Property Newsletter | October 2021
Transformation in new business
Registrations 200% up on 2000
Burst of small, micro businesses registering in recent years
Nearly two thirds of companies registered in 2019, 2020 and 2021 are measured as having “high transformation” compared to just 18% of companies which registered in 2000.
The number of companies measured as having no transformation has dropped from 80% in 2000 to 35% in 2021.
The highest level of transformation in active companies is seen (in the graph below) in Very Large (50%), Very Small, No VAT (59%) and Micro, No VAT (62%).
Transformation by size of company
As the transformation scorecard has been getting exponentially better, there has been a flurry of Micro and Small Non-VAT registered companies entering the economy in the last three years.
According to the Companies Intellectual Property Commission (CIPC), some seven million companies have been registered to date, but just 35% (around 2.5 million) are active with only 500 000 being VAT registered. Some 1.8 million companies are in the process of being deregistered, which takes place automatically should the company fail to file annual returns for two consecutive years.
Current Business Landscape 2021
Interestingly, the number of registrations of companies in 2019, 2020 and 2021 jumped significantly. The majority are Micro No VAT and Very Small No VAT registered businesses.
Total number of registrations by year
The surge in non-VAT registered companies is mirrored in the declining numbers of newly VAT registered companies. It could be that retrenchments and company closures are pushing people to open their own businesses, and government’s stated goal to using the economic disruption exacerbated by Covid-19 to accelerate economic transformation could also help explain both the escalating registrations and higher level of entities meeting transformation criteria.
The data puts into perspective the growth of Very Small, No VAT and Micro, No VAT – with each category accounting for 38% of active companies in their segments compared to the other categories.
To compensate for the effect of the two-year active leeway, the second column on the right demonstrates how many of these companies are still active after three years, and it is evident the mix changes, especially for the Micro, No VAT-registered companies, which tend not to stay active.
Registration year
Nearly two thirds of companies registered in 2019, 2020 and 2021 are measured as having “high transformation” compared to just 18% of those companies registered in around 2000. The number of companies measured as having no transformation has dropped from 80% in 2000 to 35% in 2021.
Directorships
Of the total active (VAT registered) companies registered in the last 10 years, the vast majority have one or two directors, continuing a trend which has been consistent since 2004, as the graph below indicates. Companies with one, two or three directors in fact make up 90% of the total in 2021.
Age of active companies
The graph above shows the total number, per province, of all VAT-registered companies since 2010. The graph again confirms the economic dominance of Gauteng, Western Cape and KwaZulu-Natal.
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