An estimated 50 percent of small businesses have bank accounts while only one in six is registered with the Companies and Intellectual Property Commission (CIPC), CIPC commissioner Astrid Ludin told Business Report yesterday.
Ludin, who is absolutely determined to ensure the CIPC remains on its path of continuous improvement to offer a world class service, was responding to queries about how “cheap” FNB’s R125 charge for its new company registration service was.
If you add in the R500 or so that it is estimated the big banks charge each month for a business account then the R125 does not look particularly cheap. But as Ludin points out, 50 percent of small businesses have a bank account and are paying those charges anyway.
Although it was said in the nature of an aside, the fact that only one in six businesses is registered does support the argument that economic activity in South Africa is more robust than suggested by official statistics. It is likely the businesses that are not registered are extremely small.
On the issue of continuous improvement at the CIPC, most users of the system acknowledge evidence of this, but even Trade and Industry Minister Rob Davies agreed it was “necessary to be frank” and noted that “there are still a few challenges at the CIPC”.
Registering all the new memorandums of incorporation is one of the challenges, with the problems considerably aggravated by the 50 000 last-minute applications. There is also the need to improve the system of registering director changes. These changes currently take about 49 days against a target of 30 days.
One of the big unanswered questions was why FNB was the only big bank to take up the CIPC’s invitation to collaborate. Was this just a sign of how tech-savvy it is? Did the other banks even realise they had been invited to collaborate? Did they think the service would only appeal to very small potential clients? Whatever the reason, Davies said he hoped the other banks would follow FNB’s lead.
Medical scheme fraud
The Board of Healthcare Funders of Southern Africa (BHF) estimates that medical schemes lose R22 billion a year to fraud. Yesterday, during the BHF annual conference, actuaries estimated that medical fraud made up as much as 15 percent of medical schemes’ expenditure a year.
The Health Monitor Company, which probed fraud in the medical industry, found one neurologist in KwaZulu-Natal whose admissions were emergencies 98 percent of the time. The neurologist happened to charge 300 percent of schemes’ tariffs and, as emergency admissions fall under prescribed minimum benefits (PMBs), medical schemes could not say no. A dietician was seeing each beneficiary 50 to 70 times a month. Another doctor was billing for 56 hours a day, every day.
How did the medical schemes not smell fraud from a mile away?
The Health Monitor Company chief executive Christoff Raath, who investigated the fraud together with Barry Childs of Lighthouse Actuarial Consulting, explained that it was difficult to pick up fraudulent claims if the doctor claimed from different medical schemes.
Raath said the only way fraud could be detected in this case was if those schemes collaborated in verifying claims or if they belonged to the same administrator.
Administrator Medscheme found that some doctors were abusing the coding system, using certain codes in every case, whether they were applicable or not.
Simon Dreyer, a health-care actuary at Medscheme, said the scheme had implemented a system of provider profiling to combat fraud. When the administrator identified a provider that constantly charged much more than its peers, it would investigate the provider further. As a result, Medscheme had reclaimed R2.4 million from one orthopaedic surgeon.
The actuaries said the other problem was that the Health Professions Council of SA appeared to be acting very slowly against members who were investigated or proven to be committing fraud.
The rand was unlikely to rebound “any time soon” Trade and Industry Minister Rob Davies told reporters ahead of a two-day meeting of business executives from Brazil, Russia, India, China and South Africa in Sandton yesterday.
Reporting his comments, Bloomberg noted the currency, which lost 17 percent of its value against the dollar this year, had been the worst performer among 16 major currencies tracked by the news service, “after reaching 6.5686 in April 2011”.
Davies, who has always supported a weak rand policy, said the currency’s fall might exacerbate rising costs, but could boost the competitiveness of exports.
“The depreciation of the rand, in our estimation, presents a number of opportunities, both for exporters as well as for manufacturers that are competing against a surge of imports,” he said.
He once again urged manufacturers and exporters to “seize the opportunities and try to take advantage of the new climate that is now being created. The rand is now more competitively priced, albeit in a context of volatility.”
However, cost pressures are creeping in. Even the Manufacturing Circle – a supporter of a weak rand – has acknowledged as much in recent months. A weakening currency gives producers a temporary competitive edge but the impact of higher prices has a domino effect throughout the economy, particularly because of the rising cost of petrol. And sooner rather than later workers demand to be compensated for the rising prices.
South African manufacturers generally rely heavily on imported inputs, so they immediately face rising prices.
A stable rand would be ideal – but no country can tame currency markets. Only China and the US stand a fighting chance.
Edited by Banele Ginindza. With contributions by Ann Crotty, Londiwe Buthelezi and Ethel Hazelhurst