Business has a clear incentive to find a solution, writes BLSA CEO. 

A lack of critical skills is holding back the South African economy, and we are not solving the problem as fast as we should be. There is a backlog of 74 000 applications for all kinds of visas at the Department of Home Affairs according to an official quoted by Bloomberg last month, many of those in the scarce skills category.

This despite concerted efforts by government, led by the Operation Vulindlela programme, to drive implementation of policy that will substantially improve access to scarce skills visas.

The backlog is staggering, a number in line with the headcount of some of South Africa’s biggest companies. If those skills were to suddenly be working in our economy, the impact would be significant.

The fact that companies can’t fill the positions means they can’t invest and expand. Expansion would enable much further employment, more tax to be generated, and the overall business environment to be greatly improved. The presidency has estimated that one additional job is created for every skilled post that is filled.

I have been told anecdotally by companies that service has improved from the Home Affairs Department, but the backlog remains a problem to get on top of.

I have highlighted what poor visa policy does to business in the past and the good work that has been done under OV to overhaul the policy. The presidency has said access to visas is the second biggest constraint on the economy after loadshedding. The new policies include the introduction of a trusted employer scheme that will allow certain companies to fast-track applications. Home Affairs said in April that it would have the scheme in place in three months.

There has certainly been progress, with application forms published in October. However, to date no company is yet benefiting from the scheme and there does not appear to be a clear timeline for when they will. Home Affairs has also missed deadlines for other visa reforms including remote working visas to enable so-called “digital nomads” to work from South Africa and visas for founders of start-ups that choose to launch their companies in South Africa.

I appreciate that some policy reforms can be challenging, requiring legislative amendments and changes to regulations in multiple domains. But not all are so difficult �` remote workers, for example, can be changed simply by revising the immigration regulations, a relatively straightforward process.

But even when improved policy outcomes are delivered, the backlog will still be a problem. It appears to be fundamentally administrative in that Home Affairs simply does not have the capacity to process the applications. That needs a long-term fix that must be made by the department, with appropriate resourcing to manage the load. But there is clearly a need for a short-term stopgap to get on top of long-outstanding applications.

Business could help. The private sector has extensive administrative capacity that could be drawn on to process the backlog. While the procedures to do so would need to be determined, and staff capacity will need to be built through some training, the backlog could be resolved in a matter of months.

The right technology could also be brought in to improve processing, given that Home Affair’s computers work at roughly one-sixtieth the speed of those in most banks.

In much the way that business has assisted government with technical skills to resolve infrastructure breakdowns ranging from sewerage treatment plants through to electricity stations, the visas backlog could be tackled through a partnership between business and government. It is certainly a possibility worth exploring.

Business has a clear incentive to find a solution. The inability to bring in foreign skills risks pushing many companies out of South Africa entirely. We have long marketed ourselves as a “gateway to Africa”, attracting companies to set up their regional headquarters here.

Yet many companies who have done so now encounter extreme frustration in bringing in the skills they need to operate. They would have no such problem had they opted instead to set up in Dubai or Mauritius. OV says that applications for similar visas in Kenya take three months, while in Nigeria it is two.

Analysis by OV suggests that about 900 000 South Africans emigrated in 2020. Many of those were skilled, so freeing up the ability to attract foreign skills is very important to support the economy. The backlog represents applications made through an arduous process that includes police clearance certificates from every country that applicants have previously worked in.

About half of the applications that Home Affairs does process are rejected. Countless more are never made in the first place because potential applicants are discouraged by the bureaucracy. Unsurprisingly, given the delays and difficulty in making an application, the numbers have been declining, with about 3,000 scarce skills applications in 2021 compared to 7 000 in 2017. The policy overhaul proposed by OV urgently needs to be delivered.

The visa chaos is a clear example of good policy thinking failing to be implemented. Business is willing to work with government to get to the outcomes that would leave everyone better off.

The function of business in economics is to contribute production of goods and services to society and the employment of labour for which it is reasonably taxed by the state.

The function of the state is to use those funds and the funds from personal taxes and other taxes like VAT etc to the benefit of the citizens in the form of infrastructure, security, health and education. 

The function of the ANC seems to be to deploy their inept members in state departments to steal whatever they can. 

When business has to be deflected from its main function to support the function of the state, the economy slides into being unable to compete globally and the economy fails.

Says his department is a scapegoat. 

South Africa’s minister of Home Affairs dismissed criticism that his department is causing a skills crisis in the country by failing to process work-permit applications and said it’s becoming a “scapegoat” for the failures of business. 

Aaron Motsoaledi said there’s no backlog of critical-skills applications and said his department is working expeditiously to process requests in the pipeline. 

