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Solly Moeng: Retirement - a novel route to attracting investment to SA

Jan 30 2020 06:01
Solly Moeng

The South African government has long identified business and leisure tourism as economic sectors with more potential than most to create employment quickly and spread the ripple effects of their benefits wider into the society.

What government has often failed to do is to consistently come up with policies and practices that enable this sector to function seamlessly and benefit the economy. A lot has been said about our visa regime and the difficulties faced by many potential tourists in some promising source markets to access South African visa application and processing centres.

We should hope that recent steps to grant visa free entries to some countries, in bilateral agreements, and increasing talk of e-Visas, will all eradicate many of the frustrations we have read about by restoring faith in our systems and enabling more money spenders to come to South Africa.

Other opportunities

A potential ‘goldmine’ that South Africa seems to have neglected, and that several other countries have taken advantage of, is in the area of offering South African residency through lucrative investment programs by foreign retirees.

Portugal saw this opportunity and exploited it at the height of its financial crisis in 2012, and so did Costa Rica back in the 1970’s, when its economy was struggling. Panama and Ecuador have been doing it and reaping the benefits for over 30 years.

Even one of our neighbouring states, Namibia, is said to be considering its own retirement investment program. Residency through investment programs have proven time and time again to be a sure economic booster, injecting much needed foreign exchange and creating employment for locals.

Every year over 50 000 foreign retirees decide to pack their bags and head abroad to seek new experiences, a change in scenery, a different perspective, all at a lower cost of living than in their home countries.

In fact, while a low cost of living may be their initial goal, research suggests that retirees relocating often end up spending more than double what locals do. They’re often armed with both money and time to explore new things, ticking items off their bucket lists and simply enjoying a good life.

Residency through investment programs vary throughout the world; some even offer tax incentives to encourage foreigners to invest their foreign currency into local economies. Costa Rica was the first country to promote a Pensionado programme back in the 1970’s – they enticed foreign retirees to spend their dollar-based incomes to give locals a boost, grow tourism and support a campaign to change perceptions of the country.

Over the past five years, many South American countries have been pushing their retirement solutions in Europe, the UK, North America and even in the Far East. This has seen over 200 000 expat retirees relocate to countries like Panama, Colombia, Costa Rica and Ecuador.

While most retirees tend to look for a destinations where they can live comfortably for around R20 000 to R30 000 a month – research shows that many spend a lot more, as they eat out at least twice a week, buy local, volunteer in local communities and spend at least 30% of the year exploring their new home country.

Can South Africa be a safe destination for discerning foreign retirees?

South Africa is known for a relatively good climate all year round, modern road, banking and telecommunications infrastructure, as well as friendly people. Safety remains our key challenge, as it often comes up at the top of concerns when the country comes up for discussion with foreigners. It is an area where a lot more work needs to happen. The work needed is not only in policing but also in attitudes.

A culture has to be nurtured that will ensure that South Africans appreciate the economic value that comes with having more tourists in the country. Retirees who opt to come and live here will also want to know that it is safe to go around exploring the country and that locals, wherever they are, will welcome them and ensure their safety.

Retirees living abroad may be looking for bargains, but they also want all the basic comforts of home, easy access and connectivity to their friends and family, tax breaks, and warm sunny days. South Africa can offer all this and so much more - natural beauty, vibrant cosmopolitan cities, excellent, locally made, produce, and a culture where caring for the elderly is intrinsic to who we are.

We can overcome the negative

While the narrative in South Africa is still dominated by the hell our country has gone through over the past decade and more, especially the high levels of corruption, load shedding, and increasing uncertainty about the future that pushes more South Africans to emigrate, we should also be asking what we can do to attract and retain skilled people, investments and growth. Without them, levels of strife will continue to rise and result in a total breakdown of social cohesion.

We should use known and attractive regional and city brands, e.g. Cape Town, the Garden Route, parts of KwaZulu-Natal North Coast, etc. as drawcards to get lucrative foreign retirees to come and invest their money in the country.

None of this can happen without government support, of course, as Home Affairs would need to be the key enabler of the proposed residency through investment program. The benefits for such programs could be extended from the current 90 days to 52 weeks to enable the retirees to spend a lot more time enjoying South Africa and injecting much needed foreign exchange into the local economy.

In a fascinating discussion with Jill Wilmans, a passionate South African who insists that she plans to ‘stay to make a difference’, she told me that she believes that an introduction of 1000 foreign retirees through a residency investment program could see the creation of over 5000 new jobs and R2bn in Foreign Direct Investments.

She recently established the ‘Retire 2 SA Campaign’, which she plans to use as a vehicle to play her part, but she cannot do this in the absence of sufficient appetite by government to consider the value of retiree investment programs and create enabling policies for such programs to thrive and benefit the South African economy.

Perhaps part of the message we tell the world that South Africa is open for business could include ‘out-of-the-box’ ideas, things that we have never tried before but that have been done successfully in other parts of the world. We should deal decisively with people who have reputationally and economically brought our country to its knees in order to set examples and hope that no one follows in their footsteps; but we should also build for the future, as our country has mouths to feed and cannot afford to wait forever.

* Solly Moeng is brand reputation management adviser and CEO of strategic corporate communications consultancy DonValley Reputation Managers. Views expressed are his own.

investment  |  retirement  |  foreign investment
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