The latest Frank Knight Wealth Report for 2018 shows that many of South Africa’s wealthiest people have lost a lot of money – or took their wealth elsewhere – over the past five years.
While the report predicts that fortunes for South Africa’s most wealthy will improve drastically over the next few years, thanks to political shifts and positive sentiment around the economy, the trend data from previous years tells a more worrying tale.
According to Frank Knight’s data, between 2012 and 2017 South Africa lost almost a quarter if its super wealthy individuals – those who have a net worth of over $5 million – dropping from 13,380 in 2012, to just 10,350 in 2017.
The jump between 2012 and 2016 was even greater, with a 32% decline in the number of high net worth individuals over that period.
As with its prediction for the ultra wealthy ($50 million or more) – where this group is expected to grow by 20% over the next five years – the super wealthy ($5 million+) are expected to grow in number, too, climbing to 12,430 by 2022.
|$5 million+||13 380||9 120||10 350||12 430||-23%||13%||20%|
A reason why so many wealthy people dropped off the South African tally isn’t given a direct reason in the report, however, Ian Bremmer, head of Eurasia Group, a leading political risk consultancy who was speaking to Frank Knight as part of its report, alluded to the fact that emigration has played a big part.
According to Bremmer, while the country’s wealthy people are likely to feel buoyed by the recent changes in South Africa’s leadership, “wealthy South Africans are likely to continue moving money abroad and acquiring dual citizenship”.
As part of its report Frank Knight conducted surveys on emigration plans and trends among ultra-high net worth individuals, with almost 28% African UHNWIs (largely South African-based) indicating that they already had dual citizenship or a second passport, 27% considering getting a second passport, and 19% considering permanently moving to another country.
The Frank Knight data reflects commentary made by emigration experts over the past few years, who have consistently reported a growing trend in wealthy South Africans leaving the country to set up a life overseas.
Among the many reasons given, high crime rates, heavy taxes on the wealthy, and poor levels of education are often cited as the main driving force behind these moves.
In recent years, political uncertainty has also been a key pushing factor.