South Africa is by far the largest source of HNWI emigration
in Africa. In addition to regular emigrants numbering at least 25,000 per year,
a further 1,000 HNWIs leave the country
per year.
After the decade of state capture, corruption and
maladministration under the Zuma government, South Africa had high hopes under
the reformist new president, Cyril Ramaphosa.
However, the country is facing major
political and financial challenges, possibly even beyond Ramaphosa’s ability to
deliver. While he has good intentions, he appears not politically strong enough
to fight off the radical and corrupt elements within in his own party. In
addition, there is a massive fiscal risk posed by bankrupt parastatals such as
Eskom ($40 billion debt), SAA, SABC and many others. There is a 55% youth
unemployment, 53% poverty levels (income less than $80) and the most unequal
society in the world.
The other main drivers
1. South Africa has one of the highest murder and violent
crime rates in the world, and 60% of South African emigrants listed violent crime as their main reason for
leaving.
2. Fears that capital controls could be reintroduced to stem
the tide of funds leaving the country.
Citizens have generous foreign investment and emigration allowance of
$710,000 per adult – this anxiety could speed up HNW migration.
3. Land expropriation without compensation and the proposed
nationalization of the Reserve Bank cause great uncertainty, with the example
of Zimbabwe’s failures always in the background.
4. The South African passport is relatively weak and allows
visa-free access to only 100 countries. Even for those who do not want to
emigrate now, a 2nd passport has become a sought-after commodity, for visa-free
travel and as an insurance policy against future risk.
5. The SA government is repealing a long-standing tax
exemption for South Africans who work overseas in 2020 and still are SA tax
residents. This will affect 500,000 expats working across the world. This is forcing many of this expat working population
to formally emigrate.
