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South Africa is Tackling Its Second-biggest Growth Problem


South Africa has begun taking steps to resolve what the presidency believes is the biggest impediment to growth after persistent blackouts: An acute shortage of skills, writes Bloomberg’s Antony Sguazzin.

A raft of changes to simplify the rules governing the snarled up and byzantine work permit regime were submitted to the state legal adviser last week and are expected to be passed into law in coming months, said Saul Musker, director of strategy and delivery support in the South African Presidency.

Musker said that the adviser will consider them for a few weeks, they will then be put out for public comment for 30 days before being taken to parliament.

Companies operating in South Africa struggle to find skilled workers, a result of a dysfunctional education system exacerbated by emigration. Still, between 2014 and 2021 only 25,298 skilled work permit visas were approved, according to a report prepared for the presidency. More than half of applications were rejected on grounds including errors in the complex application process.

“It’s harder to come to South Africa than almost any other country in the world despite the acute shortage of skills we have,” said Musker. “Investors are not able to grow their businesses in South Africa, or have their regional head offices here. It’s a huge and very real constraint to growth.”

A study cited in the report, prepared by a team working under the presidency headed by Mavuso Msimang, a former director general of the Department of Home Affairs, projects that a moderate increase in skilled migration could lift gross domestic product by 1.2%.

Points-Based

Eight recommendations in the study, which was released by the presidency in April, include a points-based system, where applicants who meet a minimum education and salary level would be granted work permits.

Larger employers could be granted trusted employer status, which would allow them to assess qualifications of workers they bring in without having to subject them to arduous state verification process. New permit categories to ease the entry of remote workers and those working for startups should also be created.

Ultimately, work permit applications may be able to be made and tracked online instead of through the submission of documents to embassies in what then becomes largely a manual process.

The difficulty in getting work permits “definitely is one of the areas of discussion between business leaders and the authorities,” said Kuseni Dlamini, chairman of Massmart Holdings Ltd., a unit of Walmart Inc., and a board member of the American Chamber of Commerce in South Africa. “We hear a lot of encouraging and promising pronouncements, but there is a disconnection between the pronouncements and the operations of the system,” he said.

Other measures proposed include streamlining the documentation process and the adjudication of those documents, boosting the capacity of the department and improving the quality of its computer systems, which currently connect to the Internet at one sixtieth of the speed of an average system in a bank.

Current requirements, which include having to submit qualifications to the South African Qualifications Authority in a time-consuming process and often having to prove that a South African cannot be found for the job, have frustrated applicants and potential employers and resulted in a massive backlog of applications.

Busi Mavuso, the chief executive officer of lobby group Business Leadership South Africa, in an interview earlier this year cited frustrations from foreign companies unable to get directors into the country and complaints to her organization from the French South African Chamber of Commerce that their members had received no response to work permit applications.

“One big impairment that we’ve been talking about for quite some time is the work visas,” she said. “It has been a problem. It continues to be a problem.”

Some changes have already been made, including doing away with the need for radiological reports to prove an applicant doesn’t have tuberculosis and limiting the need for police clearances from the countries where an applicant has lived to the last five years.

Until recently applicants for a critical skills visa would need to meet 22 requirements. While processing a work visa in South Africa can take 48 weeks or more the process in Kenya is a maximum of 12 weeks and just eight weeks in Nigeria, according to the report submitted by Msimang’s team.

South Africa’s skills shortage has been created through a work permit system that wasn’t designed for a skills-scarce country and a hostility toward foreign workers, a possible result of the high number of undocumented migrants in the country and one of the world’s highest unemployment rates, according to Musker and Msimang.

“I found a lot of protectionism,” Msimang said in an interview. “The lamentable statistics that you talk about in terms of visas that were approved really had to do with this hostile attitude toward the utilization of foreigners’ skills.”

This, despite the fact that research cited in Msimang’s report found that each skilled employee can create more than one job for lesser skilled workers, as well as boosting productivity and competitiveness and adding to tax revenue.

“What appear to be excessive security concerns and onerous administrative processes unduly delay and sometimes even prevent the admittance of legitimate, crucially needed immigrants,” the team said in the report compiled by Musker and Msimang.

Source: Modern Diplomacy

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