Covid-19 and the national lockdown in South Africa have had a devastating impact on small business. As a result, many are taking the decision to look elsewhere, rather than starting over again in a country deep in recession.
Businesses in the tourism and hospitality industry have been particularly hard-hit, given the uncertainty of around future travel. Many restaurants and bars were forced to close permanently over the past six months, forcing owners to contemplate the future.
Bloomberg’s Misery Index, which relies on the age-old concept that low inflation and unemployment levels show how good a country’s residents feel, ranks South Africa as the third-worst country among major economies.
Nicholas Avramis of Canadian Immigration service, Beaver Immigration, told BusinessTech that he has seen a 50% spike in his business since the beginning of June, with small business owners in particular, looking at their options to immigrate.
“Businesses are starting to leave South Africa,” he said. The types of business are from industries across the board: franchise owners, alcohol related businesses, restaurants and hospitality businesses, textiles, software companies, and other IT related businesses.
Avramis said that he has seen a particular jump in enquiries from businesses in the hospitality industry, notably restaurant owners. He said many of these business owners have been forced to close down and are now questioning whether they should reinvest in a country facing long term load shedding, and constant CCMA labour disputes.
The immigration specialist said that what really killed restaurants is that they applied to the Unemployment Insurance Fund (UIF), and temporary employer/employee relief scheme (Ters) for benefits for their workers, and didn’t see a cent.
“Many questioned, ‘do I start over again with the capital I have left, or do I take that capital and invest in Canada?'”
Avramis said that a common story he hears from clients is the difficulty to do business in the country these days, citing regulation and inconsistency.
Moving abroad is becoming a serious consideration not only for the rich but the middle class as well, said Jean-François Harvey, global managing partner of Harvey Law Group (HLG) Africa.
“Amid these uncertain times people investing in immigration programmes are no longer just the ultra-high-net-worth individuals; it has become a popular option for the middle-class South Africans as well.”
Popular destinations include New Zealand, Australia, Canada, the United Kingdom, UK, and the US. Harvey Law Group said that the residency and citizenship-by-investment are sought-after strategies.
A second residency or passport provides a safety net for an exit strategy, wealth preservation, as well as financial protection against economic slowdowns and political uncertainties in third world countries, it said.