Companies Commission in disarray: new registrations slow to a trickle

The Companies and Intellectual Property Commission (CIPC) is in disarray. Despite the new Companies Act and its associated regulations, which were designed to streamline the process of company registration, the Commission managed to process only 196 new registrations in June 2011 - equivalent to 7% of the 2 738 new registrations processed in the same month last year.

These figures came to light during the Portfolio Committee's oversight visit to the Commission at the Department of Trade & Industry's (DTI's) campus in Pretoria this past week. The visit revealed just how badly the DTI is handling the registration and renewal of South African companies. 

Companies are the building blocks of our economy. If we are failing to register new companies, or process company returns at the required rates, then we are stifling economic growth before it begins, and impeding the creation of new jobs.

In total, the Commission managed only 2 476 new registrations in the first two-and-a-half months of its existence. In the same period last year its predecessor, the notoriously dysfunctional CIPRO, completed 6 120 new registrations. The Commission also acknowledged to the committee that it has a backlog of 50 000 transactions, more than half of which are unprocessed name reservations. 

Many of the problems seem to arise from the fact that the Commission's call centre is grossly insufficient for its needs. During the month of May the centre received 66 000 calls, but 47 500 (7 out of 10 calls) were not answered.  The DTI claims that they are short of 30 call centre agents, but that they wouldn't have space for new agents on their campus. This is absurd given the rate of youth unemployment in South Africa and the ease with which the DTI could engage space to facilitate call centre capacity anywhere in the country.

Listening to the troubles of the CIPC, one is constantly struck that its major functions, such as document and call centre management, technology design and the integration of web-interfaces with backend databases, are similar to those performed every day with minimal fuss by hundreds of private companies. The private sector has to be central in finding a solution for the CIPC's woes.

Some officials at the Commission seem open to this approach, but claim that overly burdensome procurement systems stand in their way. This cannot be tolerated. If there is a delay in contracting out services, then stop-gap measures must be put in place to prevent the backlog worsening. These could include calling for temporary assistance from the private sector, renewing the secondment arrangement with the South African Institute of Chartered Accountants (which recently withdrew its 18 secondees), establishing similar arrangements with other institutions, or re-assigning internal resources.

In addition, while the DTI has acknowledged that the Commission needs a new IT system, it is simply unacceptable that their website is often not able to handle the simplest task, such as checking an existing company name. As well as fixing the basic operations, the Commission should urgently implement a system to allow for online submission of supporting documentation to free up valuable resources.

The Commission has also blamed inefficiencies on shortages of basic items such as print toner. Blame for this can only be laid at management's door. The Democratic Alliance (DA) believes that new Companies Commissioner Ms Astrid Ludin is capable of overseeing the turnaround of the institution, but she urgently needs Ministerial intervention to remove the blockages in her path. In addition, the 47 vacancies at the Commission need to be filled as soon as possible, and Ms Ludin needs to ensure that she has a management team capable of leading the reform of the institution.

Ultimately, the Minister needs to declare a state of emergency at the Commission. The DTI currently has a two-year road map to effect a turn-around, but South Africa cannot wait that long for the crisis in company registrations to be resolved. I will be writing to Minister Rob Davies to request that he personally intervenes to accelerate the two-year road map for the turnaround of the Companies Commission.

(Data distributed by the DTI following the oversight visit can be downloaded here.)

Statement issued by Tim Harris MP, DA Shadow Minister of Trade and Industry, July 24 2011

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