City Index for Ease of Doing Business or maybe not

The City of Cape Town launched their renewed “ease of doing business Index” on Tuesday 9 May, in which the mayor calls it “an honest evaluation of the extent to which the City either constrains or enables businesses in Cape Town”. The stated goal is to become “the easiest place to do business on our continent.” However, the indicators chosen fall mainly in the category of “reducing red-tape”.

Whilst this initiative by the City is undoubtedly a great step forward in measuring and reporting on the City’s core services, the index fails to measure many of the most critical factors of a business environment which determines if it is an easy place for business to succeed or not. Crime, passenger mobility and freight transport efficiency are for instance excluded. These factors including load shedding, being identified as the Western Cape’s key impediments to business in the Western Cape through two studies conducted in 2022. 

The survey conducted by the Cape Chamber of Commerce and Industry in partnership with Industry sector organisations utilised the empirically proven Global Competitiveness Index parameters. It received 248 responses across sectors. The City also conducted a survey, with almost a hundred responses. Both surveys identify crime/safety, transport and reliable supply of energy and water as key factors. The City’s “Ease of doing business Index” however excludes these factors, which begs the question then: “How can the City become the easiest place to do business whilst these factors remain problems?”

In response to this question at the event, the Mayor responded by saying they chose to report only on the factors over which the city has direct control. Safety, transport and energy depend on other public institutions and/or alternatively private sector market responses. What is the responsibility of the City of Cape Town with regard these services provided by others within their jurisdiction, the external service providers which contribute to the success of the City business eco-system? They do not have control but certainly should have great influence? The economic-, social- and spatial- development roles of the City are clearly defined in the constitution. Yet these remain unmeasured by the Index. 
Choosing the easy-to-perform-on indicators relating mainly to the built environment are the wrong indicators for the label of “Ease of doing business”. “The easiest Municipality to do business with in Africa” may be a more appropriate label, if they will be chasing their chosen indicators. 

Jacques Moolman
President of the Cape Chamber of Commerce & Industry