificate from the Johannesburg c. Ensure compliance with the Financial IntelliĬ a transfer duty receipt/exemption certificate Municipality gence Center Act by obtaining proof from the from the South African Revenue Services. As Time: 11 days companies of the physical/business address of February 23, 2011, the distinction drawn in calculating the transfer duties for legal entities and Cost: ZAR 178 and the Tax/VAT registration number with the South African Revenue Services. The conveĬ -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť Comments: The transferring conveyancer obtains yancer will also request this information from entities and natural persons now pay the transfer a rates (taxes) clearance certificate from the local the clients before proceeding, and the check duty based on a sliding scale. The scale is as authority, on behalf of the seller only if in JohanĬ is done automatically at the time the transfer $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ nesburg. Section 118 of the Local Municipality duty is paid. If a company does not have or ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť Act states that any transfer of property must be quotes an incorrect Tax/VAT number, it will be above ZAR 600,000, but not exceeding ZAR accompanied by a rates clearance from the local unable to pay the transfer duty, and the process 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 authority. However, the local authority will only will come to a halt. – ZAR 12,000 plus 5% on the value above ZAR check the last 24 months as this is sufficient 1,000,000, but not exceeding ZAR 1,500,000; for the transfer to legally take place. If any taxes Procedure 3*. Obtain an electrical ZAR 1,500,001 and above – ZAR 37,000 plus 8% are owed from previous years, the seller is not compliance certificate from a certified on the value above ZAR 1,500,000. exonerated, and the taxes will still have to be electrician paid by either the seller or the new owner as per Procedure 7. Parties sign all the agreement. Time: 7 days documentation at the conveyancer’s Cost: ZAR 1,250 office Procedure 2*. Prepare and collect all the Comments: This certificate is not required by the Time: 1 day required documentation land registry. The Health and Environment Act Cost: ZAR 27,310 (for properties valued between Time: 10 days of 1993 makes it mandatory for anyone selling ZAR 3,100,000.01 and ZAR 3,200,000.00) Cost: .Ť!.23ŤŤ anything that includes electrical wiring to have an Electrical Certificate of Compliance. It is common Comments: The conveyancer will collect all Comments: A conveyancer prepares the deed of practice for the seller to obtain this clearance the documentation signed by the seller and the sale and drafts the transfer deed. The conveyancer certificate. However, a sale agreement includes purchaser and obtain guarantees for the purchase obtains power of attorney, appointing him/her to a clause that refers to the Act, specifying who price. The documents to be signed by the parties appear before the Registrar. The conveyancer’s should obtain the clearance certificate and who are as follows: services are mandatory for the registration of land will bear the cost. a. Seller in South Africa. A conveyancer is an attorney 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" Procedure 4*. Obtain an entomologist’s 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 of immovable property. The Deeds Registries Act certificate from a certified entomologist ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť Time: 7 days Centre Act (FICA)) transfer, and thus the conveyancer is responsible Cost: ZAR 600 b. Purchaser for certain facts set out in the deed and other ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 documents. Conveyancing fees, which depend on Comments: Contractual practice in eThekwini the property value, are set by the Law Society. requires an entomologist’s certificate proving that ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ there are no infestations on the property. The conveyancer, before submitting the documentation to the deeds registry to transfer Procedure 8. Register the deed with the Procedure 5*. Obtain an ownership the property to the new company, must also Pietermaritzburg Deeds Registry conduct a company search at the Companies certificate Time: 14 days and Intellectual Property Commission Office to Time: 0.5 day ascertain the directors of both companies. Cost: ZAR 1,100 Cost: .Ť!.23ŤŤ * This procedure can be completed simultaneously with previous procedures. 120 DOING BUSINESS IN SOUTH AFRICA 2015 All conveyancers have access to this authority via Procedure 5*. Obtain a transfer duty   Ť the Internet and can perform the check online. Mangaung, Bloemfontein receipt from the South African Revenue Usually conveyancers will also ask clients to provide the requisite documents. In so doing, the Services Property value: ZAR 3,129,500 (US$ 359,500) conveyancer will: Time: 0.5 day Data as of: January 2015 a. Review the companies’ memorandum and Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the articles of association to confirm the authority Procedure 1. Obtain electricity rates value above ZAR 1,500 for a property valued at to acquire and alienate immovable property. ZAR 1,500,000 or more) clearance from the utility Centlec The founding documents of the seller will be Comments: The transferring conveyancer obtains Time: 21 days the Memorandum and Articles of Association. If the buyer company was formed before May a transfer duty receipt/exemption certificate Cost: ZAR 60 1, 2011, its Memorandum and Articles of AssoĬ from the South African Revenue Services. As Comments: The transferring conveyancer obtains ciation will be examined. If the buyer company of February 23, 2011, the distinction drawn in an electricity rates clearance certificate from the was formed after May 1, 2011, only its MemoĬ calculating the transfer duties for legal entities and local utility prior to obtaining a rates clearance randum of Incorporation will be examined. -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť certificate from the municipality. There is no entities and natural persons now pay the transfer electronic platform for requesting the clearance b. Review the necessary resolutions. Section 115 duty based on a sliding scale. The scale is as of the Companies Act 71 2008 states that a certificate, and thus the request must be made $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ manually. company may not dispose of all or the greater ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť part of its assets except through a special above ZAR 600,000, but not exceeding ZAR resolution. Procedure 2. Obtain a rates and 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 c. Ensure compliance with the Financial – ZAR 12,000 plus 5% on the value above ZAR water clearance certificate from the Intelligence Center Act by obtaining proof 1,000,000, but not exceeding ZAR 1,500,000; Mangaung Municipality from the companies of the physical/business ZAR 1,500,001 and above – ZAR 37,000 plus 8% Time: 21 days address and the Tax/VAT registration number on the value above ZAR 1,500,000. with the South African Revenue Services. The Cost: ZAR 200 conveyancer will also request this information Procedure 6. Parties sign all the Comments: The transferring conveyancer obtains from the clients before proceeding, and the documentation at the conveyancer’s a rates clearance certificate from the local check is done automatically at the time the office ,4-(!(/+(38ĎŤ -Ť+.#,$.-3#(-ďŤ!.-5#8-!#12Ť!