South Africa is turning away wealthy investors

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Update: Also published by the Mail & Guardian

Recent news reports indicate South Africa is facing a weakening economy, high unemployment levels and a worrying skills exodus.

However, the country is also not doing enough to encourage investors to come to South Africa.

This is according to Stefanie de Saude Darbandi of De Saude Attorneys, who said that the country’s taxpayer base is effectively being eroded as South Africans qualified to build the economy leave the country in droves.

“While South Africa loses skills, business capital and jobs, other countries are gaining – partly thanks to their initiatives to offer ‘golden visas’ in which applicants must invest heavily into their destination country and are then given residency or citizenship in return,” she said.

De Saude Darbandi said that these golden/investor visas – offered by over 20 countries worldwide – require investments from around R2 million to around R20 million and are reported to have grossed over €25 billion in Europe alone during the past 10 years.

“Applicants are often required to invest in both property and some form of national development fund for a minimum period of time, bringing significant revenues into the destination country.

“In addition to their financial investment, new residents or citizens also bring with them spending power, skills, tax revenues and the probable creation of jobs in their new home country,” she said.

“Surprisingly, South Africa – severely challenged in its efforts to raise the necessary revenues to improve public service delivery – not only does not tap into this potential pot of gold, it actively closes its borders to foreigners keen to bring investment, skills and business capability into the country.”

Investment issues

De Saude Darbandi said that South Africa appears to regard all foreigners with suspicion, making visa, residency and citizenship applications a complex nightmare that actively deters foreigners – despite the fact that many foreigners would like to invest and live in South Africa.

She added that her firm receives numerous enquiries from wealthy individuals looking to purchase property for leisure use, and from skilled individuals wanting to work or open businesses in South Africa.

“While it may seem surprising to South Africans currently wanting to emigrate, many foreigners see South Africa’s weather, tourist facilities, game reserves and general quality of life as very attractive draw cards,” she said.

“For each foreigner investing in a holiday home, wine farm or safari lodge, and for every skilled entrepreneur setting up shop in South Africa, we see a multitude of jobs being created and much-needed tax revenue generated.”

Yet South Africa persists in locking down its borders, De Saude Darbandi said.

“The Department of Home Affairs’ processes are beset with delays,” she said. “Its officials enforce internal policies over the laws of the country, and wrongful application refusals result in lengthy and expensive legal battles for applicants.

“Compounding these challenges, the critical skills list looks set to omit designations such as corporate general managers and financial investment advisors, excluding foreign applicants highly skilled in the fields of business development and finance.”