SA’s new visa rules could be ‘disastrous’ for local economy – October 21 2014, – Business Day

SA’s recently gazetted immigration rules could have disastrous consequences for the economy. To remain competitive in a global marketplace, we need to do everything we can to encourage investment and attract much-needed skills to our country.

SA is a developing, emerging economy. By introducing such onerous new visa regulations we are behaving like a First World economy, and are turning away opportunities to create wealth and grow our economy.

SA is not unique in wanting to tighten immigration laws and reduce the number of undesirable people entering the country. The UK and Switzerland, for example, have made it much harder to obtain work and tourist visas. But these are First World countries.

We should be following the examples of other developing economies such as Mauritius, Rwanda and Chile. They are encouraging the entry of skilled leadership to help grow their economies.

The new visa regime is also contrary to international business trends. Company boardrooms and executive teams globally are increasingly more diverse.

In the UK, for example, a third of chief executives and chairmen of FTSE 100 companies are non-British. In SA, most of our top retailers are run by nonlocals. This is to be expected given the nature of globalisation and the impact of the digital era.

As SA-based multinationals expand into the rest of Africa to diversify their risk and to capitalise on the continent’s growth story more skilled foreigners are needed at board level. Corporates now want board members and executives from African states in which they have partnerships.

In a nutshell, we are living in a globalised world and we need to develop a more international flavour on our boards and at senior executive level to compete in Africa and abroad. We should remove entry barriers, not create more of them.

The new regulations are, quite frankly, mystifying.

To realise the vision of its National Development Plan to build a society offering better economic opportunities for all, government should be doing everything possible to make SA an attractive investment destination.

This includes removing unnecessary red tape to make it easy to do business here as well as to bring in the required executive skills.

But the new visa regulations are doing the opposite.

The Department of Home Affairs appears to be sending a message that SA has no interest in creating a business-friendly environment.

Uncertainty is the biggest issue for many multinationals and corporations seeking to fill top positions with the skills they need.

A general work visa is ordinarily required, but with the new rules this could now take more than six months to process — without any guarantee it will be issued.

Corporates now need to approach the Department of Labour, which has to do its own search for suitable candidates locally first. A recommendation will then be issued to the Department of Home Affairs, which will then process the application. All this has to happen from a candidate’s home country.

The whole process is cumbersome, confusing and uncertain.

Corporations will have legal recourse but most likely they will move their head offices to countries with less severe restrictions. Already multinationals are moving their administrative functions, for example, to countries such as Mauritius and Dubai for tax reasons and because it is easier to do business there.

We seem to have forgotten that we are an emerging market economy and our biggest focus should be on drawing in foreign direct investment, which includes executive skills, to create much-needed employment to grow our economy.

We need to remember that we have competition. There are other emerging markets to which investors will look if we do not take definitive steps to attract and keep them here. India is a good example. That country’s economy faltered because it was too closed and bureaucratic. Whereas India is now doing all it can to turn this around and draw skills and investment into that country, we seem to be closing doors instead of opening them.

Ideology seems to be trumping common sense.

• Robertson is CEO of Odgers Berndtson Sub-Saharan Africa