-Ť transfer duty is paid. If a company does not request the certificate online through http://www. have or quotes an incorrect Tax/VAT number, it Time: 1 day ratesclearance.com, though most conveyancers will be unable to pay the transfer duty, and the Cost: ZAR 27,310 (for properties valued between still use the paper option. process will come to a halt. ZAR 3,100,000.01 and ZAR 3,200,000.00) Procedure 3*. Obtain an electrical Procedure 3*. Obtain an electrical Comments: The conveyancer will collect all the documentation signed by the seller and the compliance certificate from a certified compliance certificate from a certified purchaser and obtain guarantees for the purchase electrician electrician price. The documents to be signed by the parties Time: 7 days Time: 7 days are as follows: Cost: ZAR 1,250 Cost: ZAR 1,250 a. Seller Comments: This certificate is not required by the Comments: This certificate is not required by the ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" land registry. The Health and Environment Act land registry. The Health and Environment Act ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 of 1993 makes it mandatory for anyone selling of 1993 makes it mandatory for anyone selling ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť anything that includes electrical wiring to have an anything that includes electrical wiring to have an Centre Act (FICA)) Electrical Certificate of Compliance. It is common Electrical Certificate of Compliance. It is common b. Purchaser practice for the seller to obtain this clearance practice for the seller to obtain this clearance certificate. However, a sale agreement includes ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 certificate. However, a sale agreement will include a clause that refers to the Act, specifying who a clause that refers to the Act, specifying who ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ should obtain the clearance certificate and who should obtain the clearance certificate and who will bear the cost. will bear the cost. Procedure 7. Register the deed with the Johannesburg Deeds Registry Procedure 4*. Prepare and collect all the Procedure 4*. Obtain an ownership Time: 11 days required documentation certificate Time: 10 days Cost: ZAR 1,100 Time: 0.5 day Comments: The conveyancer registers the deed Cost: .Ť!.23ŤŤ Cost: .Ť!.23Ťij(-!+4"#"Ť(-Ť/1.!#"41#ŤĊĴ with the Deeds Registry. The Registrar compares Comments: A conveyancer prepares the deed of Comments: The conveyancer performs a title the draft deed with data in the register. The deed sale and drafts the transfer deed. The conveyancer 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ is examined to (1) ensure compliance with the obtains power of attorney, appointing him/her to GhostConvey, WinDeed, Korbitec, WinDeed, conditions of transfer, (2) check the legality of the appear before the Registrar. The conveyancer’s Searchworks, etc.) to ensure that the property transfer, and (3) verify that the proper standards services are mandatory for the registration of land exists and that the seller is the rightful owner. of examination were applied. Once the criteria in South Africa. A conveyancer is an attorney The search can also be conducted using the are met, the deed is prepared for registration and 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť Deeds Registry’s own platform, DeedsWeb execution. The registration fee, which depends 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť ij'33/đİİ666Ď"##"2Ď%.5Ď9İ ##"2# İ on the value of the property and is obtained from of immovable property. The Deeds Registries Act deedsweb/welcome.jsp). DeedsWeb’s coverage the Transfer Cost table available at http://www. 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť is countrywide, and a user can access information %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť transfer, and thus the conveyancer is responsible on any property throughout the country. column), is then paid. The Registrar executes the for certain facts set out in the deed and other deed, and the conveyancer signs the transfer deed documents. Conveyancing fees, which depend on A small number of conveyancers still conduct at the Deeds Registry in front of the registrar or a the property value, are set by the Law Society. the search in person, but the majority has a deputy. The Deeds Registry subsequently updates 24 2!1(/3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť the register and archives a copy. searches. The small fee associated with this procedure is included in the conveyancer’s fees. * This procedure can be completed simultaneously with previous procedures. .) %')-'4O'!#4.'#,!%')%'.2 121 The conveyancer, before submitting the docuĬ Comments: The transferring conveyancer obtains Cost: ZAR 264 mentation to the deeds registry to transfer the a transfer duty receipt/exemption certificate Comments: The transferring conveyancer obtains property to the new company, must also conduct from the South African Revenue Services. As a rates clearance certificate from the local a company search at the Companies and IntellecĬ of February 23, 2011, the distinction drawn in ,4-(!(/+(38ĎŤ -Ť(#3#1,1(39 41%ďŤ3'#Ť//+(!3(.-Ť tual Property Commission Office to ascertain the calculating the transfer duties for legal entities and cannot be done online and has to be done directors of both companies. -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť manually. All conveyancers have access to this authority via entities and natural persons now pay the transfer the Internet and can perform the check online. duty based on a sliding scale. The scale is as Procedure 2*. Prepare and collect all the Usually conveyancers will also ask clients to $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť required documentation provide the requisite documents. In so doing, the conveyancer will: above ZAR 600,000, but not exceeding ZAR Time: 10 days 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 Cost: .Ť!.23ŤŤ a. Review the companies’ memorandum and – ZAR 12,000 plus 5% on the value above ZAR articles of association to confirm the authority Comments: A conveyancer prepares the deed of 1,000,000, but not exceeding ZAR 1,500,000; to acquire and alienate immovable property. sale and drafts the transfer deed. The conveyancer ZAR 1,500,001 and above – ZAR 37,000 plus 8% The founding documents of the seller will be obtains power of attorney, appointing him/her to on the value above ZAR 1,500,000. the Memorandum and Articles of Association. appear before the Registrar. The conveyancer’s If the buyer company was formed before May services are mandatory for the registration of land 1, 2011, its Memorandum and Articles of AssoĬ Procedure 7. Parties sign all the documentation at the conveyancer’s in South Africa. A conveyancer is an attorney ciation will be examined. If the buyer company 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť was formed after May 1, 2011, only its MemoĬ office 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť randum of Incorporation will be examined. Time: 1 day of immovable property. The Deeds Registries Act b. Review the necessary resolutions. Section 115 Cost: ZAR 27,310 (for properties valued between 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť of the Companies Act 71 2008 states that a ZAR 3,100,000.01 and ZAR 3,200,000.00) transfer, and thus the conveyancer is responsible company may not dispose of all or the greater for certain facts set out in the deed and other part of its assets except through a special Comments: The conveyancer will collect all documents. Conveyancing fees, which depend on resolution. the documentation signed by the seller and the the property value, are set by the Law Society. c. Ensure compliance with the Financial purchaser and obtain guarantees for the purchase The conveyancer, before submitting the Intelligence Center Act by obtaining proof price. The documents to be signed by the parties documentation to the deeds registry to transfer from the companies of the physical/business are as follows: the property to the new company, must also address and the Tax/VAT registration number a. Seller conduct a company search at the Companies with the South African Revenue Services. The ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" and Intellectual Property Commission Office to conveyancer will also request this information ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 ascertain the directors of both companies. from the clients before proceeding, and the All conveyancers are have access to this authority ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť check is done automatically at the time the via the Internet and can perform the check online. Centre Act (FICA)) transfer duty is paid. If a company does not Usually conveyancers will also ask clients to have or quotes an incorrect Tax/VAT number, it b. Purchaser provide the requisite documents. In so doing, the will be unable to pay the transfer duty, and the ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 conveyancer will: process will come to a halt. ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ a. Review the companies’ memorandum and articles of association to confirm the authority Procedure 5*. Obtain an ownership Procedure 8. Register the deed with the to acquire and alienate immovable property. certificate Bloemfontein Deeds Registry The founding documents of the seller will be Time: 0.5 day Time: 9 days the Memorandum and Articles of Association. Cost: .Ť!.23ŤŤ If the buyer company was formed before May Cost: ZAR 1,100 1, 2011, its Memorandum and Articles of AssoĬ Comments: The conveyancer performs a title Comments: The conveyancer registers the deed ciation will be examined. If the buyer company 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ with the Deeds Registry. The Registrar compares was formed after May 1, 2011, only its MemoĬ GhostConvey, WinDeed, Korbitec, WinDeed, the draft deed with data in the register. The deed randum of Incorporation will be examined. Searchworks, etc.) to ensure that the property is examined to (1) ensure compliance with the b. Review the necessary resolutions. Section 115 exists and that the seller is the rightful owner. The conditions of transfer, (2) check the legality of the of the Companies Act 71 2008 states that a search can also be conducted using the Deeds transfer, and (3) verify that the proper standards company may not dispose of all or the greater Registry’s own platform, DeedsWeb (http://www. of examination were applied. Once the criteria part of its assets except through a special "##"2Ď%.5Ď9İ ##"2# İ"##"26# İ6#+Ĭ are met, the deed is prepared for registration and resolution. come.jsp). DeedsWeb’s coverage is countrywide, execution. The registration fee, which depends and a user can access information on any property c. Ensure compliance with the Financial IntelliĬ on the value of the property and is obtained from gence Center Act by obtaining proof from the throughout the country. the Transfer Cost table available at http://www. companies of the physical/business address A small number of conveyancers still conduct the %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť and the Tax/VAT registration number with search in person, but the majority has a subscripĬ column), is then paid. The Registrar executes the the South African Revenue Services. The conveĬ 3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť2#1!'#2ĎŤ deed, and the conveyancer signs the transfer deed yancer will also request this information from The small fee associated with this procedure is at the Deeds Registry in front of the registrar or a the clients before proceeding, and the check included in the conveyancer’s fees. deputy. The Deeds Registry subsequently updates is done automatically at the time the transfer the register and archives a copy. duty is paid. If a company does not have or Procedure 6*. Obtain a transfer duty quotes an incorrect Tax/VAT number, it will be receipt from the South African Revenue   Ť unable to pay the transfer duty, and the process Services Msunduzi, Pietermaritzburg will come to a halt. Time: 0.5 day Property value: ZAR 3,129,500 (US$ 359,500) Procedure 3*. Obtain an electrical Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the Data as of: January 2015 compliance certificate from a certified value above ZAR 1,500 for a property valued at ZAR 1,500,000 or more) electrician Procedure 1. Obtain a rates clearance certificate from the Msunduzi Time: 7 days Municipality Cost: ZAR 1,250 Time: 30 days * This procedure can be completed simultaneously with previous procedures. 122 DOING BUSINESS IN SOUTH AFRICA 2015 Comments: This certificate is not required by the Cost: ZAR 27,310 (for properties valued between All conveyancers have access to this authority via land registry. The Health and Environment Act ZAR 3,100,000.01 and ZAR 3,200,000.00) the Internet and can perform the check online. of 1993 makes it mandatory for anyone selling Comments: The conveyancer will collect all Usually conveyancers will also ask clients to anything that includes electrical wiring to have an the documentation signed by the seller and the provide the requisite documents. In so doing, the Electrical Certificate of Compliance. It is common purchaser and obtain guarantees for the purchase conveyancer will: practice for the seller to obtain this clearance price. The documents to be signed by the parties a. Review the companies’ memorandum and certificate. However, a sale agreement includes are as follows: articles of association to confirm the authority a clause that refers to the Act, specifying who to acquire and alienate immovable property. should obtain the clearance certificate and who a. Seller The founding documents of the seller will be will bear the cost. ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" the Memorandum and Articles of Association. ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 If the buyer company was formed before May Procedure 4*. Obtain an entomologist’s ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť 1, 2011, its Memorandum and Articles of AssoĬ certificate from a certified entomologist Centre Act (FICA)) ciation will be examined. If the buyer company Time: 7 days b. Purchaser was formed after May 1, 2011, only its MemoĬ randum of Incorporation will be examined. Cost: ZAR 600 ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 b. Review the necessary resolutions. Section 115 Comments: .-31!34+Ť/1!3(!#Ť(-Ť 24-"49(Ť ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ of the Companies Act 71 2008 states that a requires an entomologist’s certificate proving that company may not dispose of all or the greater there are no infestations on the property. Procedure 8. Register the deed with the part of its assets except through a special Pietermaritzburg Deeds Registry resolution. Procedure 5*. Obtain an ownership Time: 14 days c. Ensure compliance with the Financial certificate Cost: ZAR 1,100 Intelligence Center Act by obtaining proof Time: 0.5 day from the companies of the physical/business Comments: The conveyancer registers the deed address and the Tax/VAT registration number Cost: .