Civil Engineering March 2022 | Vol 30 No 2

Civil Engineering March 2022 9 Le t ter from the ed i tor A ddressing the nation, Ramaphosa noted that, “The key task of government is to create the conditions that will enable the private sector – both big and small – to emerge, to grow, to access new markets, to create new products, and to hire more employees.” He went on to say that government is in the process of reviewing the Business Act (71 of 1991), along with other legisla- tion that affects SMMEs, to reduce the regulatory burden on informal businesses. A dedicated unit is also being set up in The Presidency to improve the business environment for companies of all sizes by reducing red tape. “There are too many regulations in this country that are unduly complicated, costly and difficult to comply with. This prevents companies from growing and creating jobs,” said Ramaphosa. He added, “The red tape team will identify priority reforms for the year ahead, including mechanisms to ensure government departments pay suppliers within the required 30 days. The team will also work with other departments and agencies to unblock specific obstacles to investment and business growth. It will sup- port current initiatives to simplify processes relating to property registration, cross-border trade and construction permits.” EASE OF DOING BUSINESS Ramaphosa’s acknowledgement of the regulatory challenges facing South African businesses was welcomed by the private sector. Despite substantial improvements since 2015, South Africa only ranks 84 th out of 190 countries in the World Bank’s latest Doing Business 2020 report. South Africa scored just 67 out of 100 points and achieved poor rankings in several areas including starting a business (139 out of 190), getting electricity (114 out of 190), and trading across borders (145 out of 190). Structural inefficiencies and red tape have long been lamented as major stumbling blocks, and South Africa could learn a lesson from Rwanda when it comes to ease of doing business. Rwanda remains the second easiest place to do business in Africa (after Mauritius) and ranked 38 th globally in the World Bank Doing Business 2020 report. The country dropped nine po- sitions from 29 th last year because of a change in the World Bank’s methodology, but has nonetheless made significant improvements since it ranked 143 rd in 2009. In fact, Rwanda was named “world’s top reformer” in the Doing Business 2010 report – the first time an African country ever received the title. The improvement in Rwanda’s rankings follows an intense focus on cutting corruption and encouraging entrepreneurship by improving and reforming regulatory quality to create incen- tives for doing business. In doing so it has been able to shift its labour force from a relatively large informal economy to the formal economy. It now takes just four days to start a business in Rwanda and there is no minimum capital requirement. The World Bank lists some of the positive changes made over the last few years (among many others) as: Q Q Rwanda made starting a business easier by exempting newly- formed small and medium enterprises from paying the trading licence tax for their first two years of operation. Q Q Rwanda made dealing with construction permits faster by reducing the time to obtain a water and sewage connection. Q Q Rwanda improved the reliability of power supply by upgrading its power grid infrastructure. Q Q Rwanda reduced the time required to export and import by implementing the Single Customs Territory, risk-based inspections, and online certificates. Q Q Rwanda made enforcing contracts easier by issuing new rules of civil procedure which limit adjournments to unforeseen and exceptional circumstances and establish a simplified procedure for small claims. Q Q Rwanda strengthened minority investor protections by making it easier to sue directors, clarifying ownership and control structures and requiring greater corporate transparency. Q Q Rwanda made starting a business easier by improving the online registration one-stop shop and streamlining post- registration procedures. It is clear that Rwanda is doing something right, and if President Ramaphosa is serious about improving South Africa’s ease of doing business, it might be worth studying how a country like Rwanda has transformed its business environment. Danielle Petterson Editor: Civil Engineering danielle@saice.org.za A lesson in business reform When President Cyril Ramaphosa delivered his latest State of the Nation Address, he acknowledged a long- standing need to clear bureaucratic obstacles and facilitate private enterprise. “There are too many regulations in this country that are unduly complicated, costly and difficult to comply with. This prevents companies from growing and creating jobs.”