A report published earlier this year, commissioned by the South African presidency, said the lengthy delays in processing work visas are hampering growth and deterring investment. It said a lack of skills is the second-biggest threat to the economy after an energy crisis that sees the imposition of power cuts on an almost daily basis. 

“I am starting to believe that when businessmen are failing to step up to the pedal and improve the economy, the scapegoat is Home Affairs,” Motsoaledi said in an interview on eNCA television Monday. “We do everything in our power” to help businesses, he said. 

While South Africa takes 48 weeks or more to process an application Kenya takes 12 and Nigeria eight, the presidency said in the report. 

“A lack of critical skills is holding back the South African economy,” Business Leadership South Africa Chief Executive Officer Busi Mavuso said in a column published by Moneyweb on Monday. “The fact that companies can’t fill the positions means they can’t invest and expand.” BLSA represents the biggest companies operating in the country. 

AECI, an explosives and chemical maker, earlier this month said that Holger Riemensperger, a German national announced as group chief executive in February effective from May 1, has yet to get all the paperwork from various South African authorities to allow him to apply for a work visa. Riemensperger is running the Johannesburg-based company, which gets more than half of its revenue from its South African base, from Germany.

Direct investment liabilities in the country’s balance of payments have been slowing in the last two years. 

China is struggling in its attempt to lure foreigners back as data shows more direct investment flowing out of the country than coming in, suggesting companies may be diversifying their supply chains to reduce risks.

Direct investment liabilities in the country’s balance of payments have been slowing in the last two years. After hitting a near-peak value of more than $101 billion in the first quarter of 2022, the gauge has weakened nearly every quarter since. It fell $11.8 billion in the July-to-September period, marking the first contraction since records started in 1998.

“It’s concerning to see net outflows where China’s doing its best at the moment to try and open certainly the manufacturing sector to new inflows,” said Robert Carnell, regional head of research for Asia-Pacific at ING Groep NV. “Maybe this is the beginning of a sign that people are just increasingly looking at alternatives to China for investment.”

The Chinese government has embarked on a big push in recent months to lure foreign investment back to the country. The Internet regulator met with executives from dozens of international firms in August to ease concerns about new data rules, while the government has also pledged to offer overseas companies better tax treatment and make it easier for them to obtain visas.

But Beijing’s pledges have rung hollow for some firms, with foreign business groups decrying “promise fatigue” amid skepticism about whether meaningful policy support is forthcoming. They also have incentive to repatriate earnings overseas because of the wide gap in interest rates between China and the US, which may be pushing them to seek higher returns elsewhere.

The FDI outflows are adding pressure on the onshore yuan, which has hit the weakest level since 2007 earlier this year. China’s benchmark 10-year government bond yield is trading at 191 basis points below that of comparable US Treasuries, versus an average premium of about 100 basis points over the past decade.

“Decoupling” or “derisking” from China is an important reason for the declining FDI data reported by the State Administration of Foreign Exchange, according to Louis Kuijs, chief economist for Asia Pacific at S&P Global Ratings. Concerns about geopolitics and US-China relations were cited as major reasons for foreign corporate pessimism in a survey published in September by the American Chamber of Commerce in Shanghai.

Companies have cited various countries in the region as destinations for their supply chain shifts. Japan, India and Vietnam were floated as “top destinations gaining more attraction” in a spring survey of companies by UBS Group AG. A March AmCham report pointed to developing Asia and the US as places where members were considering moving capacity to from China.

Widespread Consequences

The lack of investment among global firms in China may have far-reaching effects on the world’s second-largest economy, especially as it tries counter US curbs on access to advanced technology.

Aside from geopolitical risks, companies had also been pulling back on investment in China last year as the country rolled out pandemic restrictions. While those curbs have been removed, firms are still contending with other challenges from rising manufacturing costs in China and regulatory hurdles as Beijing scrutinises activity at foreign corporations due to national security concerns.

“Some of the most damaging things have been the abrupt regulatory changes that have taken place,” said Carnell, pointing to this year’s anti-espionage campaign, which resulted in some firms having their offices raided by local authorities. “Once you damage the sort of perception of the business environment, it’s quite difficult to restore trust. I think it will take some time.”

Foreign companies make up less than 3% of the total number of corporations in China, but contribute to 40% of its trade, more than 16% of tax revenue and almost 10% of urban employment, state media has reported. They’ve also been key to China’s technological development, with foreign investment in the country’s high-tech industry growing at double-digit rates on average since 2012, according to the official Xinhua News Agency.

“A decline in trade and investment links with advanced economies will be a particularly significant headwind for a catching up economy such as China, weighing on productivity growth and technological progress,” Kuijs said.

