Migration is a good economic policy: Lessons from South Africa

Kipkogei Kemboi
Post Date: 25 October 2019

Recent attacks on foreign nationals in South Africa including refugees and asylum seekers, mostly fellow Africans is not new in this part of the continent. Xenophobia is triggered by socio-economic challenges facing the youth and other disenfranchised populations especially those residing in the informal settlements. While the government must ensure that this menace does not recur, there is the need for the government of South Africa to address economic stress and inequalities affecting the youth. Similarly, there is a need to create awareness on the positive impact of migration on the populace especially the disgruntled youth.

Research shows that migrants significantly make economic contributions and a good implementation of the migration policy can lead to tremendous economic growth. To understand how important migration is an important policy to South Africa, there is a need to understand its economy and the role played by its human capital. We look at the classification of the economy based on income, size of the economy, its complexity and export diversity. It’s important to measure economic complexity because it shows how knowledgeable society is, from the products it makes. The economic complexity of a country is calculated based on the diversity of exports a country produces and their ubiquity, or the number of the countries able to produce them ( (Atlas of Economic Complexity n.d.).

South Africa is the second-largest economy in Africa and the 34th largest export economy in the world. According to the Economic Complexity Index (ECI), it is the 47th most complex economy. Migration contributed a lot in attaining that complexity. In 2017, South Africa exported more to China, United States, India, and the United more than it imported (Observatory Economic Complexity 2019). Some of the top South Africa's top exports include precious metals, mineral products, metals, cars and delivery trucks, machines, chemical products, textiles et al. Of the 108 billion dollars South Africa exported in 2017, it had not more than 16% in one export category. That shows the rarity of South Africa's economic diversification in this continent. There’s a correlation in the rise of migrants in South Africa with the improvement in economic complexity. South Africa is one of the few upper-middle-income economies in Africa. 

To sustain this kind of economy, a huge base of human capital is essential. According to the IMF study, over the longer term, both high- and low-skilled workers who migrate bring benefits to their new home countries by increasing income per person and living standards. 

South Africa is one of the countries in Africa that maintains a critical skills List. The South Africa Home Affairs Ministry lists on its website that Critical Skills Work Visa or Permanent residence permit will enable the Department and the government to achieve the objectives of programs such as National Development Plan, Industrial Policy Action Plan and New Growth Plan (Department of Home Affairs South Africa 2019). The Policy to accumulate human capital as much as possible started way back in the early 2000s.  

High-skilled migrants bring diverse talent and expertise that is not ordinarily available in South Africa, while low-skilled migrants fill essential occupations for which natives are in short supply and allow natives to be employed at higher-skilled jobs. Some of the critical skills targeted include Architecture and Built Environment, Business, Economics and management studies, ICT, Engineering, Health Professions, and critical sciences, life and earth sciences, Business Process Outsourcing and Academics and Researchers. Moreover, the gains not just for the migrants alone but are broadly shared by the population (Jaumotte, Koloskova and Saxena 2016).

Migrants contribute more in taxes and social contributions than they receive in benefits. Labour migrants, like for the South African case example have the most positive impact on public accounts. Employment is the single biggest determinant of migrants’ net fiscal contribution. Migration boosts the working-age population. Migrants arrive with skills and contribute to the human capital development of South Africa (no resources were incurred on training them). Migrants also contribute to technological progress (OECD 2014).

In conclusion, we now know from global trade that countries compete on the ability to sustain a diverse range of productive know-how and unique know-how. The sophisticated and unique and Productive know-how can only be quickly built up by migration and other reforms in the education sector. We had migrations since the onset of life and we all understand the economic benefits of migration. South Africa’s economy will continue to top in the economic complexity if they sustain the Migration Policy and even improve it. The government must come out strongly and protect the lives of its people. There’s more to be done. 

Page 1 of 1 |