South Africa will ease some immigration rules, including agreeing visa waiver agreements with more countries, in an effort to boost investment and tourism, Home Affairs Minister Malusi Gigaba said on Tuesday.
The changes are part of a broader economic turnaround programme announced by President Cyril Ramaphosa last week as his team seeks to drag Africa's most developed economy out of recession.
"We play a critical economic role in admitting over 10 million international visitors to South Africa annually, which includes tourists, business travellers, investors and neighbours," Gigaba told reporters.
"Millions of jobs are sustained by the economic activity generated by these travellers."
Gigaba said negotiations were also being finalised to conclude visa waiver agreements with more than a dozen countries across Africa, the Middle East and eastern Europe, including Saudi Arabia, Iran, Egypt, Qatar and the UAE.
Much-criticized rules on travelling minors will be simplified, he said.
In June 2015 new rules were implemented requiring parents to carry an unabridged birth certificate for accompanying children and consent letters from parents who were not travelling.
The tourism industry said the regulations, which came into effect during Gigaba's previous tenure as home affairs minister, were hurting business.
Tourism contributes more than 400 billion rand ($28 billion) to South Africa's economy, or around 8 percent of GDP.
Wittingly or unwittingly, South Africa’s Finance Minister Malusi Gigaba’s medium term budget policy statement places him – and champions of the market economy inside and outside the African National Congress – in a strong position and opens the way for real economic change. Whether the opportunity is taken is, of course, another matter.
Gigaba revealed that the government’s revenue shortfall is two thirds higher than expected, spending is growing, as is the deficit which will not, as promised, stabilise next financial year. And growth projections are down from a poor 1.3% to a negligible 0.7%.
The minister announced no new measures which are likely to turn the situation around and another set of ratings agency downgrades seem inevitable. This is partly because the agencies take their cue from domestic economists and business people, all of whom see a downgrade as inevitable. The only rational response is surely that the economy is in a downward spiral and that the minister cannot or will not do anything about it.
Perhaps. But there is another way of looking at the speech which sees many of these negatives as potential economic game changers.
One reason for seeing an opportunity for change is that the speech provides more than enough grounds to begin two of the tasks which must be confronted if the economy is to turn around in a sustainable way. It provides a powerful lever for everyone who wants to resist patronage projects. And the scale of the problem does send a signal to all economic actors that a sense of crisis – the acknowledgement that the economy must change course if it’s to grow and include more people – is needed and that negotiations to change the economy are essential.
Gigaba’s speech made it clear that the argument that money is simply not available is now an understatement. One casualty might be the nuclear power project on which President Jacob Zuma and his faction seem to have set their hearts. There have been suggestions that Zuma’s primary objective in his most recent cabinet reshuffle was to insert a loyal person into the energy portfolio so that he could make the nuclear deal happen.
Gigaba is now signalling that there is no money for the project and so the reshuffle’s purpose may have been undone.
And the argument for structural change, not mere tweaking, is much stronger now than before the speech. The harsh realities he explicitly set out mean that any finance minister who wanted to shut the door on patronage, begin cleaning up state owned enterprises and kick-starting talks with other key players, such as the private sector, is in a very powerful position. This could open the way for bargaining between all the economic interests on how to grow the economy and open it up to those who are excluded.
It does not mean that Gigaba will take the opportunity. The fact that he kicked the can of change down the road during his speech, proposing no new plans for change – and that he has already granted South African Airways a bailout – seem to show that his apparent desire to please everyone leaves him ill-equipped to take any of the steps suggested here.
But, if we assume – as many people who observe him do – that Gigaba’s chief goal is to advance his political career, the numbers he quoted today suggest that he is unlikely to do that unless he can show that he did something to change the realities he described. It’s possible that the minister knows that these realities won’t change unless he takes some decisive steps.
Stage set for trade-offs?
The speech offers no solutions but it can hardly be accused of ignoring or concealing the problem. On the contrary, Gigaba made a great deal of his refusal to “sugar coat” the problem. Insisting that South Africans must know how bad it is, he added that citizens needed to understand the “challenges” because only then
(will) we … know what to do … as well as what trade-offs must be made in the public interest.
That sounds very much like an attempt to set the stage for some unpopular decisions and for engaging with key economic actors on what trade offs should be made. Clearly, a minister who hopes to please as many people as possible is not going to initiate major changes without very solid backing – the speech may well have been an attempt to get that backing.
So Gigaba could be trying to set the stage for a process in which the awful state of the economy enables him to gain support from key economic actors to introduce the “trades off” he promised.
Of course, the minister may have no plans to use his leverage in this way. But, if so, the speech may have provided an important lever to those who would want him to do so. It clearly was an invitation to private economic interests to engage.
