Roseau, Sept. 29, 2023 (GLOBE NEWSWIRE) -- The South African business landscape has become difficult with numerous economic and regulatory challenges that startups and business owners face, driving them to seek opportunities abroad. Many more South African businesspersons are exploring citizenship by investment (CBI) programmes. The Commonwealth of Dominica offers a Programme for South African businesspersons to grow and succeed.
South African entrepreneur Athi Rwexu's journey from local startup founder to global success story highlights the challenges faced by small businesses in South Africa. While her mathematics application, Beta-SigmaX, aimed to make math accessible to children worldwide, Rwexu found it more promising to seek support and investment in the United Kingdom than in her home country.
This trend of South African startups seeking opportunities abroad due to unfavourable conditions has caught the attention of the Department of Small Business Development (DSBD).
Mofalefa Mohoto, the acting deputy director-general of DSBD, acknowledged that many startups, especially in the tech sector, were moving overseas because of issues such as funding limitations and regulatory hurdles.
South Africa's tax policies and business regulations often hinder the growth of startups, pushing them to explore more conducive environments abroad.
The Southern African Venture Capital and Private Equity Association (Savca) reported a decrease in venture capital investment in South Africa in 2021, reflecting the challenges faced by startups seeking capital in the country.
One key issue is that South African financial institutions typically require a proven track record of returns before investing, a barrier that many startups cannot overcome. To address these challenges, DSBD has initiated a "start-up act movement" to tackle the regulatory issues constraining startups' growth and create an environment conducive to their success.
The goal is to foster high-tech startups that can eventually become major players, similar to the success stories in Silicon Valley and other innovation hubs.
Despite the challenges, there is optimism within the South African startup ecosystem. Rwexu believes that the ongoing discussions on startup support in South Africa are promising, and there is hope for a brighter future in the sector. However, for businesspersons who are struggling in South Africa, there is another potential avenue to consider - citizenship by investment (CBI) programmes in the Caribbean.
Citizenship by Investment Programmes for business start-ups
As South African entrepreneurs face hurdles in their home country, some are exploring alternative options to support their businesses and secure their future. CBI programmes, commonly offered by several Caribbean nations, present an appealing opportunity for South African small business owners seeking stability and growth. A notable destination that offers this CBI programme is the Commonwealth of Dominica.
The benefits of these Caribbean CBI programmes
Foreign Direct Investments
The Government of Dominica is actively promoting and facilitating foreign direct investment (FDI) in the country, with a strong emphasis on industries that generate employment, bring in foreign currency, and positively impact the local population.
To encourage businesses to set up in Dominica, the government has established various investment incentives through the Invest Dominica Authority (IDA). These policies include generous tax incentives, allowing duty-free importation of equipment and materials, exemptions from value-added tax on specific capital investments, as well as waivers on withholding tax for dividends, interest payments, and certain external payments and income.
Additionally, the IDA offers support to approved CBI projects, providing an attractive avenue for certain forms of foreign direct investment.
In 2021, the IDA introduced an Investment Promotion Strategy that targets four key sectors:
1. Organic agri-business.
2. Aquaculture and manufacturing.
3. Renewable energy.
4. Tourism.
These sectors are seen as critical for the country's economic growth. Dominica is also actively exploring opportunities in knowledge services, including business processing operations. Beyond these priorities, the government maintains an open stance toward FDI and continually evaluates other sectors for investment potential.
Importantly, Dominica welcomes foreign investors with open arms and imposes no restrictions on foreign control. Foreign investors enjoy the same rights as local nationals and can own up to 100 per cent of their investment. This approach underscores Dominica's commitment to providing a conducive environment for foreign businesses to thrive.
The IDA plays a crucial role in overseeing proposed investments seeking government incentives. Their evaluation ensures that each project aligns with national laws and serves Dominica's best interests while delivering economic benefits. This review process is transparent and involves a series of steps that investors must follow to secure a business license.
Dominica transforming into a digital economy
As part of the National Reset initiative, the government of Dominica has made a deliberate choice to allocate more budget resources to productive sectors. The aim is to encourage the emergence of new businesses and the growth of existing ones.
This strategy is geared towards generating additional employment, expanding the nation's economy, and contributing to a resilient and sustainable development path for Dominica. Key areas of investment include agriculture, value-added manufacturing, the blue economy, tourism, renewable energy, export-oriented services, the digital economy, and commerce.
Dominica has made significant strides in transitioning towards a digital economy, both in the private and public sectors. Private enterprises have introduced online banking, digital bill payment platforms, and online shopping. Many businesses have fully embraced digital processes.
The government has played a pivotal role in driving this transformation by introducing new digital services for public use each year. To further support the development of the digital economy, the government plans to invest directly in the country's young population.
Grants will be provided to support digital technology initiatives, empowering young people with skills, resources, and tools to excel in the digital era. The application process for these grants will begin in the first quarter of the fiscal year, and young individuals are encouraged to seize these opportunities.
One immediate benefit of the government's investment in the digital economy is the creation of online job opportunities. To date, 181 Dominicans have received training, and 109 have been engaged in online jobs on the global stage. An additional 60 individuals are participating in a 12-week training programme. These efforts reflect the government's commitment to enhancing the capabilities of its citizens and creating improved job prospects for them, aligning with the broader goals of national development.
The Government of Dominica supports businesses in the tourism sector
The Ministry of Commerce, Enterprise, and Small Business Development in Dominica has a clear mission to foster the growth of resilient businesses and promote economic transformation. They aim to create an environment that is supportive of business development, capable of adapting to climate-related challenges, and facilitating recovery from adverse climate events.
To achieve these goals, the government has implemented measures to encourage the organised growth of micro, small, and medium enterprises (MSMEs), which play a significant role in the private sector and contribute substantially to employment.
The government initially allocated funds to support these initiatives, and it has additionally secured more funds to aid MSMEs in developing and restructuring their businesses, enabling them to navigate the current economic challenges effectively.
In response to these efforts, the Cabinet has approved significant changes to the Small Business Support Unit (SBSU) Small Business Enterprise Development Grant application process. Grant assistance amounts now vary. This flexible approach considers factors such as the readiness of entrepreneurs, the level of innovation, expansion plans, export readiness, and the hiring of employees beyond family members.
These changes reflect the government's commitment to providing substantial support to small businesses and encouraging their growth and resilience in the face of economic challenges.
This Caribbean nation is not only a beautiful tropical paradise but also an inviting destination for entrepreneurs and investors looking to make a positive impact while enjoying the island's natural beauty and cultural richness.
