New data shows how wealth has been destroyed in South Africa over the last 10 years

AfrAsia bank in collaboration with New World Wealth has published its African wealth report for 2021, highlighting the trends of the continent’s ultra-wealthy.

The report shows that South Africa is home to over twice as many dollar millionaires as any other African country, while Egypt has the most billionaires on the continent.

Despite this dominance, the data shows that the number of millionaires living in South Africa continues to decline, with 36,500 dollar millionaires living in the country – down by 1,900 from the number recorded in 2020.

New World Wealth defines millionaires as those with a net worth of $1 million or more.

Included in South Africa’s millionaire figures are 1,930 multi-millionaires living in South Africa, each with net assets of $10 million or more. In addition, there are five billionaires living in South Africa, each with net assets of $1 billion or more.

The destruction of wealth 

AfrAsia bank described South Africa’s wealth performance as ‘poor’, with total private wealth held in the country declining by 25% over the past decade, when measured in dollar terms.

The group said that performance was negatively impacted by:

  • Significant loss of currency value versus the US$, from around R6.80 per dollar in 2010 to R14.70 per dollar in 2020 (year-end rates);
  • A large number of local businesses closed down during the period, especially in the SME space;
  • Poor returns from the JSE all share index – down by 12% over the past decade when measured in dollar terms;
  • The ongoing migration of wealthy people out of the country.
  • A sluggish local prime residential market. In particular, homes valued at over R10 million (equates to around $700,000) have become very difficult to sell.

Emigration has had a notable impact – based on AfrAsia’ estimates, around 4,200 HNWIs have left South Africa over the past decade (2010 to 2020). Most of these individuals have gone to the
UK, Australia and USA.

Some have also gone to Switzerland, Israel, Mauritius, New Zealand, the UAE, Canada, Portugal, Spain, Cyprus and Malta, it said.

Coronavrius impact 

Apart from the human cost, the coronavirus outbreak has also had a severe economic impact on the wealth, the report shows.

AfrAsia’s estimates show that private wealth and HNWI levels in Africa have dropped by around 9% over the past year (2020), driven by:

  • A drop in salary levels and job losses (mainly related to the virus outbreak and the related lockdowns). The travel, hospitality, manufacturing and real estate sectors have been most heavily impacted.
  • A large number of local businesses closed down during the year, especially in the SME space.
  • The residential property market weakened, especially the prime (top-end) market.
  • Rising household debt. Debt is subtracted when calculating net assets so this has a negative impact on private wealth.

“Many HNWIs have chosen to work remotely and live in smaller towns. For instance, many South African HNWIs are now working remotely from affluent small towns such as Hermanus and Franschhoek,” the bank said.

Outdoor hobbies/sports that allow for easy social distancing – such as golf, hiking, fishing, cycling and bird-watching – have also become more popular.

Read: How much money you need to retire in South Africa

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New data shows how wealth has been destroyed in South Africa over the last 10 years