Data from Henley & Partners shows that high-net-worth individuals (HNWI) continue to leave the country’s economic hubs.
The latest Henley Global Citizens Report 2022 Q3, compiled in collaboration with New World Wealth, reported that Johannesburg has seen a 5% decrease in the number of HNWIs to date in 2022, while Cape Town has seen a slight decrease of 2% over a six month period to the end of June.
HNWI refers to all individuals with investable assets of $1 million or more. Currently, Johannesburg is home to 15,200 dollar millionaires, 800 multi-millionaires, and two dollar-billionaires. Cape Town, meanwhile, has less than half the number compared to Johannesburg, with 6,800 HNWIs, 410 multi-millionaires, 24 centi-millionaires and one dollar billionaire.
In Africa, Johannesburg still ranks first for millionaires, ahead of Cairo, Cape Town, Lagos, and Nairobi.
New World Wealth data shows that approximately 4,500 HNWIs have left South Africa over the past decade.
Most of these wealthy individuals have gone to the UK, Australia, and the US. NWW noted that Lisbon has also become a very popular destination for affluent families from South Africa, with the Portugal Golden Residence Permit Program being enquired after significantly.
Henley & Partners added that investment residency programs for St Kitts and Nevis, Canada, Antigua and Barbuda, the UK, Malta, Montenegro, Spain and Greece have also secured a lot of residents from Africa through investment.
The loss of HNWIs has knock-on effects on South Africa’s revenue collection – decreasing an already shrinking tax base.
Claude de Baissac, the chief economist of business management consultancy Eunomix, speaking at Johannesburg’s annual Tax Indaba, said that the South African Revenue Service (SARS) is too dependent on taxes from the rich, but ever more rich taxpayers are leaving the country, reported the City Press.
Keith Engel, the chief executive officer at the South African Institute for Tax Professionals (SAITP), said that the wealthiest 2% of the taxpaying population, which contributes more than 30% of individual tax revenue in the country, is vulnerable and best not pressured too hard by SARS.
According to EY’s chief economist Angelika Goliger, between 2003 and 2012, the number of personal income tax (PIT) taxpayers grew by 7%; however, some of these gains have been eroded by a 2.1% decline in the number of taxpayers.
The rise in the cost of living has also pushed wealthy people out of the country. In July, investment migration company Sable International noted that people are sick of paying more for less.
Sarah Young, an investment migration manager, said that many people are still on the fence about emigrating, however, events like increased load shedding for example, are a trigger point.
Additional push factors include:
- Concern over the future of the country;
- More safety and stability;
- Better education for their children; and
- Better job opportunities.