Start-up visas can help boost job creation in South Africa
KIZITO OKECHUKWU | JUNE 5, 2018
A start-up visa programme targets immigrant entrepreneurs with the skills and potential to build businesses in a guest or host country that are innovative; can create jobs; compete on a global scale and are sustainable.
History is now rich with successful ‘new generation’ firms, such as Facebook, Uber, Stripe and Airbnb, all of which began as start-ups. Today, many countries are working overtime to ensure that there is adequate support for their country’s start-ups, as this entrepreneurial space is undeniably where the ‘next big thing’ will come from.
Most countries are now resolving to attract not just their own local talent, but also talent from other parts of the world. On the continent, we are blessed with a pool of young and dynamic ideation leaders, which are constantly generating exciting and innovative concepts. However, the environment and the ecosystem in the countries they operate, as well as the lack of support, hinder their development.
In this regard, the African Union Agenda 2063 focuses on Africa we, as a continent, want. It reflects a vision for Africa based on the aspirations of African countries and their people. The agenda articulates the following – an integrated, people-centered, prosperous Africa, at peace with itself and enhances the ideology of a Pan-African state.
Yet when it comes to startups and entrepreneurs in general under the banner of the “The Future We Want for Africa”, many African countries lack the institutions that can provide adequate funding, skills development programmes, access to markets and even government support.
South Africa on the other hand, has the ability to provide the much-needed infrastructures and resources that can support entrepreneurship. In addition, the legislation in South Africa has been fairly progressive in ensuring that various private sector open up their supply chains to smaller players, though more still need to be done. There is also an array of programmes that various local entrepreneurs can tap into, including access to seed grants for prototypes from various government agencies and corporates.
Amidst all of this, we must keep our eyes constantly on the current unemployment rate, as stronger support for start-ups and entrepreneurs can help change these figures for the better, albeit slowly. According to data from Trading Economics, South Africa’s unemployment rate was at 26.7% in the first quarter of 2018, unchanged from the previous period. The number of unemployed increased by 100 000 to 5.98 million and the number of employed rose by 207 000 to 16.38 million. Millions of youth are unemployed in South Africa.
Start-up Visa Programme Case Studies
Applicants can secure a Canadian Start-up visa by proving that they have been accepted into a business incubator programme and received a Letter of Commitment from the incubator.
Those successful are granted permanent residence immediately and can apply for, and receive, a work permit within a week, while their permanent residence application is being processed. The initial work permit enables an applicant to enter Canada, attend workshops at the incubator and incorporate their company under Canadian Federal law.
Designated business incubators are similar to elite business schools that all entrepreneurs want to attend. They are for profit organisations and all entrepreneurs have to pay fees for programmes and services. The incubators deliver curriculum and mentorship to accentuate attendee strengths and overcome challenges. They connect start-up ventures with international customers and networks to accelerate growth. At the conclusion of the 12 or 24 month incubation programme, the international entrepreneur’s business venture will be launched in Canada. Ongoing mentorship is also provided to ensure that the business grows across North America.
Since its introduction in late 2014, the number of applicants to the Canadian Start-up visa programme has risen and its potential is being realised. The country’s unemployment rate has fallen sharply to 5.7%.
In the UK, the entrepreneur visa lasts for a total of 3 years and 4 months. This can be extended for a further period of two years if the applicant has met certain conditions in relation to investment, job creation, and business generation. Entrepreneurs must show that two full-time jobs have been maintained. If not, two new full-time jobs for British citizens or permanent residents must have been created and existed for at least 12 months. The country’s unemployment rate is at 4.2%.
The Italian government’s Start-up Visa programme is a special permit reserved for entrepreneurs coming from outside the Eurozone with innovative business ideas. Recently, it extended the programme to foreign students who have received a degree in Italy and want to stay in the country to start a business. Although the Italian start-up scene overall still lags behind that of Germany, France and the UK, Italy’s visa programme is arguably one of the best around. The strengths of it include its relatively quick turnaround time and applicants need to demonstrate they have access to at least €50 000 in start-up funding. Italy’s unemployment rate is at 10.2%.
The French Ministry for Economy and Finance has what is called “Passport Talent” program, which was set up to attract more foreign workers. Now, as part of the so-called French Tech Visa, entrepreneurs, startup employees, and angel investors can apply to grow their ventures in France.
The visa is valid for four years, and also covers spouses. One way to get the visa is by applying for the related French Tech Ticket program, that is, of course, if you’re willing to launch your business in France. Those selected for this program will work with one of 41 partner incubators for 12 months, which will provide mentorship and funding to the recipients. The Tech Ticket comes with 45,000 euros ($48,330) to cover the costs of relocation. This is by far the most sophisticated programme given that government puts some substantial initial investment in the startup for relocation. France’s unemployment rate is at 9.5%.
As one of the continent’s economic powerhouses, what can South Africa do regarding ‘immigrant’ start-up visas?
- Attract dynamic start-ups from various African countries that can collaborate with their South African counterparts in various key sectors. This could begin by giving special start-up visas to 100 of those selected that will be based in the country for 1-2 years. The benefit is that their start-up ideas can be commercialized in South Africa for the benefit of the country and for that of the continent. Critics could argue that South Africa will be exploiting these start-ups, but the fact remains that this is already being done by the Americans and Europeans, who are beneficiaries of these by taking our African start-ups and commercializing them in the Western countries.
- Place the selected start-ups in an accelerated programme with clear monitoring, evaluation and implementation strategies. Programmes should be ‘certified’ by government agencies, which will be given the mandate to track and report on their progress.
- Ensure that there is a benefit to the start-up’s country of origin, either by licensing the IP in their home country.
- Provide private sector firms with access to a broader range of entrepreneurs, including the best and the brightest minds from around the world and encourage more partnership between big business and startups.
In conclusion, a South African Start-up Visa programme could establish an exciting and prosperous ‘business without borders’ environment for the entire continent’s start-up entrepreneurs, in light of the African Union’s Agenda 2063 mandate.
Kizito Okechukwu is the Co-Chair of Global Entrepreneurship Network (GEN) Africa – 22 on Sloane. 22 on Sloane is Africa’s largest startup campus.