South Africa’s millionaires are leaving

 ·13 Jun 2023

Henley & Partners, with New World Wealth, has published its latest Wealth Migration Report for 2023, showing the net inflow or outflow of super-wealthy individuals across the globe.

The report tracks the countries and territories with net inflows or net outflows of 100 or more high-net-worth individuals (HNWIs) – defined as people who have a net worth of over US$1 million (approximately R19 million).

Specifically, the figures represent the difference between the number of HNWIs who relocated to and who emigrated away from a particular country during a given year, with all figures rounded to the nearest 100.

According to the report, South Africa saw 400 HNWIs emigrate in 2022, with 500 expected to leave in 2023.

“Millionaire migration figures can be a telling real-time barometer for the health of an economy as wealthy people are extremely mobile and they, therefore, tend to be the first to move,” the group said.

However, what is even more alarming is that this means that South Africa’s big drop in millionaires between 2021 and 2022 can be attributed to the huge destruction of wealth in the country rather than the super-rich leaving.

The latest African Wealth Report for 2023 shows that South Africa was home to 37,800 US dollar millionaires at the end of 2022, down from 39,300 recorded at the end of 2021 – a loss of 1,500 HNWIs.

If only an estimated 400 of these HNWIs emigrated that year, the remaining 1,100 millionaires simply lost their millionaire status, seeing their net worth drop below the US$1 million mark due to the prevailing economic conditions in the country.

The loss of the super-rich to emigration is well documented in South Africa. However, it is impossible to track the figures accurately as the government does not track emigration in any official form.

The closest analysts have to rely on are anecdotal figures from related industries, tax data (such as changes in residency), and inflow data from countries with much more thorough migrant tracking.

The South African Revenue Service (SARS) has acknowledged the loss of taxes through emigration – although it has also tried to downplay its significance.

Tax statistics provided by SARS show that over 32,000 people ended their tax residency in South Africa between 2017 and 2021.

Of those individuals, approximately 2,700 earned more than R500,000 per year and 1,100 earned more than R1 million per year.

In total, this amounts to R1.3 billion in assessed tax that is simply no longer in the country.

SARS commissioner Edward Kieswetter acknowledged earlier in the year that over 6,000 taxpayers had left the country in 2022, stating that only a small number were HNWIs (400, according to Henley & Partners’ data).

Where wealth is going

According to Henley & Partners, China is seeing the most significant outflow of HNWIs, having seen 10,800 wealthy individuals emigrate in 2022, and an expected 13,500 set to leave in 2023.

This is followed by India (7,500 and 6,500), the UK (1,600 and 3,200) and Russia (8,500 and 3,000).

The countries seeing the biggest inflows, however, are more evenly matched.

Australia is expected to see the biggest inflow in 2023, with 5,200 immigrants anticipated this year. This is followed by the UAE (4,500), Singapore (3,200) and the USA (2,100).

Notably, nine of the top 10 countries for net inflows of HNWIs in 2023 host formal investment migration programs and actively encourage foreign direct investment in return for residence rights.

Read: Rich South Africans are packing their bags – and taking billions in tax with them

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