EXECUTIVE AUTHORITY STATEMENT

Minister for Tourism

In the financial year 2020/21, the tourism sector operated mostly under travel restrictions imposed in varying degrees in various countries of the world to curb the spread of the Covid-19 pandemic. The evolution of the pandemic has seen the virus spread fluctuating between multiple peaks and troughs resulting in the tightening and easing of travel restrictions over time. According to the United Nations World Tourism Organisation (UNWTO) report on restrictions, as of 1 February 2021, 32% of all destinations worldwide are completely closed for international tourism and 34% are partially closed, while 2% have lifted all COVID-19 related travel restrictions.

As a result of these travel restrictions the UNWTO expects international arrivals to have declined by 70% to 75% for the whole of 2020. In this case, global tourism will have returned to levels of 30 years ago, with 1 billion fewer arrivals and a loss of some US$ 1.1 trillion in international tourism receipts. This drop in tourism could result in an economic loss of US$ 2 trillion in world GDP.

Locally, the sector has not been spared from the devastation of the pandemic. According to Statistics South Africa, for December 2020 foreign arrivals decreased by 82.1%, from 1.5 million arrivals in December 2019 to 279,539 in December 2020. It was also reported that while 163,335 tourists came from Europe in December 2019, only 26,880 arrived from Europe in December 2020. Regionally, 772,945 visitors came from other African countries in December 2019, dropping to 161,358 in December last year. From March until December 2020, because of the travel restrictions, there was a significant drop of inbound international travellers which translates into a huge loss of tourism revenue for the financial year 2020/21.

The focus of the financial year 2021/2022, will be on the implementation of the Tourism Recovery Plan (TRP) in alignment with our country’s Economic Reconstruction and Recovery Plan. The TRP outlines a set of strategic interventions together with enablers which, if implemented, will ensure business continuity and restore growth in the tourism sector.

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Employment and Labour minister Thulas Nxesi says that his department has been working closely with the International Labour Organisation in the commissioning and development of a new national labour migration policy.

Answering in a written parliamentary Q&A around e-hailing services in South Africa, Nxesi said that one of the recommendations emerging from a range of proposals is the concept of introducing complete prohibitions or quotas on the number of foreign nationals that can be employed in any sector.

This may include e-hailing transport, he said.

“This will be in line with Section 36 of our Constitution to justify fair discrimination against foreign nationals as part of our efforts to address local high unemployment levels and to uphold existing minimum labour standards.

“I will release the draft policy and the proposed amendments for public discussion and consultation with the social partners as soon as internal government processes are completed.”

Other sectors being looked at

In his budget speech at the end of April, Nxesi said that the policy will regulate and limit sectors on the number of people employers can hire from other countries especially in sectors that do not require sophisticated skills.

“We have signed binding international agreements and will ensure that our policy does not conflict with those agreements. In short, whatever we do, will be in line with the Constitution,” he said.

Briefing parliament in March, Nxesi said that the policy would primarily deal with low-skilled workers, with the government expecting a ‘big debate’ given the tensions around foreigners in the country.

Nxesi said that South African employers deliberately prefer foreign workers as a source of cheap labour, as they are willing to take ‘anything’ for wages.

The minister said that a number of interventions were being considered as part of the policy, but confirmed that his department was considering the introduction of quotas that would specify how many foreign workers could be hired in a given sector.

Based on previous comments by Nxesi, the sectors which are likely to be directed impacted by the labour migration policy include:

• The hospitality sector;
• Restaurants;
• Security;
• Farming and agriculture.

Specific jobs such as restaurant waiters and truck drivers are also likely to come under scrutiny as they have previously been identified by the department as having a high concentration of foreign workers.

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Home Affairs minister Aaron Motsoaledi says that his department has concluded its e-visa pilot process and now plans to officially roll the system out later this year.

Responding in a written parliamentary Q&A, Motsoaledi said that the rollout is envisaged to commence in the second quarter of the 2021/2022 financial year for short-term visitor’s visa applications.

He added that the government is in process of setting up an e-visa adjudication hub and that staff for the e-visa adjudication hub are currently in their final stages of training.

The rollout of more e-visas is expected to be beneficial for both tourists and for the local economy as the system significantly reduces the amount of administrative time and requirements required for visitors to enter South Africa.

The entire e-visa application process takes place online and takes around 20 minutes, provided the applicant has all of the necessary supporting documents ready for submission.

Should one of the required documents be missing, applicants can resume the process exactly where they left off at a later date.

As international travel starts to recover in the wake of Covid-19, Home Affairs has previously said that it intends to rollout the e-visa system and service to visitors from China, India, Nigeria, Kenya and 10 other countries.

The full list of countries which could receive e-visas, subject to approval, includes:

• Cameroon
• DRC
• Egypt
• Ethiopia
• Mexico
• Uganda
• Saudi Arabia
• Iran
• Philippines
• Pakistan.