Ť!.23ŤŤ with the Deeds Registry. The Registrar compares with the South African Revenue Services. The Comments: The conveyancer performs a title the draft deed with data in the register. The deed conveyancer will also request this information 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ is examined to (1) ensure compliance with the from the clients before proceeding, and the GhostConvey, WinDeed, Korbitec, WinDeed, conditions of transfer, (2) check the legality of the check is done automatically at the time the Searchworks, etc.) to ensure that the property transfer, and (3) verify that the proper standards transfer duty is paid. If a company does not exists and that the seller is the rightful owner. of examination were applied. Once the criteria have or quotes an incorrect Tax/VAT number, it The search can also be conducted using the are met, the deed is prepared for registration and will be unable to pay the transfer duty, and the Deeds Registry’s own platform, DeedsWeb execution. The registration fee, which depends process will come to a halt. ij'33/đİİ666Ď"##"2Ď%.5Ď9İ ##"2# İ on the value of the property and is obtained from deedsweb/welcome.jsp). DeedsWeb’s coverage the Transfer Cost table available at http://www. Procedure 2*. Obtain a rates clearance is countrywide, and a user can access information %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť certificate from the municipality at on any property throughout the country. column), is then paid. The Registrar executes the deed, and the conveyancer signs the transfer deed Nelson Mandela Bay Municipality     A small number of conveyancers still conduct at the Deeds Registry in front of the registrar or a Time: 7 days the search in person, but the majority has a deputy. The Deeds Registry subsequently updates 24 2!1(/3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť Cost: ZAR 102 (ZAR 34 for valuation certificate + the register and archives a copy. ZAR 68 for rates clearance certificate) searches. The small fee associated with this procedure is included in the conveyancer’s fees. Comments: The transferring conveyancer obtains   Ť a rates clearance certificate from the local Procedure 6*. Obtain a transfer duty Nelson Mandela Bay, Port Elizabeth ,4-(!(/+(38ĎŤ -Ť.13Ť+(9 #3'ďŤ,.23Ť!.-5#8-!#12Ť receipt from the South African Revenue Property value: ZAR 3,129,500 (US$ 359,500) request the certificate in person. Services Data as of: January 2015 Procedure 3*. Obtain an electrical Time: 0.5 day Procedure 1. Prepare and collect all the compliance certificate from a certified Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the electrician value above ZAR 1,500 for a property valued at required documentation ZAR 1,500,000 or more) Time: 7 days Time: 10 days Comments: The transferring conveyancer obtains Cost: ZAR 1,250 Cost: .Ť!.23ŤŤ a transfer duty receipt/exemption certificate Comments: This certificate is not required by the from the South African Revenue Services. As Comments: A conveyancer prepares the deed of land registry. The Health and Environment Act of February 23, 2011, the distinction drawn in sale and drafts the transfer deed. The conveyancer of 1993 makes it mandatory for anyone selling calculating the transfer duties for legal entities and obtains power of attorney, appointing him/her to anything that includes electrical wiring to have an -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť appear before the Registrar. The conveyancer’s Electrical Certificate of Compliance. It is common entities and natural persons now pay the transfer services are mandatory for the registration of land practice for the seller to obtain this clearance duty based on a sliding scale. The scale is as in South Africa. A conveyancer is an attorney certificate. However, a sale agreement will include $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť a clause that refers to the Act, specifying who ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť should obtain the clearance certificate and who above ZAR 600,000, but not exceeding ZAR of immovable property. The Deeds Registries Act will bear the cost. 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť – ZAR 12,000 plus 5% on the value above ZAR transfer, and thus the conveyancer is responsible for certain facts set out in the deed and other Procedure 4*. Obtain an entomologist’s 1,000,000, but not exceeding ZAR 1,500,000; certificate from a certified entomologist ZAR 1,500,001 and above – ZAR 37,000 plus 8% documents. Conveyancing fees, which depend on on the value above ZAR 1,500,000. the property value, are set by the Law Society. Time: 7 days The conveyancer, before submitting the Cost: ZAR 600 Procedure 7. Parties sign all the documentation to the deeds registry to transfer the property to the new company, must also Comments: .-31!34+Ť/1!3(!#Ť(-Ť#+2.-Ť documentation at the conveyancer’s -"#+Ť8Ť1#04(1#2Ť-Ť#-3.,.+.%(23ġ2Ť office conduct a company search at the Companies and Intellectual Property Commission Office to certificate proving that there are no infestations Time: 1 day ascertain the directors of both companies. on the property. * This procedure can be completed simultaneously with previous procedures. .) %')-'4O'!#4.'#,!%')%'.2 123 Procedure 5*. Obtain an ownership Cost: ZAR 1,100 1, 2011, its Memorandum and Articles of AssoĬ Comments: The conveyancer registers the deed ciation will be examined. If the buyer company certificate with the Deeds Registry. The Registrar compares was formed after May 1, 2011, only its MemoĬ Time: 0.5 day randum of Incorporation will be examined. the draft deed with data in the register. The deed Cost: .Ť!.23ŤŤ is examined to (1) ensure compliance with the b. Review the necessary resolutions. Section 115 conditions of transfer, (2) check the legality of the of the Companies Act 71 2008 states that a Comments: The conveyancer performs a title transfer, and (3) verify that the proper standards company may not dispose of all or the greater 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ of examination were applied. Once the criteria part of its assets except through a special GhostConvey, WinDeed, Korbitec, WinDeed, are met, the deed is prepared for registration and resolution. Searchworks, etc.) to ensure that the property exists and that the seller is the rightful owner. execution. The registration fee, which depends c. Ensure compliance with the Financial The search can also be conducted using the on the value of the property and is obtained from Intelligence Center Act by obtaining proof Deeds Registry’s own platform, DeedsWeb the Transfer Cost table available at http://www. from the companies of the physical/business ij'33/đİİ666Ď"##"2Ď%.5Ď9İ ##"2# İ %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť address and the Tax/VAT registration number deedsweb/welcome.jsp). DeedsWeb’s coverage column), is then paid. The Registrar executes the with the South African Revenue Services. The is countrywide, and a user can access information deed, and the conveyancer signs the transfer deed conveyancer will also request this information on any property throughout the country. at the Deeds Registry in front of the registrar or a from the clients before proceeding, and the deputy. The Deeds Registry subsequently updates check is done automatically at the time the A small number of conveyancers still conduct the register and archives a copy. transfer duty is paid. If a company does not the search in person, but the majority has a have or quotes an incorrect Tax/VAT number, it 24 2!1(/3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť   Ť will be unable to pay the transfer duty, and the searches. The small fee associated with this process will come to a halt. procedure is included in the conveyancer’s fees. Tshwane, Pretoria Procedure 6*. Obtain a transfer duty Property value: ZAR 3,129,500 (US$ 359,500) Procedure 3*. Obtain an electrical receipt from the South African Revenue Data as of: January 2015 compliance certificate from a certified Services electrician Procedure 1. Obtain a rates clearance Time: 7 days Time: 0.5 day certificate from the municipality at City Cost: ZAR 1,250 Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the of Tshwane Municipality value above ZAR 1,500 for a property valued at Comments: This certificate is not