DIGITAL NOMAD VISAS
It’s time for South Africa to cash in on the remote working trend
South Africa’s economy will benefit from creating a more enabling environment for remote workers. So what’s stopping the government from doing so?
It sounds like a no-brainer: instituting a special remote worker visa, which allows self-employed or foreign-employed people to bring their pounds, euros and dollars into South Africa to take a “workation” or however they define their non-office-bound business arrangement.
After all, Covid has reshaped the job market and created new expectations about not being bound to the office, with hybrid arrangements and work-from-anywhere flexibility.
A growing number of governments have identified the remote working trend as an opportunity to boost their economies, especially by offering a lifeline to sectors ravaged by the pandemic — in particular, those related to tourism and hospitality. By expanding their visa regimes and rolling out the welcome mat for digital nomads and other remote workers, these forward-thinking countries are benefiting from strong foreign currency injections into their economies.
Dozens of countries have introduced digital nomad or remote-working visas, with immense success. Estonia, Montenegro, Cyprus, Bermuda, Dubai, Mauritius and Australia beckon. Often, all that’s required is a clean criminal record, proof of income above a certain threshold and health insurance, and before you can say je suis arrivé (I’ve arrived), you’ve booked yourself a ticket to a workation on an exotic island with white sands, Coco Loco cocktails and luxurious accommodation.
Remote working has arrived
Before Covid, most remote workers were freelancers, but in 2020, full-time employees became the majority, an MBO Partners study observed. “Independent workers already had substantially more location freedom than traditional job-holders, so the impact of Covid-19 on where they worked was less pronounced,” the report explained.
“The Covid-19 pandemic has sped up the process of becoming location independent,” noted Inge Hermann, head of the international office at ROC van Amsterdam-Flevoland and co-author of a study on digital nomadism.
Read more in Daily Maverick: “Tax consequences of being a digital nomad or working remotely for South African companies”
“Before,” said Hermann, “many companies, especially outside tech, were still hesitant about working remotely due to all sorts of issues — related to trust, technological [factors] or a lack of facilities that were available at home.”
Research by Ladders, a career site for high-paying jobs, tracked remote work availability from North America’s biggest 50,000 employers, from since the pandemic began to October 2021, and found that remote opportunities had leapt from under 4% of available opportunities before the pandemic to about 9% at the end of 2020, to more than 15% at the end of last year. They estimate that at least 25% of all jobs that pay $100,000 or more will be available remotely by 2023.
For those not required to be in the office, remote working is increasingly appealing: they can work anywhere, at any time, as long as there is access to the internet and a power supply, whether that means a public library, a co-working space, a hotel room, short-term rental accommodation or even a beach.
A Stanford University study found that in 2020, 10.9 million US workers described themselves as digital nomads, an increase of almost 50% from the previous year. No longer restricted to younger age groups, the study found older age groups continued to be well represented, with 28% aged 45 or older and 8% aged 65 and older. Most digital nomads reported being highly satisfied (81%) or satisfied (9%) with their work and lifestyle.
Although many (34%) planned to be nomadic for less than one year, more than half (53%) planned to continue as digital nomads for at least the next two years, indicating that numbers and interest in this way of work will continue, if not grow, in coming years. Independent or self-employed workers are also much more likely to want to work as digital nomads for at least the next two years (62%) than traditional workers (41%).
In June 2021, the City of Cape Town hosted a remote work webinar in partnership with Cape Town Tourism and the Federated Hospitality Association of South Africa (Fedhasa), setting out the business case for appealing to digital nomads.
Participants heard how one survey, by Growmotely, a “global platform for remote conscious work that connects professionals to culture-conscious companies” found that 74% of professionals believed remote working will become commonplace, while 97% of employees and entrepreneurs said they wanted flexibility in terms of where they do their jobs.
The City’s mayoral committee member for economic opportunities and asset management, James Vos, told participants that attracting digital nomads was firmly on the City’s agenda as it believed the trend would bring in much-needed tourism to South Africa and, critically, revenue.
“The rise of the digital nomad means that tourism players in both government and the private sector have to shift their approach so as to be more marketable to those who are blending aspects of work and vacations into a ‘workation’.”
Lisa-Ann Hosking, tourism services manager at Cape Town Tourism, cited the success of Estonia — currently ranked as the best country for remote working — which implemented a 12-month remote work visa in July 2020.
“They’ve got free internet, and their digital economy has actually boomed. Their cost of living is very affordable. Cape Town can certainly up its ranking [from 42 on the list of 50 Best Places for Remote Working in 2021],” said Hosking.
However, it should be borne in mind that Estonia has a population of about 1.33 million; Montenegro only 628,230, Cyprus 1.25 million, and Bermuda 61,801, with vastly different constraints and risks than South Africa, which has a population of more than 60.6 million.
Read more in Daily Maverick: “Slipping the electronic leash: Remote work and the right to switch off after hours”
Vos, who has spearheaded the campaign to attract digital nomads to SA, believes doing so will boost the economy and help market SA as a prime destination for work and play.
He told Business Maverick that Cape Town had committed to preparing the hospitality and tourism sectors to accommodate digital nomads and remote workers. These tourism services and businesses were now destination-ready, with tailored packages, to accommodate the trend.
“We’ve worked closely with Airbnb and all the other tourism businesses, from accommodation to service providers and experiences, to make the packages appealing and to make business sense for a person choosing Cape Town,” said Vos.
