The latest African Wealth Report for 2023 shows that South Africa has lost thousands of millionaires over the last ten years – though it remains the country with the highest concentration of individual wealth on the continent.
The report, compiled by Henley & Partners and New World Wealth, shows that South Africa was home to 37,800 US dollar millionaires at the end of 2022, the most millionaires in Africa and accounting for over 27% of the 138,000 millionaires on the continent.
South Africa is followed by Egypt, which has 16,100 millionaires, Nigeria (9,800), Kenya (7,700) and Morocco, which rounds out the top five with 5,800 millionaires.
South Africa also leads in the count of centi-millionaires – individuals with a net worth greater than $100 million – with 98 people falling into this category. The country also has five dollar billionaires – though this is second to Egypt, which has eight billionaires.
The report’s authors said that South Africa’s high centi-millionaire count is particularly notable, as these individuals are typically the founders of large multi-national companies, making their presence in a country particularly valuable when it comes to creating employment.
However, what is also notable – for the wrong reasons – is that wealth on the continent appears to be declining, particularly because of a poor showing from South Africa.
“Total high-net-worth individual numbers in Africa have fallen by 12% over the past decade (2012 to 2022). Performance was constrained by poor growth in the three largest African markets, South Africa, Egypt, and Nigeria,” the authors said.
South Africa has seen a 21% decline in the number of millionaires over the last decade.
Back in 2012, New World Wealth – then working with WealthInsight – recorded 48,800 millionaires living in South Africa. This points to a loss of 11,000 millionaires in the last ten years.
While South Africa’s current level of centi-millionaires is impressive compared to other countries in Africa, the figure is also down from 158 in 2018, meaning a loss of 60 such individuals over the years.
According to the report, Africa’s wealthiest are on the move.
Approximately 18,500 high-net-worth individuals have left Africa over the past decade – and most have relocated to the UK, the USA, and the UAE, it said.
Significant numbers have also moved to Australia, Canada, France, Israel, Monaco, New Zealand, Portugal, and Switzerland.
In terms of internal millionaire migration within the continent, approximately 1,200 high-net-worth individuals have moved between African countries over the 10-year period, with most relocating to Mauritius and South Africa, it said.
“A large number of billionaires have left Africa over the past 20 years or so. Notably, there are 52 African-born billionaires globally, of whom only 23 still live on African soil. This is a significant concern as many billionaires are entrepreneurs and company founders who therefore have the ability to create significant employment in their host countries,” the group said.
“Billionaires rarely move for tax reasons. They usually relocate to expand their businesses or due to safety concerns.”
Reasons for losses
Two reasons explain the major loss of millionaires in South Africa: emigration and the destruction of wealth.
According to the report’s authors, South Africa’s economic metrics have declined significantly over the ten-year period in dollar terms.
The MSCI World Equity Index rose dramatically during the review period — from 1,320 at the end of 2012 to 2,603 at the end of 2022. The index had a poor past year, however, as it dropped back almost 20% in 2022.
South Africa’s main stock market index, the JSE All Share Index was up by a healthy 86% in local currency terms, rising from around 39,250 at the end of 2012 to 73,048 at the end of 2022. However, when measured in US dollar terms, the index was down by 8%.
The South African rand depreciated against the US dollar by 50% during the review period, from ZAR8.45/USD at the end of 2012 to ZAR17.01/USD at the end of 2022. The rand/dollar exchange rate has only continued to weaken.
Thus, measuring local wealth in dollar terms would show a significant decline, and those who were once dollar millionaires may have dropped out of the category as a result.
The other big cause of the loss of millionaires is emigration.
Despite South African authorities downplaying emigration as a point of major concern for the flight of wealth from South Africa, the writing has been on the wall for years that the rich are leaving the country.
However, more concerning is that it is no longer just the wealthy who are parting ways with the country.
The latest tax statistics from the South African Revenue Service (SARS) show that more than 40,500 taxpayers indicated that they ceased to be tax residents of South Africa for the tax years 2017 to 2021.
The demographics data shows that more taxpayers from lower-income brackets are starting to change tax residency – likely reflective of taxpayers deciding to end tax residency from a younger age.
Another worrying 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.