Limited optimism

There are some reasons for optimism in the coming weeks and months. President Joe Biden is set to meet with his Chinese counterpart Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco later this month, which may help stabilize strained bilateral ties.

It would be helpful if increased communication yielded some “more stability and clarity on the geopolitical front,” Kuijs said, though he added it is unlikely the US will meaningfully change its policy stance.

Some economists also argue that FDI will stabilize once the China-US yield differential narrows. They also point to data on actually utilized FDI published by the Ministry of Commerce, which holds up better the SAFE data: Those figures show FDI fell 8.4% in the first nine months of this year from the same time period in 2022, to 920 billion yuan.

“I think things are not as bad as they seem from the SAFE data, otherwise policy tightening for China’s capital account management would be witnessed,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc.

In any case, China still needs to convince investors that they are welcome in the country.

“The more that it can offer a stable, conducive policy environment, the better it would be for FDI,” Kuijs said. “That includes minimizing the impact of national security-related measures on the economy and sentiment.”

Department of International Relations and Cooperation head of public diplomacy Clayson Monyela said the embassy in Germany had a functional visa system, email, telephone, and printers. 

• South Africa`s embassies across the world are struggling with bandwidth and other ICT challenges.

• The Department of International Relations and Cooperation has upgraded several systems, but in some cases, challenges still need to be solved.

• The department`s Clayson Monyela says visas are issued manually when systems are down.

South Africa`s diplomatic mission in Lisbon, Portugal, has laptops and computers that are not compatible with their old infrastructure, and despite the technical challenges, opted not to issue handwritten visas.

In June, the Portfolio Committee on International Relations and Cooperation conducted a fact-finding oversight visit on the status of the vacant state-owned properties under the management of South Africa`s embassies in Germany and Portugal.

Last Friday, a debate on the matter was held during a mini plenary in the National Assembly.

According to a report compiled by the committee, the mission reported generally, the department`s network and ICT infrastructure were old, slow, and impacted negatively on the overall mission performance.

`There was a period when the mission went for four months without connectivity in 2020. 

The report read:

It was said that the department invested a lot of money on ICT, and although the mission has recently completed the installation of new desktops and laptops and allocated all transferred officials with mobile phones, there were still challenges with the network and some of the critical applications are not fully functional.

One of the main issues was the need for better internet facilities.

`The communication of the department and that of the missions continues to be highly exposed due to the use of private wifi.

`It was argued that the tools of trade were bought before the new infrastructure could be installed. 

`As a result, the challenge is the laptops and computers are not compatible with the old infrastructure system that is still on the premises.

`The problem was with the issuance of visas, so the mission decided that rather than issue handwritten visas, they kept the old infrastructure, especially as the new system does not read commands for printing,` the report read.

Last week, News24 reported diplomatic staff at South Africa`s mission in Germany were issuing handwritten visas because printers were faulty, telephone lines were not working, and officials used private routers to connect to wifi.

Germany is South Africa`s third-largest trading partner.

Department of International Relations and Cooperation head of public diplomacy Clayson Monyela said the embassy in Germany had a functional visa system, email, telephone, and printers.

`Around the world, countries who have embassies overseas experience technical challenges with their networks. 

`A temporary solution is the manual issuance of visas to ensure a continuation of services and once fixed, we revert to the normal system. It is not uncommon,` he added.

Regarding the embassy in Lisbon, Monyela said the visa system, emails and telephones were also working fine.

He added the reason the committee found system failures was that South African embassies around the world have historical challenges with low bandwidth.

Monyela said these issues have since been resolved.

`System upgrades are being done, but there were delays in certain countries with the system. 

`Several departments play a role at the embassies, like the DTIC [Department of Trade Industry and Competition], home affairs and defence. With visas, the authority lies with home affairs,` he added.

Meanwhile, the committee also visited a state-owned property in Funchal, Portugal.

The mission was first informed of the disposal of the property in Funchal through a memo from the acting chief financial officer dated 12 October 2021.

`It was reported that the lease evaluation of the vacant property was carried out by the H&LP Consulting [evaluators] on 24 March 2022 with a cost of 1 525 euros. The value of the property was pitched at 246 000 euros.

`The mission reported having spent 17 615.88 euros since 2020 to date for the general upkeep of the property in Funchal. 

`The expenditure was on garden maintenance, municipal services, cleaning and security, property valuation, and the disposal advertisement,` the report said.

South African Ambassador to Portugal Mmamokwena Gaoretelelwe told the committee to circumvent the impact of ICT on the telephone systems, the mission acquired a satellite wifi and would look for a fibre network.

`The mission is serviced by the London ICT hub. The transition has taken long, the mission only completed the installation of tools of trade two weeks before the oversight visit, and that process affected the telephone network,` the report read.

