Governments across the world are finding alternative means of offsetting debt and raising revenue to boost their economies. The new wave is the sale of citizenship, passports, permanent residency and special visa programmes as products to foreign nationals. The revenue from these sales is meant to complement the normal tax base of a country or finance specific developmental issues such as medical research, job creation, or housing shortages.
The United States (EB-5 visa programme), Spain (Golden visa programme), Canada (The Federal Immigrant Investor Program), Thailand (“Elite” visa residency) are just some of the packages available to investors.
Swiss lawyer Christian Kalin, told the BBC that citizenship-through-investment is now a global industry worth $25bn (£20bn) a year. He told the publication that our traditional notions of citizenship are “outdated,” adding that, “This is one of the few things left in the world that is tied to blood lines, or where you are born.”
“It’s super unfair,” he said, explaining that where we are born is by no means down to our own skill or talent, but instead “pure luck”. “What is wrong with regarding citizenship like a membership,” he added. “And what is wrong with admitting talented people who will contribute?”
Countries are having success commoditising citizenship. Since introducing a new citizenship scheme four years ago, the Pacific island nation of Vanuatu’s biggest source of revenue is passports. Kenya is just another African country trying to tap into this competitive global market but for much dire reasons.
Kenya’s crippling national debt
Kenya is adopting this revenue stream to repay or considerably reduce its suffocating national debt. The country’s debt is an estimated 15% beyond the recommendations set for developing countries by the International Monetary Fund (IMF).
The Daily Nation reports that every Kenyan child born today owes its lenders $1,300 (Sh130,000). The Kshs 50 trillion ($50 billion) is in addition to the current annual borrowing of nearly $2 billion (Sh200 billion) to retire matured loans, finance infrastructure and address other budgetary expenditures, according to the publication.
Officials are optimistic that the sale of citizenship and residency permits will help wean the government off loans, significantly reduce national debt and boost the country’s economic status. Many are hoping the government will push for investments in businesses or government bonds before handing over a passport or residence permit, like the United States or the UK.
Drawbacks of commoditised citizenships
Although the programs seem largely beneficial there are downsides. Locals such as those in Vanuatu told the BBC that they have not seen the benefits of the revenue the country is generating. In fact, life on the ground has scarcely changed which seems a slap in the face for locals who were only officially became recognised as citizens themselves in 1980.
The stateless Ni Vanuatu who until then had to travel with a document given to them by the British and the French are now forced to witness foreign nationals wielding their passport and reaping its benefits. One of which is visa-free travel throughout Europe.
Vanuatu has also become a tax haven, and as a result re-joined the EU’s “blacklist” of countries, over transparency and corruption issues. The European Commission has even gone on to issue a statement warning that these programs could help organized crime groups infiltrate regional blocs and raise the risk of money laundering, corruption and tax evasion.
Ultimately the drawbacks are a matter of policy and transparency. Should governments require investments and undertake exhaustive background checks before issuing passports or residence permits, they will not only secure the citizenry but retain their rights within their regional blocs.