South Africa has officially joined the “Remote Work Visitor Visa” as a means of enhancing economic growth by attracting highly skilled international labourers.
Introduction
The new “Remote Work Visitor Visa” was introduced by South Africa’s Department of Home Affairs in October 2024; this new law permits foreign nationals to live in the country while working remotely for an overseas employer, effectively functioning as a “digital nomad” visa. This is a “Points-Based System” which is a transparent framework for evaluating work visa applications based on various factors to attract skilled workers through a merit-based approach.[1]
South Africa has joined other African nations like Cape Verde, Seychelles, Mauritius, and Namibia in attracting ‘digital nomads. In fact, South Africa has already been a destination for remote workers, with the Covid-19 pandemic having accelerated remote work, allowing workers from economically strong countries to migrate and work internationally – especially in Cape Town, which has been voted as the most popular remote work destination according to a survey by Remote.io.[2]
This innovation will enable high-earning international employees to live in South Africa while continuing to work for an organisation based outside the country while
spending money on domestically produced goods and services boosts the local economy. The application process has been designed to be a seamless points system where applicants are awarded points according to several factors, including pay, work experience, education level, and language ability. This transparent method strives to expedite the work visa application process and lessen corruption while attracting a larger pool of highly qualified professionals anticipated to be drawn to South Africa.
History of digital nomads and their contribution to economic development.
The history of digital nomads began with the emergence of specialised online communities (like Nomad List), the creation of coworking spaces, and conference series; digital nomadism gained recognition as a mainstream phenomenon in but 2000s; it initially emerged as a more personal phenomenon. Around that time, software developers began to be able to work remotely for IT companies, a significant book was released , and online markets for freelancing we advanced.[3]
The phrase the digital nomad has used the event in the 1990s. However, technology was not yet as advanced; some even believe that the backpacking movement broke ground for digital nomadism. [4] In South Africa, tourist would extend their holidays while working in cities like Cape Town, Johannesburg and Pretoria. However, there was no official legislation that allowed for this innovation, thus VISA application process was strenuous for most foreigners. Moreover, there was no framework that would be used to ensure the growth of the local economy.
It is important to draw examples of countries that have had this kind of Visa and how the economy grew. Countries like Portugal offer a digital nomad visa, allowing remote workers from outside the EU or EEA to live and work in the country for up to 12 months. Applicants must demonstrate a monthly income four times the Portuguese minimum wage, which is currently €760. This has culminated in massive growth in the economy and for local businesses to thrive.[5] As a result of this, Portugal has become a popular destination for digital nomads due to its affordable living costs and vibrant culture. However, the influx of remote workers has contributed to rising housing costs, leading to tensions with residents.
Another country that has executed this remote Visa is Japan, which introduced a visa authorizing remote workers to stay in the country for up to six months. This initiative has contributed to diversifying Japan’s workforce and stimulating the economy by attracting foreign professionals.[6] Most recently, then United Arab Emirates (Dubai) Virtual Working Program permits foreign nationals employed abroad to reside and work remotely in the city for up to one year, with a minimum salary requirement of $3,500 per month. This program has positioned Dubai as a hub for international professionals, enhancing its global business environment and increasing tourist attractions.[7]
In general, these initiatives have been effective in enticing remote workers, boosting regional economies, and promoting cross-cultural interactions. However, issues including increasing living expenses and integrating into local communities have surfaced, necessitating well-rounded policy approaches to guarantee benefits for both host nations and digital nomads.
These initiatives have varied degrees of success; Nomads in nations like Mauritius and Cape Verde have responded favourably. Through the introduction of varied professions into communities, these visas not only strengthen local economies but also enhance the cultural fabric.
The South African Remote Work Visa
This Remote working visa has been introduced under the Visitor’s Visa category in terms of section 11(2) of the Immigration Act 13 of 2002. This means that foreign nationals wishing to apply for a visitor’s visa must meet the following requirements to qualify:
- the foreign national must be an employee of a foreign employer.
- such foreigners must earn a gross income of at least ZAR 650 976 per annum (roughly about R55 000 per month), and this must be proven by the latest three months of bank statements.
- if the foreigner is a tax resident in a country that the Republic has an agreement in force with for the prevention of or relief from double taxation under section 108(2) of the Income Tax Act, 1962, such foreigner will be required to register with the South African Revenue Service (SARS) if he is present in the Republic for longer than an aggregate period of 183 days during any 12-months period; and;
- if the foreigner is not a tax resident in a country referred to in sub-paragraph (ii), such foreigner will be required to register with the SARS.
- The visa is designed for short-to-medium-term stays, offering limited pathways to long-term residency or citizenship.