required by the Time: 20 days ZAR 1,500,000 or more) land registry. The Health and Environment Act Cost: ZAR 54 of 1993 makes it mandatory for anyone selling Comments: The transferring conveyancer obtains Comments: The transferring conveyancer anything that includes electrical wiring to have an a transfer duty receipt/exemption certificate obtains a rates clearance certificate from the Electrical Certificate of Compliance. It is common from the South African Revenue Services. As local municipality. In Pretoria, clearance can practice for the seller to obtain this clearance of February 23, 2011, the distinction drawn in be requested online through http://www. certificate. However, a sale agreement will include calculating the transfer duties for legal entities and ratesclearance.com. a clause that refers to the Act, specifying who -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť should obtain the clearance certificate and who entities and natural persons now pay the transfer Procedure 2*. Prepare and collect all the will bear the cost. duty based on a sliding scale. The scale is as $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ required documentation ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť Procedure 4*. Obtain an ownership Time: 10 days certificate above ZAR 600,000, but not exceeding ZAR 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 Cost: .Ť!.23ŤŤ Time: 0.5 day – ZAR 12,000 plus 5% on the value above ZAR Comments: A conveyancer prepares the deed of Cost: .Ť!.23ŤŤ 1,000,000, but not exceeding ZAR 1,500,000; sale and drafts the transfer deed. The conveyancer ZAR 1,500,001 and above – ZAR 37,000 plus 8% obtains power of attorney, appointing him/her to Comments: The conveyancer performs a title on the value above ZAR 1,500,000. appear before the Registrar. The conveyancer’s 2#1!'Ť42(-%ŤŤ+(!#-2#"Ť3'(1"Ĭ/138Ť2.$361#Ťij#Ď%ĎďŤ services are mandatory for the registration of land GhostConvey, WinDeed, Korbitec, WinDeed, Procedure 7. Parties sign all the in South Africa. A conveyancer is an attorney Searchworks, etc.) to ensure that the property documentation at the conveyancer’s 43'.1(9#"Ť4-"#1Ť3'#Ť33.1-#82Ť!3Ť3.Ť/#1$.1,Ť exists and that the seller is the rightful owner. office 2/#!(+(9#"Ť"43(#2Ť6(3'Ť1#%1"Ť3.Ť3'#Ť!.-5#8-!#Ť The search can also be conducted using the of immovable property. The Deeds Registries Act Deeds Registry’s own platform, DeedsWeb Time: 1 day ij'33/đİİ666Ď"##"2Ď%.5Ď9İ ##"2# İ 43'.1(9#2Ť.-+8Ť!.-5#8-!#12Ť3.Ť/1#/1#Ť"##"2Ť.$Ť Cost: ZAR 27,310 (for properties valued between transfer, and thus the conveyancer is responsible deedsweb/welcome.jsp). DeedsWeb’s coverage ZAR 3,100,000.01 and ZAR 3,200,000.00) for certain facts set out in the deed and other is countrywide, and a user can access information documents. Conveyancing fees, which depend on on any property throughout the country. Comments: The conveyancer will collect all the documentation signed by the seller and the the property value, are set by the Law Society. A small number of conveyancers still conduct purchaser and obtain guarantees for the purchase The conveyancer, before submitting the the search in person, but the majority has a price. The documents to be signed by the parties documentation to the deeds registry to transfer 24 2!1(/3(.-Ť3.ŤŤ3'(1"Ĭ/138Ť2.$361#Ť42#"Ť$.1Ť are as follows: the property to the new company, must also searches. The small fee associated with this conduct a company search at the Companies procedure is included in the conveyancer’s fees. a. Seller and Intellectual Property Commission Office to ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" Procedure 5*. Obtain a transfer duty ascertain the directors of both companies. ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 receipt from the South African Revenue All conveyancers have access to this authority via ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť the Internet and can perform the check online. Services Centre Act (FICA)) Usually conveyancers will also ask clients to Time: 0.5 day b. Purchaser provide the requisite documents. In so doing, the conveyancer will: Cost: ZAR 167,360 (ZAR 37,000 plus 8% on the ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 value above ZAR 1,500 for a property valued at ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ a. Review the companies’ memorandum and ZAR 1,500,000 or more) articles of association to confirm the authority Procedure 8. Register the deed with the to acquire and alienate immovable property. Cape Town Deeds Registry The founding documents of the seller will be the Memorandum and Articles of Association. Time: 14 days If the buyer company was formed before May * This procedure can be completed simultaneously with previous procedures. 124 DOING BUSINESS IN SOUTH AFRICA 2015 Comments: The transferring conveyancer obtains a transfer duty receipt/exemption certificate LIST OF PROCEDURES from the South African Revenue Services. As ENFORCING CONTRACTS of February 23, 2011, the distinction drawn in calculating the transfer duties for legal entities and -341+Ť/#12.-2Ť'2Ť ##-Ť .+(2'#"ĎŤ.3'Ť+#%+Ť entities and natural persons now pay the transfer Filing and service duty based on a sliding scale. The scale is as 1 Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply $.++.62𫫫ë3.ŤŤĊĂĂďĂĂĂŤĬŤ#7#,/3ĒŤŤ with the contract. ĊĂĂďĂĂăŤ3.ŤŤăďĂĂĂďĂĂĂŤĬŤąœŤ.-Ť3'#Ť5+4#Ť above ZAR 600,000, but not exceeding ZAR 2 Plaintiff hires a lawyer: Plaintiff hires a lawyer. 1,000,000; ZAR 1,000,001 to ZAR 1,500,000 – ZAR 12,000 plus 5% on the value above ZAR * Plaintiff files a summons and complaint: Plaintiff files a summons and complaint with the court 1,000,000, but not exceeding ZAR 1,500,000; (orally or in writing). ZAR 1,500,001 and above – ZAR 37,000 plus 8% 3 Registration of court case: Registration of court case by the court administration (this can include on the value above ZAR 1,500,000. assigning a reference number to the case). Procedure 6. Parties sign all the * Arrangements for physical delivery of summons and complaint: Plaintiff takes the necessary documentation at the conveyancer’s steps to arrange for physical service of process on Defendant (e.g. instructing a court officer or a office private bailiff). Time: 1 day 4 Attempt at physical delivery: An attempt to physically deliver summons and complaint to DefenĬ dant is made. Cost: ZAR 27,310 (for properties valued between ZAR 3,100,000.01 and ZAR 3,200,000.00) * Proof of service: Plaintiff submits proof of service to court, as required by law or standard Comments: The conveyancer will collect all practice. documentation signed by the seller and the łŤ//+(!3(.-Ť$.1Ť/1#Ĭ)4"%,#-3Ť33!',#-3đŤ+(-3(ǪŤ24 ,(32Ť-Ť//+(!3(.-Ť(-Ť61(3(-%Ť$.1Ť3'#Ť purchaser and obtain guarantees for the purchase attachment of Defendant's property prior to judgment. price. The documents to be signed by the parties are as follows: łŤ#!(2(.-Ť.-Ť/1#Ĭ)4"%,#-3Ť33!',#-3đŤ 4"%#Ť"#!("#2Ť6'#3'#1Ť3.Ť%1-3Ť+(-3(Ǫġ2Ť1#04#23Ť$.1Ť a. Seller /1#Ĭ)4"%,#-3Ť33!',#-3Ť.$Ť#$#-"-3ġ2Ť/1./#138Ť-"Ť-.3(ǫ#2Ť+(-3(ǪŤ-"Ť#$#-"-3Ť.$Ť3'#Ť ĖŤ .6#1Ť.$Ť33.1-#8Ť3.Ť/22Ť3'#Ť"##" decision. ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 5 Custody of assets attached prior to judgment: If physical attachment is ordered, Defendant's ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ(--!(+Ť -3#++(%#-!#Ť attached assets are placed in the custody or control of an enforcement officer or private bailiff. Centre Act (FICA)) b. Purchaser Trial and judgment ĖŤ 1-2$#1Ť"438Ť"#!+13(.-2 ĖŤ ǭ"5(32Ťij.