Gauteng Premier Panyaza Lesufi is leading the ANC`s push to restrict the employment of foreign nationals in the province. 

Melinda Stuurman

• The Gauteng premier is leading the ANC`s push to restrict the employment of foreign nationals in the province as the youth unemployment crisis seems to have defeated the ANC. 

• Panyaza Lesufi and ANC provincial secretary TK Nciza said the time had come for local citizens to be given priority in employment by private businesses. 

• Immigration experts have warned against this political rhetoric, saying it was dangerous and was only used as an excuse to mask the failures of the ANC governance.

Gauteng Premier Panyaza Lesufi wants to restrict the number of foreign nationals employed by businesses in Gauteng to put a dent in worrying unemployment figures. 

Lesufi and Gauteng ANC provincial secretary TK Nciza proposed the plan to restrict how many foreign nationals can be employed, saying it was time for local citizens to be given priority in the country`s economic hub. 

“We are saying there must be a quota on employing locals. Everybody sits and looks to the government for employment. We are calling on the private sector to start employing locals, and we must agree on a quota. We must have a quota, and we will start in Gauteng. It is time. 

`You go to a restaurant, and you hardly come across a South African. I was impressed [by] one restaurant in Durban [where] everyone was South African. We have [a] serious issue of unemployment, and the youth are not working. We are not saying people must be xenophobic, we are saying let`s have a quota and let our people be employed in their own country,` Nciza said on Thursday at the ANC Gauteng press briefing. 

Immigration experts have warned that this political rhetoric so close to elections threatens foreign nationals. 

They said the ANC was relying on right-wing populist messaging to lure support ahead of elections in a context where the party`s track record in governance had failed to produce a strong economy that could enable employment. 

But the ANC provincial leaders dug in, saying South African businesses should employ South Africans. 

`We have a private sector that is not coming to the party. We are calling upon them to start employing South Africans and let`s agree on a quota, and we will engage ...,` Nciza said. 

The rhetoric to target foreign nationals comes months ahead of crucial elections for the ANC, where the party faces losing control of Gauteng. 

It narrowly held onto the province in 2019, and election experts have warned it may not be able to win a majority in 2024. 

University of Johannesburg`s Professor Trevor Ngwane said policies that aimed to restrict the employment of foreigners would likely affect desperate citizens from South Africa`s neighbouring countries of Zimbabwe, Mozambique and Lesotho. 

`The divide-and-rule tactics target our SADC neighbours and goes against President Cyril Ramaphosa`s efforts to create and encourage a free-zone movement around the SADC region.  

`This is the same right-wing, xenophobic sentiment that we have seen around the world in populist speeches. The ANC has failed to create jobs as a ruling party, and now it is trying to find scapegoats, playing to the audience, and fanning sentiments of division and hate against our neighbours,` Ngwane said. 

Sharon Ekambaram, head of the refugee and migrants rights programme at Lawyers for Human Rights, shared similar sentiments, saying that targeting foreigners was an effort to scapegoat the failures of governance. 

`The evidence does not support this rhetoric. It is clear that this is scapegoating by the government after failing to ensure basic service delivery to the people.  

`There is no data about the number of migrants that live in Gauteng, let alone in South Africa. We have no capacity to collect this data, provinces are even struggling to budget for basic services because they have no knowledge of how many live in various provinces,` Ekambaram said. 

`They do not have this data, and instead, they blame foreign nationals for every failure even in the provision of health care.”

Ekambaram said Lawyers for Human Rights had successfully pointed out the unconstitutionality of a Township Development Bill presented to the Gauteng legislature by the ANC. 

The legislation would have barred foreign nationals from establishing businesses in the province`s townships. The Gauteng government has since amended that section of the bill. 

The concerns about foreign nationals in Gauteng have lingered mainly on the issue of illegal mining. 

When launching the ANC`s manifesto review, Ramaphosa said the government had launched an initiative to identify illegal immigrants.

`We continue to have foreign nationals who do not have documents. A programme has been started to examine who among foreign nationals does not have documents, and a number of them are being arrested.

Ramaphosa said:

Those who do not have permits to be in South Africa better know now that South Africans want this country to be occupied by people who have documents or who are citizens of our country.

The rise in the unemployment rate among young people has added to the woes faced by Lesufi and the ANC as the party aims to remain in charge of the province.

Lesufi conducted a massive employment drive in the province to show that the government was doing something about youth unemployment. 

He promised to advertise thousands of jobs this year until the end of the ANC term in government. 

When he launched his job recruitment programme for 8 000 jobs, 1.2 million young people applied. 

He said, in July, that the figures showed how grave the unemployment crisis was.