- No Automatic Extension: Renewing or extending the visa may require reapplication and meeting updated criteria
It is important to note that foreign national who holds a Remote Work visitor’s visa is not allowed to take up employment in South Africa and cannot change their visa status while in South Africa unless the exceptional circumstances set out in the Immigration Regulations apply.
Benefits for economic growth
The benefits include revenue generation, the majority of digital nomads contribute to the local economy through spending on accommodation, dining, transportation, and recreational activities. This can be attributed to most of them arriving in the country with a form of employment, not relying on public expenditure, and the economic power and higher disposable income associated with being a digital nomad from a country with a strong exchange rate.[8]
Secondly, the rise in demand for coworking spaces, cafes, and services for digital nomads has led to job growth in the hospitality, tourism, and technology sectors. forecasts Cape Town’s direct tourism contribution to GDP at approximately R70 billion rands by 2026. This influx of skilled individuals boosts productivity, fosters innovation, and creates new employment opportunities for the South African economy.[9]
Furthermore, it boosts the entrepreneurial ecosystem that mirrors Silicon Valley’s success, fostering innovation and billion-dollar businesses. The digital nomad community incubates startups, freelancers, and consulting firms, bolstering the country’s tech reputation. Major cities host global summits like Sentech Africa Tech Week and the Africa Tech Festival, drawing attendees worldwide.[10]
In conclusion, there is no denying the benefits of the digital nomad movement. By increasing local spending and drawing in investors and business owners, they make a substantial contribution to our nation’s GDP. As a result, tax income rises, allowing the government to fight crime, upgrade infrastructure, and deal with other internal problems.
The possible setbacks for the local economy
This initiative has the potential to have a revolutionary economic impact by boosting local businesses, real estate, and tourism. However, due in part to the drastic increase in international remote workers, rental rates have skyrocketed in popular remote work destinations like Cape Town. According to the most recent State of Cape Town Central City Report, the cost of one-bedroom flats has climbed by 28% annually.
According to Forbes Africa, the surge of international remote workers in cities like Cape Town and Johannesburg has contributed to a 28% yearly increase in one-bedroom apartments. Exorbitant prices, a little rental supply, and growing utility and amenity costs are causes for concern in a housing market that was already difficult for locals.[11]
Rent in Cape Town is particularly more affordable for digital nomads, making it an attractive destination for those seeking cost-effective living arrangements. Another aspect of concern is the cost of living in a city like Cape Town can be considerably high for locals. The estimated monthly expenses for a single person and a family of four are R10 880 and R 38 050, respectively, excluding rent.[12] Furthermore, as major cities attract digital nomads, living expenses rise, potentially leading to gentrification. Gentrification involves profit-driven shifts in socioeconomic and racial demographics in low-income neighbourhoods.[13]
Importantly, this trend isn’t exclusive to Cape Town; destinations like Bali, New York, and London have faced similar challenges. Additionally, as more people visit well-known locations like the V&A Waterfront, costs increase, which affects local enterprises. In order to survive, many people take out long-term loans, which increases their personal debt.
In conclusion, the introduction of digital nomad visas by South Africa represents a forward-thinking approach to economic growth, recognising the value of integrating global talent into the local economy. However, the effects of digital nomads on South Africa’s local economy are complex, and it is necessary to carefully weigh the advantages and disadvantages of their presence in the nation.
Yolokazi Mfuto is a communications strategist and writes in her personal capacity.
References
[1] https://www.dha.gov.za/index.php/notices/1824-remote-work-visa-requirements-9-oct-2024
[2] https://remote.io./
[3] https://www.researchgate.net/publication/329182172_The_History_of_Digital_Nomadism
[4] https://globalresidenceindex.com/portugal-digital-nomad-visa/https://www.researchgate.net/publication/348594929_The_Emergence_of_the_Digital_Nomad_A_Review_and_Analysis_of_the_Opportunities_and_Risks_of_Digital_Nomadism
[5] https://globalresidenceindex.com/portugal-digital-nomad-visa/
[6] https://www.bbc.com/travel/article/20240215-japan-is-finally-releasing-a-digital-nomad-visa-heres-what-you-need-to-know
[7] https://resources.envoyglobal.com/global-news-alerts/top-remote-work-destinations-for-employees/
[8] https://www.oecd.org/en/publications.html
[9] https://www.statista.com/statistics/795067/south-africa-cape-town-tourism-contribution-to-gdp/
[10] https://www.cnbcafrica.com/2023/the-rise-of-african-tech-hubs-how-they-are-becoming-the-silicon-valleys-of-the-continent/
[11] https://www.forbesafrica.com/current-affairs/2024/02/23/south-africa-embracing-digital-nomads-for-economic-growth/
[12] https://www.numbeo.com/cost-of-living/in/Cape-Town
[13] https://robertsmith.com/blog/gentrification-pros-and-cons/#gentrification-defined
