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.