- Pending legislation could welcome more digital nomads to South Africa while also making it easier for companies to employ skilled foreigners.
- This runs the risk of worsening the unemployment crisis in South Africa and increasing the cost of living.
- While there are benefits to this legislation, the pitfalls should be considered as well.
South Africa wants to be seen as the destination for those looking to work remotely in an objectively beautiful part of the globe. As such the government is currently eyeing a remote working visa as well as streamlining the process for companies looking to employ skilled foreign workers.
In a country where unemployment sits at 41.1 percent as of Q4 2023, not only do these policies threaten locals looking for jobs, but they also run the risk of digital nomads leading to rental increases and a higher cost of living.
One sector that is particularly at risk is the emerging coding space.
“Digital nomads, with their diverse skill sets and global perspectives, undoubtedly bring value to South Africa’s tech landscape. Their presence contributes to the local economy, driving revenue generation through spending on various services and stimulating job creation across sectors like hospitality, tourism, and technology. So too, their entrepreneurial spirit within this community acts as a catalyst for innovation, fostering a vibrant startup ecosystem that enhances South Africa’s reputation as a tech hub,” says chief executive officer at Zaio, Mvelo Hlophe.
Zaio offers locals a way to pursue a career in coding through web development. Courses include a twelve-month programme as well as a two-month BootCamp. As many as 10 000 students have passed through Zaio’s digital halls and its well placed to see how the sector is evolving.
Hlophe in particular is concerned about how pending legislation could harm the local sector, and that doesn’t just mean for local job seekers.
“Digital nomads earn higher salaries and drive up living expenses in city centres like Cape Town and Johannesburg. This results in higher rents and food costs, pushing locals to move to the outskirts and spend hours in traffic to get to their place of work. Because of this decrease in quality of life, lucrative opportunities abroad or even just working remotely for an international company lure many skilled coders. This leads to a depletion of our pool of talented coders, as local businesses find it hard to match the salary packages offered by international rivals,” the CEO explains.
“If we introduce the digital nomad visa, proactive measures must be taken to level the playing field and ensure equal opportunities for all. One approach is through taxation policies that aim to redistribute wealth. This will help ease the strain on local coding communities who are being priced out of their homes because of inflated rental and living costs brought on by digital nomads. By implementing fair and transparent tax structures, we can balance the economic benefits of digital nomadism with the need to protect the interests of our citizens,” adds Hlophe.
According to Vantage Debt Management, the cost of living in Cape Town (a destination of choice for digital nomads) ranges from between R10 000 to R38 000, excluding the cost of rent. With digital nomads potentially increasing that cost, living in Cape Town becomes nigh untenable for most locals. Add to this the risk of gentrification as digital nomads take over previously low-cost areas and rentals, food and amenities rise in price.
This is not to say that digital nomads are wholly a bad idea. There are potential benefits such as helping local coders improve their skills, and potential for these nomads to take up roots in SA and start companies.
But these are big ifs and hinge on the proper implementation of government’s proposed legislation. More than that, citizens aren’t keen on well-paid foreigners taking over their cities and forcing them into a higher cost of living.
Whether the government is wise to these concerns is unclear but given that it is forging ahead with its plan, we suspect it either isn’t aware of the discourse or is ignoring it.
“By implementing strategic policies and encouraging a collaborative culture, we can successfully navigate this change and build towards a future where both local and international talent coexist harmoniously,” Hlophe concludes.
We do expect to see pushback from folks as government moves its legislation through the proper channels, especially given the current state of the economy in South Africa.