+5#-!8ĒŤ Ĵ 6 Defendant files an answer to Plaintiff’s claim: Defendant files a written pleading which includes his answer or defense on the merits of the case (see assumption 4). Procedure 7. Register the deed with the 7 Plaintiff’s written reply to Defendant's answer: Plaintiff responds to Defendant’s answer with a Pretoria Deeds Registry written pleading, which may or may not include witness statements or expert (witness) stateĬ Time: 9 days ments. Cost: ZAR 1,100 8 Filing of written submissions: Plaintiff and Defendant file written pleadings and submissions Comments: The conveyancer registers the deed with the court and transmit copies of the written pleadings or submissions to one another. The with the Deeds Registry. The Registrar compares pleadings may or may not include witness statements or expert (witness) statements. the draft deed with data in the register. The deed 9 Adjournments: Court procedure is delayed because one or both parties request and obtain an is examined to (1) ensure compliance with the adjournment to submit written pleadings. Check as ‘yes’ if this commonly happens. conditions of transfer, (2) check the legality of the transfer, and (3) verify that the proper standards * Request for interlocutory order: Defendant raises preliminary issues, such as jurisdiction, statute of examination were applied. Once the criteria of limitation, etc. Checked as ‘yes’ if commonly raised by the Defendant as a matter of practice, are met, the deed is prepared for registration and regardless of justification. execution. The registration fee, which depends on the value of the property and is obtained from * Court’s issuance of interlocutory order: Court decides the preliminary issues the Defendant the Transfer Cost table available at http://www. raised by issuing an interlocutory order. Check as ‘yes’ if this is commonly the case in commercial %'.23"(%#23Ď!.Ď9İ!."#İįĄĂĎ'3,+ŤijİŤ #58Ť cases. column), is then paid. The Registrar executes the 10 Plaintiff’s appeal of court's interlocutory order: Plaintiff appeals the court's interlocutory order, deed, and the conveyancer signs the transfer deed which suspends the court proceedings. Check as ‘yes’ if an appeal by Plaintiff is common in this at the Deeds Registry in front of the registrar or a case. deputy. The Deeds Registry subsequently updates the register and archives a copy. * Discovery requests: Plaintiff and Defendant make requests for the disclosure of documents, attempting to force the other party to reveal potentially detrimental documents. Check as ‘yes’ if discovery requests usually entail disputes. 11 Discovery disputes: Following a request for discovery of documentary evidence by one of the parties, the other party disputes the request and calls upon the judge to decide the issue. Check as ‘yes’ if discovery disputes are provided by law and commonly happen. 12 Request for oral hearing or trial: Plaintiff lists the case for trial on the court’s calendar or applies for the date(s) for the oral hearing or trial. 13 Adjournments: Court proceedings are delayed because one or both parties request and obtain an adjournment to prepare for the oral hearing or trial as a matter of common practice. .) %')-'4O, )'#,!),.'.4 125 14 Trial (prevalent in common law): The parties argue the merits of the case at (an) oral session(s) #$.1#Ť3'#Ť!.413ĎŤ(3-#22#2Ť-"Ť#7/#13Ť6(3-#22#2Ť1#Ť04#23(.-#"Ť-"Ť!1.22Ĭ#7,(-#"Ť"41(-%Ť trial. 15 Adjournments: Court proceedings are delayed because one or both parties request and obtain an adjournment during the oral hearing or trial, resulting in an additional or later trial or hearing date. * Final arguments: The parties present their final factual and legal arguments to the court either by oral presentation or by a written submission. 16 .3(ǫ!3(.-Ť.$Ť)4"%,#-3Ť(-Ť!.413đŤ'#Ť/13(#2Ť1#Ť-.3(ǫ#"Ť.$Ť3'#Ť)4"%,#-3Ť3ŤŤ!.413Ť'#1(-%Ď 17 Writing of judgment: The judge produces a written copy of the judgment. 18 Registration of judgment: The court office registers the judgment after receiving a written copy of the judgment. 19 Defendant is formally notified of the judgment: Plaintiff or court formally notifies the Defendant of the judgment. The appeal period starts to run from the day the Defendant is formally notified of the judgment. 20 //#+Ť/#1(."đŤ8Ť+6Ť#$#-"-3Ť'2Ť3'#Ť.//.134-(38Ť3.Ť//#+Ť3'#Ť)4"%,#-3Ť"41(-%ŤŤ2/#!(ǫ#"Ť period. Defendant decides not to appeal. Seller decides to start enforcing the judgment when the appeal period ends (see assumption 8). Enforcement of judgment * Plaintiff hires a lawyer: Plaintiff hires a lawyer to enforce the judgment or continues to be repreĬ sented by a lawyer during the enforcement of judgment phase. 21 Plaintiff retains an enforcement agent to enforce the judgment: Plaintiff retains the services of a court enforcement officer such as a court bailiff or sheriff, or a private bailiff. * Plaintiff requests an enforcement order: Plaintiff applies to the court to obtain the enforcement order ('seal' on judgment). 22 Attachment of enforcement order to judgment: The judge attaches the enforcement order (‘seal’) to the judgment. * Delivery of enforcement order: The court's enforcement order is delivered to a court enforceĬ ment officer or a private bailiff. 23 Identification of Defendant's assets by court official or Defendant for purposes of enforcement: The judge, a court enforcement officer, a private bailiff or the Defendant himself identifies Defendant's movable assets for the purposes of enforcing the judgment through a sale of Defendant’s assets. 24 Contestation of selection of assets identified for sale: A party, Plaintiff or Defendant, which was not involved in the designation of the assets for attachment, contests the selection of assets for enforcement of judgment through a sale. 25 Attachment: Defendant’s movable goods are attached (physically or by registering, marking or separating assets). 26 Call for public auction: Judge calls a public auction by, for example, advertising or publication in the newspapers. 27 Sale through public auction: The Defendant’s movable property is sold at public auction. 28 Reimbursement of Plaintiff’s enforcement fees: Defendant reimburses Plaintiff's enforcement fees which Plaintiff had advanced previously. 29 Payment: Court orders that the proceeds of the public auction or the direct sale be delivered to Plaintiff. łŤ.3Ť!.4-3#"Ť(-Ť3'#Ť3.3+Ť-4, #1Ť.$Ť/1.!#"41#2ĎŤ'(2Ť23#/Ť#7(232Ť(-Ť3'#Ť#!.-.,8Ť 43Ť(2Ť-.3Ť1#!.1"#"Ť2Ť part of the 100 potential procedural steps identified in the Doing Business methodology. Note: The procedures for enforcing contracts are the same for all cities. Doing Business in South Africa 2015 Indicator details Enforcing contracts Trading across borders 128 DOING BUSINESS IN SOUTH AFRICA 2015 Enforcing contracts Procedures Time (days) Cost (% of claim) Municipality (Municipality seat) (number) Filing Judgment Enforcement Total time Attorney Court Enforcement Total cost Buffalo City (East London) 29 75 557 64 696 25.2 7.6 3.0 35.8 Cape Town (Cape Town) 29 31 438 76 545 22.9 7.6 3.0 33.5 Ekurhuleni (Germiston) 29 30 400 83 513 23.3 7.6 3.0 33.9 eThekwini (Durban) 29 33 408 80 521 20.0 7.6 3.0 30.6 Johannesburg (Johannesburg) 29 30 490 80 600 22.6 7.6 3.0 33.2 Mangaung (Bloemfontein) 29 30 360 83 473 18.8 7.6 3.0 29.4 Msunduzi (Pietermaritzburg) 29 33 353 83 469 19.7 7.6 3.0 30.3 Nelson Mandela Bay (Port Elizabeth) 29 35 496 80 611 19.8 7.6 3.0 30.4 Tshwane (Pretoria) 29 30 414 83 527 22.5 7.6 3.0 33.1 Trading across borders Cape Town Durban Ngqura Port Elizabeth Time Cost Time Cost Time Cost Time Cost (days) (US$) (days) (US$) (days) (US$) (days) (US$) Export documents Export 17 2,078 16 1,830 16 1,979 16 1,984 Balance of Payment (BOP) Form Document preparation 8 355 8 355 8 355 8 355 Bill of lading Commercial Invoice Inland transportation 4 1,300 2 1,100 3 1,200 3 1,200 Customs export declaration (SAD 500) and handling Customs 2 100 2 90 2 95 2 95 Packing List Port and terminal 3 323 4 285 3 330 3 334 handling Import documents Import 19 2,267 21 2,080 20 2,222 20 2,193 Balance of Payment (BOP) form Bill of lading Document preparation 7 405 7 405 7 405 7 405 Cargo release order Inland transportation and 4 1,300 3 1,100 4 1,200 4 1,200 Commercial invoice handling Customs 2 145 2 125 2 135 2 135 Customs import declaration (SAD 500) Port and terminal Packing list 6 417 9 450 7 482 7 453 handling Doing Business in South Africa 2015 Acknowledgments Doing Business in South Africa 2015 Salgado Otonel, William Owusu, Maria Contact details for local partners was produced by a team led by Trimor Camila Roberts and Anna Sukiasyan are available on the subnational Mici. The team comprised Caroline provided valuable assistance at various Doing Business website at http:// Frontigny, Julio Fuster, Madalina stages of the project. The outreach www.doingbusiness.org/contribu- Papahagi, Susanne Perard, Tommaso strategy was implemented by Hyun tors/subnational Rooms, Pilar Sanchez-Bella, Moussa Kyong Lee and Indira Chand in col- Traoré, Mariline Vieira, and Alessio laboration with Sub-Saharan Africa re- Zanelli. The study was prepared under gional communications team. The web the direction of Mierta Capaul. Asad page (http://www.doingbusiness.org/ Alam, David Bridgman, Augusto Lopez SouthAfrica) was developed by Kunal Claros, Saleem Karimjee, Catherine Patel, Vinod Vasudevan, and Hashim Masinde and David Sislen provided Zia. The report was edited by Djurdja guidance. Lazic and Gerald Quinn produced the layout. The team is grateful for valuable peer review comments provided by col- The study was requested by the leagues from across the World Bank National Treasury of the Republic Group. Zenaida Hernandez, Catriona of South Africa as part of the Cities Purfield and Hulya Ulku reviewed Support Programme (CSP)—a national the full text. Experts in each of the 6 program of investment and technical areas measured were consulted when assistance that aims at supporting drafting the individual chapters: Gavin the 8 South African metro areas to Adlington, Karim Belayachi, Reynaldo strengthen economic development Bench, Erica Bosio, Baria Nabil Daye, and growth. The CSP team comprised Marie-Lily Delion, Laura Diniz, Alejandro Roland Hunter (Economic Development Espinoza-Wang, Raluca Georgiana Component Lead) Subethri Naidoo Golumbeanu, Heike Gramckow, Ankur (Stakeholder and Communications Huria, Joyce Antone Ibrahim, Austin Specialist), Samantha Naidu Kilroy, Khrystyna Kushnir, Guo Li, (Programme Manager) and Shirley Numa de Magalhaes, Luiz Maurer, Robinson (Senior Technical Advisor). Eva Maria Melis, Frédéric Meunier, The South African Cities Network Nuria de Oca, Mikiko Imai Ollison, Gael (SACN) also participated in the project Raballand, Valentina Saltane, Periklis and its implementation through a team Saragiotis, Gunjan Sharma, Jayashree led by Geci Karuri Sebina (Programme Srinivasan and Victoria Stanley. Executive Manager). Frederic Bustelo, Kobina Daniel, Cécile The project was funded by the Ferro, Andres Baquero Franco, Carlos Government of the Republic of South Andres Guadarrama Gandara, Cemile Africa and the State Secretariat Hacibeyoglu, Austin Kilroy, Vera for Economic Affairs of Switzerland Lapshina, Mario Nascimento, Monique (SECO). Pelloux, Lynette Bonareri Osiemo, Pilar 130 DOING BUSINESS IN SOUTH AFRICA 2015 Data collection was carried out in col- laboration with the Wright Rose-Innes Inc. law firm (WRI), the South African Institute of Architects (SAIA), the Council for Scientific and Industrial Research (CSIR), and the Electrical Contractors’ Association of South Africa (ECASA). More than 400 accountants, business consultants, lawyers, conveyancers, engineers, architects, construction experts, electrical contractors, utility providers, sheriffs, freight forwarders, customs brokers, logistics companies and public officials contributed to the Doing Business in South Africa 2015 study. The team would like to express its special gratitude to the national and local government officials, members of the judiciary, and deed registry officials who participated in the project and who made valuable comments during the consultation and data-review period. The names of those wishing to be ac- knowledged are listed on the following pages. ACKNOWLEDGEMENTS 131 PRIVATE SECTOR Chris Waugh WAUGH ACCOUNTING SERVICES Tisetso Muwe CHEBO PELE LOGISTICS SUPPORT Tim Brown VENNS ATTORNEYS Florence Mabena ELECTRICAL CONTRACTORS ASSOCIATION CONTRIBUTORS Eliana De Camillis Clara da Cruz Almeida Allen Umraw Lucas Bowles BUF FALO CITY WRIGHT, ROSE-INNES INC. CLARA DA CRUZ ALMEIDA ARCHITECT CC Johan Riekert ELECTRICAL CONTRACTORS ASSOCIATION Mike Taberer Graeme Carrington Frans Nortje Mark Mfikoe WRIGHT, ROSE-INNES INC. COUNCIL FOR SCIENTIFIC & INDUSTRIAL NELSON MANDELA BAY ELECTRICAL CONTRACTORS ASSOCIATION C & C ELECTRICAL RESEARCH Paul Gerber Michael Weppelman Paul Rademan Tembe Mwemba WRIGHT, ROSE-INNES INC. Johan Swart BLG LOGISTICS SOUTH AFRICA ELECTRICAL CONTRACTORS ASSOCIATION CONTACT ELECTRICAL DEUTAIMEX INTERNATIONAL Dawid Bester Nicholas Sharn Ravi Morar Andrew Simon WRIGHT, ROSE-INNES INC. Thaniso Ramashala CA DU TOIT EASTERN CAPE (PTY) LTD. SOUTH AFRICAN BOARD OF SHERIFFS ELECTRONIQUE ELECTRICAL EVERGREEN AGENCY SOUTH AFRICA Roger Philip Anton Janse van Rensburg Richard Maddern Bongi Luthuli WRIGHT, ROSE-INNES INC. Simon Bird DAL AGENCY (PTY) LTD. SOUTH AFRICAN BOARD OF SHERIFFS GRAVETT SCHOEMAN INC. GAPP ARCHITECTS & URBAN DESIGNERS Graham Clarke Tamlyn Scheepers Bradley Sparg ETH EKWI NI Kabelo Sebati GRAHAM CLARKE ELECTRICAL SOUTH AFRICAN BOARD OF SHERIFFS RUSSELL INC. Jorge Moutinho GLOBAL REACH Fritz Troskie Vincent Nel Allen Clarke A1 MOUNTI ENTERPRISE TRADING Keshni Naidoo GREYVENSTEIN INC. SOUTH AFRICAN BOARD OF SHERIFFS SQUIRE SMITH & LAURIE INC. Kas Naidoo KUEHNE & NAGEL John Luke Collyer Zainab Abrahams Johan Christiaan Heunis BAL LOGISTICS CC T/A AFRICAN LOGISTICS SERVICES Duduzile Madi GREYVENSTEIN INC. SOUTH AFRICAN BOARD OF SHERIFFS SQUIRE SMITH & LAURIE INC. MEDITERRANEAN SHIPPING CO. (PTY) LTD. Warren Goslet (MSC) Sophia Lindeque Bryan Wallis Victoria Brittain BMS HILLCREST GREYVENSTEIN INC. SOUTH AFRICAN INSTITUTE OF ARCHITECTS SQUIRE SMITH & LAURIE INC. Heather Dodd Jerolene Yegambram SAVAGE & DODD ARCHITECTS Ryan Glegg Debbie Kirk CAPE TOWN IBHAYI FREIGHT SERVICES SOUTH AFRICAN INSTITUTE OF ARCHITECTS CFR FREIGHT SA (PTY) LTD. Stanley Ibe Robyne Smith M. C. Botha Penelope Sebe Francis Kumahor TAXPRACTICE ACCOUNTING SA (PTY) LTD. ARIAD JOUBERT GALPIN SEARLE SOUTH AFRICAN INSTITUTE OF ARCHITECTS FKK CONSULTING & CO. Kris Van Heerden Jaco Bergh Warren Parker Dorinda Angelica Tristan Tooms UTI BRAND ENGINEERING JOUBERT GALPIN SEARLE WRIGHT, ROSE-INNES INC. FORWARDING AFRICAN TRANSPORT SERVICES Mlungisi Msomi Kriel Herman Tim Hewitt-Coleman Christine Seger WISEMAN BUSINESS SOLUTIONS BRAND ENGINEERING NGONYAMA OKPANUM & ASSOCIATES GARLICKE & BOUSFIELD INC. Frederick van der Westhuysen MAN GAUN G Graeme Palmer Barry Masters BRINK DE BEER & POTGIETER INC. Wynand Flemming SERVICE ELECTRICAL GARLICKE & BOUSFIELD INC. Riëtte Nel BEZUIDENHOUTS INC. Graeme Phillips Gavin Shaw BRINK DE BEER & POTGIETER INC. Mathubesizwe Radebe SERVICE ELECTRICAL GARLICKE & BOUSFIELD INC. Yyvonne Rajdl BONANI CHARTERED ACCOUNTANTS INC. Jacqui Smith Lyle Knickelbein CFR FREIGHT SA (PTY) LTD. Lukas Fourie UTI GARLICKE & BOUSFIELD INC. Roann Gerber BURGER & FOURIE ARCHITECTS CC Patrick Forbes Natasha Haefele DC ELECTRICAL AFRICA CAPE    Jaco Cohen UTI GARLICKE & BOUSFIELD INC. Manley Glyn COHEN ADVANCED ELECTRICAL Rajen Jugdeo Wernich Gouws ELECTROGEM ELECTRICAL Gert Van Der Walt UTI I. C. MEER, KALLIDEEN & CO. Martin Vermeulen GP PROSTRAR ELECTRICAL HEROLD GIE ATTORNEYS Rajendra J. Kallideen TSHWAN E I. C. MEER, KALLIDEEN & CO. Barry Jones Gerhard Smit HONEY ATTORNEYS Barry Kok Pierre Beley 50 HZ ELECTRICAL MILLER