Business Insider Edition

South Africa must stop people leaving and lure emigrants back home. Here’s what we can learn from Portugal’s crazy scheme

Bruce Whitfield , Business Insider SA
 Aug 17, 2019, 03:07 PM

NEWS ANALYSIS

  • Evidence is mounting that skills are leaving South Africa.
  • That’s devastating for the economy.
  • Portugal has an innovative solution which we need to consider.
  • For more stories, go to BusinessInsider.co.za

Imagine if South Africa could bring back home some of its highly skilled, wealthy migrants. The return of skills would be a positive boost for the economy and goodness knows, we could do with the additional tax revenue.

It may sound desperate, but government should consider financial incentives, including tax breaks, and even fund some relocation costs.

Sound crazy? Maybe.

But Portugal is doing precisely this.

Between 2010 and 2015, Portugal suffered one of the worst economic crises in its history. Taxes rocketed and unemployment spiked to 17%, very high by European standards. It caused hundreds of thousands of people to pack their bags.

Now, after years of austerity and hardship, things are turning, thanks to growth in tourism and a pick up in the property sector. It’s created the opportunity to encourage inward migration.

South Africa’s current emigration data is ropey at best; there’s no more reliable proof than the anecdotal evidence that the country is going through a period of skills migration. South Africa sees waves of departures at critical inflection points in its history. This is one of those times.

The current state of the economy, the failure to clearly define a vision for a better future and a breakdown in trust between government and many of its citizens, means that a growing number of those with options elsewhere, are packing their bags.

Migration is a perfectly natural phenomenon and has been around since the beginning of time. Every generation has its problems and people make choices about their futures using the best information they have access to.

In recent decades, South Africa has seen periods of brain drain, primarily driven by political and economic uncertainty.

Portugal has seen similar waves of migration since the days that Christopher Columbus proved the world was not flat and that opportunities exist everywhere for those with the means, access and gumption to move seeking better opportunities. There was a time that Portugal worried about waves of departures to colonial domains like Angola and Mozambique. Recent migration has tended to be within the European Union.

Portugal has been creating incentives for some time to attract richer migrants to their country. Many wealthy South Africans have taken advantage of its golden visa scheme. Investors get residence in the European Union in return for a substantial investment in the economy. The scheme encourages individuals to invest at least €500,000 into property or create 10 jobs in Portugal.

It started in 2012 and reports suggest more than 6,000 people took advantage of this opportunity, leading to about €4 billion in investment.

But it’s not enough. And the Portuguese government is now offering incentives for its own citizens to return home.

It launched a new scheme to incentivise emigrants to return.

It’s called the Regrassar, or “return” programne.

Read: What Ramaphosa can learn from the catastrophe in Argentina

The logic behind it is that often those who leave are those with capital and the capacity to make a positive economic contribution to the country. And now the government wants to subsidise their return.

Returning citizens are promised 50% off their income tax bills for five years. The logic being that citizens outside the country are paying no tax right now, so getting them home, generates income for the fiscus. It makes sense.

If they need a job, the Portuguese employment office will help. And they will also help families who are relocating – with everything from ensuring that professional qualifications are up to date, to travel and even furniture removals and plane tickets.

Emigrants, though, are sceptical. There is a significant trust deficit about the sustainability of the turnaround. Taxes remain high relative to other economies, wages in Northern Europe are far higher.

So, it’s a hard sell.

And for those who stayed, there is some anger that those who abandoned ship in the crisis are being paid to return. Many South Africans might have similar reservations.

But the South African government needs to think differently about incentivising skilled individuals to remain. And to provide those with the desire to return and contribute, a reason to do so beyond just the pull of home.

Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.

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