Foreign investors and entrepreneurs face overprotective red tape and imbalanced arbitrary immigration policies
As the world has watched US President Donald Trump’s “America First” administration in action, from trade tariffs to the termination of 90% of USAID foreign aid contracts, an introspective assessment of state-determined priorities surrounding what constitutes the “national interest” has been reignited.
Due to its intrinsic mutating nature, a clear definition of what constitutes the national interest has always been uncertain and elusive. From an international relations perspective, Trump’s agenda reflects a razor-sharp application of the so-called “realist school” (also known as realpolitik), whereby national interest in the implementation of a state’s foreign policy “is designed to influence the behaviour of other states for its own benefit, and it can exercise this influence through co-operation, coercion or conflict”.
Immigration policies follow similar self-interest patterns in protecting and promoting the national interest from both a domestic and foreign policy perspective, and are mostly driven by economic and demographic factors. The preservation of citizens’ jobs, boosting employment and stimulating the economy are often key factors that determine immigration policies, and SA’s stringent immigration regime reflects these protective traits. In light of this multilayered nature, co-operation and alignment between different governmental departments are key to an unambiguous application and pursuit of the national interest.
SA’s struggle with high unemployment, one of the highest globally at 33% at the end of 2024, has been a constant reminder of a stagnant economy since 2007. A recent World Bank Group report concluded that “over the past decade, SA has struggled to expand its economy, growing by only 0.7% per year” and “targeted policy actions — fostering competitive markets and strengthening institutions — can spur recovery and lay the foundation for sustainable growth and shared prosperity in SA”.
Unsurprisingly, in early 2025 the IMF ranked SA as the most difficult place to do business in the world, putting us last among the 49 countries measured. Nonetheless, from an immigration perspective, for decades SA has attracted the interest of foreign investors and entrepreneurs from all over the world who share the vision of a young and dynamic country with great opportunities.
Big multinational corporations and BEE discouragement aside, individual private investments into SMEs in SA have been fuelling the economy behind the scenes. According to the Banking Association SA, SMEs make up 91% of formalised businesses, provide employment to about 60% of the labour force and account for about 34% of GDP. Looking at foreign investment and catalysts to economic growth, it most certainly is not all about size.
Desirable and undesirable businesses
However, over the past few years foreign individual investors and entrepreneurs who are willing to, or have already, personally invested in SA are faced with overprotective red tape and subject to imbalanced arbitrary immigration policies surrounding the evasive definition of “national interest”, beyond the application of the legislative scheme and objectives of the SA Immigration Act.
In terms of the act, business visa applicants require committing to a minimum foreign direct investment into an SA business of no less than R5m, and the investment must relate to a business that is deemed to be ” feasible”, in the SA “national interest” and will employ South Africans to account for no less than 60% of its permanent staff component.
The department of trade, industry & competition is mandated to assess the investment and the business, and to issue — where applicable — a letter of recommendation towards the visa or permanent residence application. Published in the Government Gazette is a list of businesses that are deemed to be undesirable, which cannot support a business visa or permanent residence application.
In the same gazette can be found the list of business sectors that qualify for a financial or capital contribution reduction. In brief, these are the highly desirable business investments, which, for immigration purposes, are to be promoted regardless of the R5m investment and automatically deemed to be promoting the national interest. Among these highly desirable sectors are agro-processing, renewable energy and infrastructure development.
While this may seem straightforward and reasonable on paper, the reality is that the process has for more than a decade been blatantly hijacked by a disconnect of policy guidelines. The department of trade, industry & competition’s mandate for these purposes remains void of essential guidelines and definitions to function outside its own mission statement and the provisions of the Immigration Act and its regulations.
This is particularly so regarding the standard to be applied towards the “national interest” evaluation. Interdepartmental collaboration between international relations & co-operation, home affairs and trade, industry & competition is all too often overlooked, causing a practical implementation deficit on the ground.
Arbitrary policies and procedural misdirection
Once an investment of R5m has been established and the business determined not to be undesirable, and all legal and employment undertakings met, what other interest is to be assessed and what constitutes “national interest” still remains a vague and arbitrary exercise.
The Immigration Act is unequivocal in relation to its empowering provisions. The home affairs minister is responsible for the revision and publication of undesirable businesses, and the identification of highly desirable businesses that are in the national interest, irrespective of the value of the investment. The department’s director-general is responsible for approving a reduction in, or waiving entirely, the financial or capital contribution, where the business investment falls within the list of desirable businesses.
Applications for business visas and for permanent residence in terms of the act are addressed to the director-general for adjudication, and where the trade, industry & competition department recommendation stands with a lesser investment, it should be within the scope of those applications that the director-general has the direct authority “to reduce or waive” the investment by granting the visa or permit.
Yet applications submitted to the department towards the recommendation of reduced investments in these highly desirable sectors, when approved, instruct the applicant to apply for a ministerial waiver for the financial reduction — in contradiction to the provisions of the act, injecting a misguided, capricious step in what should be a two-step process.
This stance is not merely the result of an oversight, but has been adopted on the advice of the legal services team with the departments of trade, industry & competition and home affairs. In 2022, the government said it was “working to effect changes in terms of the Immigration Act and its regulations ... however, this is a long-term process”.
To date, progress on these issues has ground to a halt, mirroring SA’s economic growth, blocking much-needed foreign investment.
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