The recently published African Wealth Report for 2023 reveals that South Africa has experienced a significant decline in its millionaire population over the past ten years. Despite this decrease, the nation continues to hold the highest concentration of individual wealth in Africa. The report, jointly produced by Henley & Partners and New World Wealth, indicates that South Africa was home to 37,800 US dollar millionaires at the end of 2022, representing over 27% of the 138,000 millionaires on the continent.
Following South Africa are Egypt with 16,100 millionaires, Nigeria with 9,800, Kenya with 7,700, and Morocco completing the top five with 5,800 millionaires. South Africa also leads in the number of centi-millionaires – individuals with a net worth greater than $100 million – with 98 such individuals. Furthermore, the country boasts five dollar billionaires, coming second to Egypt, which has eight billionaires.
The authors of the report highlight that South Africa’s high centi-millionaire count is particularly notable, as these individuals are often the founders of large multi-national companies, making their presence valuable for job creation in a country. However, the report also points out a concerning trend – wealth on the continent appears to be declining, particularly due to South Africa’s underperformance.
The number of high-net-worth individuals in Africa has decreased by 12% over the past
decade (2012 to 2022). This decline in performance can be attributed to poor growth in the three largest African markets, namely South Africa, Egypt, and Nigeria. South Africa, in particular, has seen a 21% reduction in the number of millionaires over the last decade.
In 2012, New World Wealth, in collaboration with WealthInsight, reported that 48,800 millionaires were living in South Africa. This suggests a loss of 11,000 millionaires in the past ten years. Although South Africa’s current centi-millionaire population is impressive compared to other African countries, it has also decreased from 158 in 2018, resulting in a loss of 60 such individuals over the years.
The report indicates that Africa’s wealthiest individuals are migrating. Approximately 18,500 high-net-worth individuals have left Africa over the past decade, with most relocating to the UK, the USA, and the UAE. Significant numbers have also moved to Australia, Canada, France, Israel, Monaco, New Zealand, Portugal, and Switzerland.
Regarding internal millionaire migration within the continent, about 1,200 high-net-worth individuals have moved between African countries over the 10-year period, with the majority relocating to Mauritius and South Africa.
A significant number of billionaires have left Africa over the past 20 years. There are 52 African-born billionaires globally, but only 23 still reside on African soil. This is a major concern, as many billionaires are entrepreneurs and company founders who have the potential to create substantial employment in their host countries. The report suggests that billionaires rarely move for tax reasons; they usually relocate to expand their businesses or due to safety concerns.
Two primary factors explain the substantial loss of millionaires in South Africa: emigration and the destruction of wealth. The report’s authors note that South Africa’s economic metrics have significantly declined over the ten-year period when measured in dollar terms. The MSCI World Equity Index rose dramatically during the review period, while South Africa’s main stock market index, the JSE All Share Index, increased by a healthy 86% in local currency terms. However, when measured in US dollar terms, the index experienced an 8% decrease.
The South African rand depreciated against the US dollar by 50% during the review period, which consequently led to a significant decline in local wealth when measured in dollar terms. As a result, individuals who were once dollar millionaires may have fallen below the threshold.
Emigration is the other major factor contributing to the loss of millionaires. Despite South African authorities downplaying emigration as a significant concern for the flight of wealth from the country, it has been evident for years that the rich are leaving. Moreover, it is no longer just the wealthy who are departing.
The latest tax statistics from the South African Revenue Service (SARS) show that over 40,500 taxpayers indicated that they ceased to be tax residents of South Africa for the tax years 2017 to 2021. The data reveals that more taxpayers from lower-income brackets are starting to change tax residency, likely reflecting a trend of taxpayers deciding to end their tax residency at a younger age.
Another concerning trend in the data is that even though fewer wealthy taxpayers appear to be ending their tax residency – likely because many have already left – the average wealth they take with them is higher. This suggests that the flight of wealth from South Africa is not only affecting the millionaire population but also impacting the broader economic landscape.
In conclusion, South Africa’s decline in its millionaire population over the last decade is a cause for concern, as it may have far-reaching implications on the country’s economy, job creation, and overall wealth distribution. Factors such as emigration, the destruction of wealth, and currency depreciation have contributed to this trend. To address these issues, South African authorities need to adopt measures aimed at improving economic growth, ensuring safety and stability, and creating a favorable environment for business expansion and wealth retention.
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