If businesses take Gigaba up on the offer, they may well find themselves in a more powerful position than they imagined, given the state of public finances and of the economy. They certainly have economic reality on their side and, since the minister is not zealously attached to either of the African National Congress factions, he may well be inclined to support them if the alternative seems likely to promise his political ruin.
The speech showed that the economy is in crisis – it needs to change direction if it’s to serve the country’s needs. Whatever the minister decides to do, its effect will depend on how those in society who have an interest in that change choose to react. The stakes are clearly too high for them to fold their hands and wait for the minister to act.
South Africa’s finance minister ordered the government pension fund on Friday to investigate possible irregularities at the fund to help ally concerns that politicians are trying to “influence” it.
The Public Investment Corporation (PIC), which holds a large chunk of government bonds and stakes in leading South African companies, has come under the public spotlight after reports that the finance ministry had requested 100 billion rand ($7 billion) from the fund to bail out struggling state firms.
Finance Minister Malusi Gigaba has denied making such a request, which drew sharp criticism from opposition parties and civil society. Gigaba said in a statement on Friday he was concerned about the “politicisation” of the PIC and asked its management to conduct a “forensic investigation” into its operations.
“We need to assure pension holders that those with political or economic power will not be allowed to unduly influence the PIC,” Gigaba said. Gigaba also asked the PIC to provide a list of all its beneficiaries and the investments it has made.
The PIC, which was given two weeks to respond to Gigaba’s request, could not immediately comment on the matter. The PIC board said last week its chief executive Daniel Matjila had been cleared of any wrongdoing following an internal audit triggered by allegations that he had allocated funds improperly.
South Africa's Treasury is considering a 13 billion rand ($972 million) bailout state airline SAA to keep the company going as it battles a mounting cash crunch, Finance Minister Malusi Gigaba said on Friday.
"We are in discussions about that and at the medium term budget statement in October I will make the necessary announcement," Gigaba told Johannesburg's Talk Radio 702. The Treasury said on Thursday it had appointed Vodacom Group executive Vuyani Jarana as SAA chief executive. Jarana becomes the first permanent chief executive in over two years.
South Africa's credit rating could get downgraded deeper into junk status if political uncertainty triggered by the recent firing of the finance minister stalls reforms needed to grow the economy, an executive from S&P Global Ratings said this week.
"There are risks that potential growth outcomes could be weakened, especially with uncertainty that's been brought along in a year where you may not get strong decisions for strong reform programs," said Gardner Rusike, the associate director and lead analyst for South Africa at S&P.
S&P downgraded South Africa's sovereign credit rating to BB+ with a negative outlook from BBB- grade on April 3, saying the firing of its internationally respected finance minister Pravin Gordhan posed a major risk to fiscal policy. The new Finance Minister Malusi Gigaba has said Treasury is committed to fiscal consolidation plans outlined in the 2017 budget after S&P and Fitch downgraded the country to sub-investment grade.
Rusike said political jostling ahead of the ruling African National Congress's conference at year-end, where the party will elect leaders to contest general elections in 2019, was likely to distract government from implementing economic reforms.
"You are probably looking at a much longer time line when you are talking about the path of economic growth that can help to stabilise debt," Rusike said. "We've had three downgrades over the last four or five years which means that the credit story for South Africa has been deteriorating."
The country's net debt currently sits just below 50 percent of gross domestic product, at around 2.2 trillion rand ($165 billion), and in recent budgets the treasury has said the cost of servicing that debt has been one of the fastest growing items.
A total of 5 504 022 people travelled across South Africa’s borders between 9 December 2016 and 14 January 2017, says Home Affairs Minister Malusi Gigaba.
This marks an increase of 200 467 movements, or 3.78 percent, at the ports of entry nationally when compared to the corresponding period over the previous holiday season. “The 2016/17 festive season was marked by increased movement of people and goods across borders for different reasons varying from cross-border employment and business to academic and educational endeavours.
“We also observed a high number of travellers crossing borders for holiday and tourist purposes, which is one of the important priorities for the country,” said the Minister at a media briefing on the latest festive season traveller statistics in Pretoria on Wednesday.
Minister Gigaba said South Africa remains an attractive tourist destination. The top 10 nationalities that arrived in South Africa during the period were from Lesotho, Zimbabwe, Mozambique, Swaziland, Botswana, United Kingdom, United States, Namibia, Germany and Zambia.
The top 10 ports of entry used by travellers between 9 December 2016 and 14 January 2017 were Oliver Tambo International Airport, Beit Bridge, Lebombo, Maseru Bridge, Ficksburg, Cape Town International Airport, Oshoek, Kopfontein, Ramatlabama and Groblers Bridge.