But the national government needs to see the value in it. He said he had written to the departments of tourism, home affairs and international relations “on several occasions”, insisting that opening SA to remote working was a fantastic opportunity for the entire country, “whether you’re in Cape Town, in Limpopo or Mpumalanga.
“This is a market that’s really untapped. We can’t just wait for accolades all the time to get us over the line. We have to make things happen ourselves. And that comes into the pricing and into the visa regime. It’s one thing to be destination-ready but the visa regulations are our biggest barrier.”
Currently, tourists can apply for a 30- or 60-day visitor’s visa, not exceeding 90 days. But with a ministerial amendment to the Immigration Act, that could change, Vos said.
“We are proposing that under the relevant section of the Immigration Act, that remote working is recognised as one of the permitted activities.
“Other countries are doing it and now they are outperforming us and in tourism. If you fall behind, it will take years to get back on that ladder and to become a destination of choice. So the application simply can be authorised by a ministerial directive, expanding on the current list of activities contemplated then in section 11(1) of the act.”
Vos said by allowing remote workers to stay for at least a year, South Africa would be able to compete with other destinations.
“The multiplier [for the economy] is amazing. It will benefit the entire hospitality value chain.”
The Department of Home Affairs, he said, appeared to be dithering on issuing the ministerial directive due to unnecessary concerns around tax implications.
“Look at countries such as Germany, Dubai, Australia, Norway – they’re doing really well [in terms of remote working]. They’ve actively adopted an equivalent of a remote work visa and it comes down to the allowed period of stay.”
Vos said with studies suggesting remote working would increase by up to 500% in the next two years, with more than 45 million remote workers in the US alone, the government needs to come up with a solution for the remote worker visa. “It shouldn’t be a hurdle.”
If you build it, they will come
Airbnb has put Cape Town on its list as one of the world’s most remote-worker-friendly destinations, through a dedicated online resource hub for aspiring remote workers.
In mid-July, Airbnb announced it was partnering with 20 international destinations to make it easier to live and work there, including Cape Town, Bali, Lisbon and the Caribbean.
Earlier this year, Airbnb launched its “Live and Work Anywhere” initiative to identify some of the most remote-worker-friendly destinations in the world, and support governments and destination marketing organisations in helping to revive tourism and provide economic support.
Airbnb plans to work closely with Cape Town Tourism on initiatives that will showcase long-term listings, provide information on entry requirements and visa policies to attract remote workers and promote responsible hosting and travelling as a remote worker.
Nathan Blecharczyk, the Airbnb co-founder, said: “In the two years since the pandemic began, a new world of travel has emerged in which many workers are untethered to an office. In collaborating with these destinations, we want to make it easier for workers to enjoy this flexibility and support the return of safe and responsible travel.
“We know that travel brings significant economic opportunity to local communities and connects people around the world. We’re excited to launch this one-stop shop for anyone thinking of joining the millions of workers that are already enjoying this new trend of working flexibility and travel.”
What the Immigration Act says:
Section 11 of the Immigration Act 13 of 2002 (as amended) envisages a visitor’s visa issued for any purpose other than those provided for in sections 13 to 24 (study, treaty, business, crew, medical treatment, relatives, retired person, corporate, exchange and asylum transit).
Section 11(1)(a) of the act deals with visas not exceeding 90 days, whereas section 11(1)(b) allows for an extended visitor’s visa to be issued for a period not exceeding three years to a foreigner engaged in South Africa in:
- An academic sabbatical;
- Voluntary or charitable activities;
- Research; or
- Any other prescribed activity.
Angelika Yakovchuk, partner and head of the immigration department at WerthSchröder Attorneys, says the research and benchmarking point to the duration of a remote worker’s visa exceeding 90 days.
“Accordingly, it is proposed that, to accommodate a foreign remote worker, an application for a visa is to be included under section 11(1)(b), recognising remote working as one of the permitted activities. This category of the application may be authorised by a ministerial directive expanding the current list of activities contemplated in section 11(1)(b) of the act, whilst applying existing regulations that govern extended visitors’ visas applications, as prescribed in terms of section 11 of the Immigration Regulations, which call on an applicant to evidence control of sufficient financial resources and proof of accommodation during the intended stay in South Africa, and submit supporting documents of medical insurance, medical certificate, radiological report, and police clearances.
“In addition, applicants would be called to provide evidence that, for the duration of their intended stay in South Africa, they continue to be employed abroad and have sufficient income. Applicants must also be permitted to apply for their dependants to accompany them, where applicable.”
Yakovchuk said introducing the remote worker’s visa does not require a lengthy amendment to the legislation and can be promptly implemented by means of the proposed ministerial directive.
“Admitting foreigners in the republic on an extended visitor’s visa for a limited purpose of remote working poses no threat to the local labour market, nor adversely impacts on existing labour standards and the rights and expectations of South African workers.
“Conclusively, actioning this change in the visa regime, South Africa can showcase its proactive approach to the inescapable and rapidly growing global trend, while further promoting its economic growth in the hospitality and tourism sectors that took a substantial knock as a consequence of the pandemic, as well as assisting these sectors’ sustainability.”
Yakovchuk, who manages immigration compliance for multinational corporations, does not believe tax considerations to be a factor in the minister’s delay in signing the directive, because “remote workers’ activities in South Africa do not give rise to tax liability locally”.
She added: “Theoretically, our Immigration Act is one of the most liberal in the world.”
The Department of Home Affairs failed to respond to requests for comment on the matter. DM