Restrictions 

The rollout of e-visas could be hampered by the travel restrictions currently imposed on South Africa by a number of key countries.

Major travel markets have kept restrictions on South Africa in place over fears of possible variant transmission – including the UK and large parts of the European Union.

While the US has lowered restrictions in recent weeks, the country’s health authorities still advise against unnecessary travel to South Africa.

A mapping tool developed by travel website Skyscanner shows that as of 23 June, South Africa has 83 ‘major restrictions’ from other countries in place. This is up from around 60 major restrictions before the third Covid wave hit.

These countries have suspended travel, may be closed to entry, or entry may only be possible if you are a citizen/meet strict entrance requirements.

By comparison, there are currently 29 moderate restrictions in place for South Africa, where travel is possible, but only if travellers meet certain entry requirements which can include taking Covid-19 tests.

www.samigration.com

Legacy systems pose real challenges to small business, often because they’ve outlived their usefulness and no longer provide a worthwhile return on investment (ROI). Hence, they’re best upgraded or replaced.

These systems can include hardware and software which may have serviced a specific technology purpose some time ago, but now may have been enhanced with newer features.

Of course, technologies evolve so quickly that it doesn’t take long for current technology investments to become outdated. (Picture black bananas where if you leave them for too long, they start spoiling).

The real catch for all organisations is that over time, older technology becomes less efficient and delivers a lower return on investment (ROI) than equivalent or more capable new technology.

Keeping outdated technology in service can raise costs and reduce productivity.

Here are some possible reasons why:

• Maintenance – Limited budgets for most SMBs means old technology is expensive to maintain and tying up cash into this seems counterproductive.
• Compliance – Compliance failures can lead to civil or criminal penalties and punishing fines.
• Security – New technologies frequently include security enhancements that can’t be added to older technology.
• Compatibility issues – Legacy systems are often incompatible with newer systems. This locks them out of new technologies and can pose high (if not impassable) hurdles to adopting and integrating cloud-based services and solutions.

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In its 2020 budget, National Treasury announced changes to the tax and exchange control of individuals, particularly those who underwent financial emigration.

Not only did the South African Reserve Bank remove themselves from the emigration process, but it repealed restrictions placed on non-residents, says Lovemore Ndlovu, financial emigration specialist at Tax Consulting SA.

“The aim of this decision was to ease the limitations on emigrants and to make transacting easier for them while in transition,” he said.

“They were instantly free to invest, borrow, lend and transact like any other South African. In the review, it states that ‘under the new system, natural person emigrants and natural person residents will be treated identically’.

Out with the old, in with the new

Before 1 March 2021, if you changed your tax residency status to non-resident, your bank accounts were converted and designated as non-resident bank accounts and were referred to as emigrant-blocked accounts.

This was done for exchange control purposes, to track funds leaving South Africa and monitor all cross-border capital transfers, Ndlovu said.

Once declared non-residents, emigrants had limited access to online banking, could only hold credit associated to an asset and could only engage with one banking institution.

“Post-March 2021, we were expecting to see the emigrant blocked accounts fall away, as SARB was no longer a part of the process,” Ndlovu said.

“Now under the new regime, when an individual ceases their tax residency by financially emigrating, it has become a requirement for them to notify their banking institutions of their tax residency status change.

“Thereon the relevant bank accounts associated will change status name and the accounts will be converted and designated as non-resident.”

The left-hand doesn’t know what the right hand is doing

In a circular on 21 May 2021, the SARB said that it is up to each authorised dealer (bank) to control non-residents and the movement of their funds for exchange control purposes.

As a result, some banks are still restricting non-resident accounts for tax non-residents – others say they do not apply any restrictions, and a select few are working on new systems to simplify the process for their clients, said Ndlovu.

 “To maintain control over the flow of money movement in and out of the country, SARB instructed banks to monitor non-resident accounts and to submit a report on activity in each account,” he said.

“The only sure way to see every single activity that goes on in an account, is to ‘block’ it. There are banks who are looking for ways to get around this hurdle, but they have all reverted to ‘blocking’ non-resident accounts to adhere to SARB’s instruction.”

 While banks are trying not to inconvenience clients, the blocking process makes it impossible not to, said Ndlovu.

“Because the onus is on the authorised dealer, they will rather protect themselves by monitoring and potentially resorting to blocking non-resident accounts.

“To summarise, the process went from ‘blocked’ non-resident accounts – to resident accounts with financial freedom – back to ‘blocked’ non-resident bank accounts. This directly contrasts the reasoning behind the changes to financial emigration because it does not treat residents and non-residents identically,” he said.

What has actually changed?

Ndlovu said that the main restriction that falls away is the requirement of emigrants to bank with one banking institution.

They can bank with multiple institutions and choose the bank that offers the least constraints on their non-resident account, which helps little if all non-resident accounts are to be ‘blocked’, he said.

“National Treasury’s promise that residents and emigrants will be able to transact identically, has not been maintained,” he said.

www.samigtration.com