BOSMAN LE ROUX HILL INC. Deon Rossouw ING JACKSON ARCHITECTS Grant Hill HONEY ATTORNEYS Faan Nel Lauren Kelso ARCA ARCHITECTS & DESIGNERS MILLER BOSMAN LE ROUX HILL INC. Pauli Du Toit KNIGHT TURNER T/A EVERSHEDS Nico Le Roux PHATSHOANE HENNEY INC. Gerrit Wassenaar Bruce Forrest ARCA ARCHITECTS & DESIGNERS MILLER BOSMAN LE ROUX HILL INC. Sharon De Lange MEUMANN WHITE ATTORNEYS Johan Greyling PHATSHOANE HENNEY INC. Charl F. Pretorius (Maredi) Nolen Patleson KWALATA SMITH TABATA BUCHANAN BOYES ATTORNEYS Mariska Fieberg NOLSIHI CONNECTION Ross Mc Donald RAMOTHELLO RAYNARD & TSOTETSI INC. André Germishuizen Rob Anderson MACINTOSH CROSS & FARQUHARSON STUDIOMAS ARCHITECTURE & URBAN ROB ANDERSON & ASSOCIATES    Madelane Gerber PLANNNING Bronwynne Botha ROODT ARCHITECTS Nashita Davids Joey Konan MACINTOSH CROSS & FARQUHARSON STEVELEC ELECTRICAL Sarel Le Roux UTI Johan Engelbrecht TRI LECTRO Rion Henning Julian Roman MKATEKO ELECTRICAL & EARTHING UTI TRADE OCEAN MSUNDUZI Sefu Sekgala Jason Hinrichsen Patrick Smith Kim Burnie NABLIE ACCOUNTANTS (PTY) LTD. WALKER SMITH ARCHITECTS BRIGHT LIGHTS ELECTRICAL Andri Williams EKURHULENI Thami Nkawanyana Jimmy Van Rooyen NEIL ESTERHUYSEN & ASSOCIATES INC.    Brandon Pandaran WE CAN BUSINESS ACCOUNTANTS (PTY) LTD. ELECTRO TECHNICAL AGENCIES Ronel Niemand EDISON POWER GAUTENG LTD. Cyril Dalitsu Ismail Cassimjee NEIL ESTERHUYSEN & ASSOCIATES INC.    Ma Labuschagne Neil Oberholzer ISMAIL CASSIMJEE ARCHITECTS FLICK ELECTRICAL OT HER Russell Ash Kobus Van Staaden JO H AN NES B U RG SBS ELECTRICAL Berenice Lue Marais JOUBERT SCHOLTZ INC. COUNCIL FOR SCIENTIFIC & INDUSTRIAL Alta Badenhorst Hugh Drummond RESEARCH Monica de Sousa 4PL TATHAM WILKES INC. MARTO LAFITTE & ASSOCIATES INC. Esbeth Van Dyk Muhammed Khan Jaco van der Merwe COUNCIL FOR SCIENTIFIC & INDUSTRIAL Rui Marto ANSANA LOGISTICS TATHAM WILKES INC. RESEARCH MARTO LAFITTE & ASSOCIATES INC. Cassie Potgieter Daniel Steenkamp Mathetha Mokoyama Theo Kleinhans BARLOWORLD LOGISTICS AFRICA TMJ COUNCIL FOR SCIENTIFIC & INDUSTRIAL MARTO LAFITTE & ASSOCIATES INC. Monica RESEARCH Venesen Reddy Roger De Sousa BELFREIGHT SHIPPING MANAGEMENT SERVICES TOMLINSON MNGUNI JAMES INC. Theo Stylianides QUAD AFRICA CONSULTING (PTY) LTD. Fikile Mcanyana COUNCIL FOR SCIENTIFIC & INDUSTRIAL Patrick Richard John Dewes RESEARCH BIZ-ASSIST BUSINESS MANAGEMENT VENNS ATTORNEYS 132 DOING BUSINESS IN SOUTH AFRICA 2015 PUBLIC SECTOR Gershwin Williams CITY OF CAPE TOWN Venus Cresswell DURBAN MAGISTRATES’ COURT Qondile Khedama MANGAUNG MUNICIPALITY TSHWAN E CONTRIBUTORS Hilary Joseph Nithiananda Govender Samantha Haddad Bruno Seabela CITY OF TSHWANE BUF FALO CITY CITY OF CAPE TOWN DURBAN SHERIFF’S OFFICE MANGAUNG MUNICIPALITY Garrin McKenzie Annemarie Fish Jaco van der Westhuizen Abdull Domingo Sejane Sempe CITY OF TSHWANE BUFFALO CITY MUNICIPALITY CITY OF CAPE TOWN ETHEKWINI MUNICIPALITY MANGAUNG MUNICIPALITY Isaac Lehobye George McDonald Jan Mogalodi Ajiu Maharaj Theuns van der Westhuizen CITY OF TSHWANE BUFFALO CITY MUNICIPALITY CITY OF CAPE TOWN ETHEKWINI MUNICIPALITY MANGAUNG MUNICIPALITY M. Modiehim John Volker Jessa Zoben Nato Govender Tilfred Mabuza CITY OF TSHWANE BUFFALO CITY MUNICIPALITY CITY OF CAPE TOWN ETHEKWINI MUNICIPALITY MANGAUNG MUNICIPALITY Makgorometje Makgata Malcolm Galvin Shaik Ahmed Parker Nkaniso Gumede Willie Loftus CITY OF TSHWANE BUFFALO CITY MUNICIPALITY CITY OF CAPE TOWN ETHEKWINI MUNICIPALITY MANGAUNG MUNICIPALITY Modiehi Molebatsi Patrick Lavery Susan Mosdell Nuthan Maharaj Leon Kritzinger CITY OF TSHWANE BUFFALO CITY MUNICIPALITY CITY OF CAPE TOWN ETHEKWINI MUNICIPALITY MANGAUNG MUNICIPALITY, CENTLEC Modise Maimane Riana Pretorius Tim Hadingham Randall Wagner Moipone Mokanyane CITY OF TSHWANE BUFFALO CITY MUNICIPALITY CITY OF CAPE TOWN ETHEKWINI MUNICIPALITY MANGAUNG MUNICIPALITY, CENTLEC Nivendra Mithoo Ruweida Naina Fezeka Ngalo Ravesha Govender MSUNDUZI CITY OF TSHWANE BUFFALO CITY MUNICIPALITY CITY OF CAPE TOWN, DEPARTMENT OF ETHEKWINI MUNICIPALITY LABOUR George Lebelo Nndwamato Tom Mutshidza Stewart Pooley Reggie Ntshingila MSUNDUZI MUNICIPALITY CITY OF TSHWANE Zuben Jessa ETHEKWINI MUNICIPALITY BUFFALO CITY MUNICIPALITY Sunday Mahlangu CITY OF CAPE TOWN, ECONOMIC Kass Thaver Zolile Vumazonke DEVELOPMENT DEPARTMENT Selvan Naidoo MSUNDUZI MUNICIPALITY CITY OF TSHWANE ETHEKWINI MUNICIPALITY BUFFALO CITY MUNICIPALITY Michael Schmidt Theunis Pretorius Lizwi Memela Albie Kotzee CITY OF CAPE TOWN, ELECTRICITY SERVICES Fatima Khan MSUNDUZI MUNICIPALITY CITY OF TSHWANE DEPARTMENT ETHEKWINI REAL ESTATE BUFFALO CITY MUNICIPALITY, CITY PLANNING Augustine Makgata DIVISION Narain singh Peter Jaeger Nithia Naidoo MSUNDUZI MUNICIPALITY CITY OF TSHWANE, CITY PLANNING DIVISION Haus Schluter CITY OF CAPE TOWN, ELECTRICITY SERVICES ETHEKWINI WATER & SANITATION DEPARTMENT Ray Ngcobo Jones Rustoff BUFFALO CITY MUNICIPALITY, CITY PLANNING Moshe Motlohi CITY OF TSHWANE, ENERGY & ELECTRICITY DIVISION MSUNDUZI MUNICIPALITY J. P. Dreyer TRANSNET PORT TERMINALS HEADQUARTERS DIVISION Erlin Moll DEPARTMENT OF RURAL DEVELOPMENT & Samson Gabelo LAND REFORM Nonku Mpanza Lindiwe Kwele BUFFALO CITY MUNICIPALITY, ELECTRICITY MSUNDUZI MUNICIPALITY TRANSNET PORT TERMINALS HEADQUARTERS CITY OF TSHWANE, OFFICE OF THE DEPUTY DEPARTMENT Kasavel Pillay CITY MANAGER Sibonelo Myeni Johann-Louw Badenhorst DEPARTMENT OF RURAL DEVELOPMENT & Willie Coetsee MSUNDUZI MUNICIPALITY LAND REFORM TRANSNET PORT TERMINALS HEADQUARTERS Myeza Msizi DEPARTMENT OF RURAL DEVELOPMENT & CITY OF TSHWANE, OFFICE OF THE DEPUTY LAND REFORM Sicelobuhle Nene V. M. Tango Moeletsi Tsautse MSUNDUZI MUNICIPALITY CITY MANAGER Adele Heidlmann DEPARTMENT OF RURAL DEVELOPMENT & Nhlanhla J. 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Gwangwa EKURHULENI MUNICIPALITY Queenie Ebrahhyi Shamah Kara-Ebrahim PRETORIA DEEDS OFFICE Amanda Tobias JOHANNESBURG MAGISTRATES’ COURT NELSON MANDELA BAY MUNICIPALITY CAPE TOWN SHERIFF’S OFFICE Itumeleng Nkoane Cylia Moloko EKURHULENI MUNICIPALITY Indran Adimoolum Llewellyn Sharp PRETORIA MAGISTRATES’ COURT Ncedile Ntsibantu JOHANNESBURG SHERIFF’S OFFICE PORT ELIZABETH SHERIFF’S OFFICE CAPE TOWN SHERIFF’S OFFICE Ken Sanpersad Martha Otto EKURHULENI MUNICIPALITY Marks Thapelo Mangaba Nomajwara Victoria Soga PRETORIA MAGISTRATES’ COURT Xolile Aron Ngesi JOHANNESBURG SHERIFF’S OFFICE PORT ELIZABETH SHERIFF’S OFFICE CAPE TOWN SHERIFF’S OFFICE Michael Swanepoel Mogamat Naseem Gasant EKURHULENI MUNICIPALITY MAN GAUN G David Goliath PRETORIA SHERIFF’S OFFICE Barry Gouws TRANSNET NATIONAL PORTS AUTHORITY CITY OF CAPE TOWN Phuti Moloto Esta Lekone Sabeir Ismail EKURHULENI MUNICIPALITY BLOEMFONTEIN MAGISTRATES’ COURT Margorie Makama PRETORIA SHERIFF’S OFFICE Carlo Vizzi TRANSNET NATIONAL PORTS AUTHORITY CITY OF CAPE TOWN Thifhelimbilu Mashapa Nombi Masiangwako Lufuno Tshikovhi EKURHULENI MUNICIPALITY BLOEMFONTEIN MAGISTRATES’ COURT Mpumi Dweba-Kwetana Cheryl Walters TRANSNET NATIONAL PORTS AUTHORITY OT HER CITY OF CAPE TOWN Adele Louw Zikhona Xabuza GERMISTON MAGISTRATES’ COURT BLOEMFONTEIN MAGISTRATES’ COURT Rajesh Dana Joey Mathekga Christo Steyn TRANSNET NATIONAL PORTS AUTHORITY COMPANIES & INTELLECTUAL PROPERTY CITY OF CAPE TOWN Anton Carel Greyling Celmarie Louw COMMISSION GERMISTON SHERIFF’S OFFICE MANGAUNG MUNICIPALITY Xolile Tatana Garreth Bloor Carlize Strydom TRANSNET NATIONAL PORTS AUTHORITY CITY OF CAPE TOWN Shirley Thoke Johannes Smith DEPARTMENT OF JUSTICE & CONSTITUTIONAL GERMISTON SHERIFF’S OFFICE MANGAUNG MUNICIPALITY Amelia Buchner DEVELOPMENT Gary Ross CITY OF CAPE TOWN Jorro Segabutla Kevin Dolphin Debbie Hendricks Lufuno Mmbadi MANGAUNG MUNICIPALITY DEPARTMENT OF JUSTICE & CONSTITUTIONAL Georges Felix ETH EKWI NI Fickerie Toyer DEVELOPMENT CITY OF CAPE TOWN Nico Fourie M. 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