New visa reforms could boost South Africa's economy by 1.2%

Hailed as an evolution in South Africa’s immigration policies, the new regulations to attract skilled and remote workers are a shot in the arm for the country’s economy.

Gazetted on Wednesday by Home Affairs Minister Leon Schreiber, the new regulations not only offer certainty on remote work visas but also introduce general work visas and a new points-based system for critical skills, which promise to boost GDP growth by 1.2%, with every additional skill creating seven new jobs for South Africans.

Schreiber announced the new regulations last month at the RMB Morgan Stanley Investor Conference, where he unveiled initiatives to grow tourism, investment, the economy and job creation.

Economic case

Citing independent research commissioned by the SA Reserve Bank and  the International Food Policy Research Institute, Schreiber told the conference that South Africa’s annual growth rate could triple by attracting 11,000 highly skilled individuals, while increasing tourist arrivals by 10% would boost annual GDP growth by 0.6%.

To quantify the potential gains, the researchers showed that just a 1% increase in tertiary-educated employees, primarily driven by skilled immigration, could boost GDP by more than 1.2% and overall economic welfare by the same amount.



Lower-skilled workers benefit significantly, with employment gains exceeding 1.25%. Tax revenues would increase by more than 1%, which adds up to around R21.55-billion (based on SARS’ net collections of R1.741-trillion, announced in March).

By laying out the welcome mat for these highly skilled and experienced professionals, the country gets greater bang for its buck because their wages are likely to surpass the average for tertiary-educated South Africans.

For example, if the average highly skilled and experienced immigrant earned three times the average tertiary wage in South Africa, then only about 11,000 migrants would be required to generate the above outcomes, which represents 0.33% of the skilled labour force, 0.07% of the total labour force and 0.02% of the population.

Much more open immigration policies for highly skilled labour appear to offer “high upsides with near-zero investment requirements as well as limited downsides”, notes the report.

“Highly skilled and experienced immigrants will spend money on housing, food, services and so forth. Substantial positive multiplier effects are essentially guaranteed. And their magnitude can be enhanced by policies that augment the share of total earnings of highly skilled migrants that are spent in South Africa as opposed to remitted. Encouraging highly skilled migrants to come with their families is one good example.”

New broom

Barely six months ago, Schreiber’s predecessor, Aaron Motsoaledi, was widely criticised for his hashed digital nomad visa regulations, which were panned as not being internationally competitive, for forcing applicants to jump through hoops to stay here, and for flouting the constitutionally required public participation process.

They were also identical to the draft published in February, turning a deaf ear to substantial private-sector contributions.

Two days later, on 9 April, Motsoaledi was forced to withdraw the Second Amendment of the Immigration Regulations after criticism at the National Economic Development and Labour Council, which questioned why they were published a day before the closing date for public comments. Motsoaledi blamed it on poor advice.

This was the second official correction to the document: the first was on 2 April when he had to correct the date of his signature to 2024, not 2023.

Motsoaledi also claimed in the regulations gazetted on 28 March that he was publishing the amendments after consultation with the (non-existent) Immigration Advisory Board.

At the time, Andreas Krensel, a partner at IBN Immigration Solutions, questioned whether the regulations were valid because they were published within the public participation process.

“The [Department of Home Affairs] had offered the public a chance to comment on the proposed changes but then ignored its own deadline and went ahead with publication a day before the period for public comment was to end, which most certainly is not procedure, and shows that public comment was not taken into consideration…”

Key points of Schreiber’s new regulations:

• The minimum income requirement for a remote-working foreigner is R650,976 per annum — double the median income in the formal sector — which is considered sufficient for living in South Africa while earning a salary from abroad. Additional points are awarded for salaries above R976,000.


• Foreigners from countries with double taxation agreements do not need to register with SARS — unless they are present in South Africa for more than 183 days within a 12-month period.


• Foreigners from countries that don’t have double taxation agreements must register with SARS for tax.


• A points-based system, applicable to general and critical skills workers, with a 100-point threshold that considers qualifications, work experience, salary offer, local language skills and offer of employment.


• Applicants for these work visas must meet all other prescribed requirements, including police clearance certificates, proof of accommodation, return flights and medical reports.


• The new system for both work and remote working is effective immediately and ready to start taking applications.

Nods of approval

The regulations published this week have been met with widespread support because they position South Africa as an attractive destination for remote work and tourism, potentially increasing demand and improving service delivery in sectors like healthcare and infrastructure.

Frank Blackmore, the lead economist at KPMG, said the visa regime was “finally fit for purpose”, as it aligned with SA’s growth targets and industrial policy. Designed to attract skills from any market, including those with higher wage rates, the reforms are likely to stimulate productive functions in South Africa.

These changes are necessary to address skills gaps caused by emigration and policies like BEE and quota legislation that had created skills gaps.

The new points-based system targets specific sectors and high-earning roles to avoid competition with local unemployed workers. Blackmore said while the changes would not immediately boost GDP, they could have long-term benefits by enabling projects and investments that required specialist skills.

“Say Tesla wants to build a factory in South Africa. This will allow a company like Tesla to invest in certain labour and skills to set up a production plant within South Africa. And over time, international staff can be phased and become local. Investment would not happen if that were not possible. A lot of these opportunities, specifically at the high-end, Fourth Industrial Revolution-type phase, are not going to happen in South Africa to the degree in which they could if we don’t have the skills available.”

In a LinkedIn commentary, Krensel hailed the new points-based system for work visas as an “evolution in the country’s immigration policies”.

Similar to systems used by Canada, Australia and the UK, the points-based system offers clear criteria and measurable requirements, he said, which reduced confusion for applicants and employers and made the process more efficient. The system also recognises a wider range of skills and experiences, ensuring that those who can contribute most to South Africa’s economy are prioritised.

Tourism Business Council of South Africa CEO Tshifhiwa Tshivhengwa said the simplification of the visa application process, with more relevant and streamlined criteria, should be applauded.

“This positions us as a more competitive destination by making travel easier, which will attract more tourists to South Africa. It also emphasises the importance of collaboration between government and the private sector for the benefit of the South African economy.

“The tourism sector has long worked alongside government departments, including Home Affairs, to push for the visa reforms we see today.”

President Cyril Ramaphosa also welcomesed "the significant reforms to South Africa’s visa regime".

gazetted today, Wednesday 9 October 2024, as a key step towards attracting international skills and investment, growing tourism and creating jobs.

He said Schreiber, has gazetted reforms which constitute another success under Operation Vulindlela, a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic growth".

Ramaphosa said the reforms look to achieve more rapid and inclusive growth and create jobs "by removing the constraints which have held our economy back in the past".

Ramaphosa said: “The opportunities unlocked by our new system are a passport to faster economic growth and to welcoming more people around the world to our beautiful country.

“Many more reforms are in process with the aim of us achieving more rapid, inclusive and sustainable economic growth, which is the top priority of the Government of National Unity.” DM