South Africa kisses R11 billion goodbye as more millionaires head for the door

 ·18 Jun 2024

While South Africans continue to emigrate and come back in a yo-yo of migratory patterns, new data from Henley & Partners and wealth intelligence firm New World Wealth (NWW) shows that for the wealthy, it’s a one-way trip.

The group’s latest Wealth Migration Report 2024 shows that South Africa remains one of the major millionaire outflow countries, with an estimated 600 high-net-worth individuals (HWNIs) expected to leave the country in 2024.

NWW defines HWNIs as individuals with liquid investable wealth of US$1 million (~R18.5 million) or more.

Put another way, South Africa is expected to see at least R11.1 billion in investible wealth head for the exit in 2024.

According to New World Wealth, HWNIs are exceptionally ‘flighty’ and often have their pick of where to go. Notably, they also typically take their wealth with them, leaving their ‘outflow’ country in the dust and boosting their new home.

NWW said that approximately 128,000 of the world’s millionaires are projected to migrate to a new country in 2024.

China is seen as the biggest ‘loser’, topping the list of outflow countries. Notably, the UK is also set to lose a significant number of HWNIs, continuing the losses seen since the Brexit fiasco.

Head of research at NWW, Andrew Amoils, said that the UK, and London especially, has traditionally been seen as one of the world’s top destinations for migrating millionaires, consistently attracting large numbers of wealthy families from mainland Europe, Africa, Asia, and the Middle East.

However, since Brexit, the UK has lost 16,500 HWNIs to emigration, with another 9,500 expected to leave this year.

South Africa is listed among the biggest outflow countries in 2024:

Where there is an outflow, there is an inflow, and the biggest gainers of HNWIs are in the United Arab Emirates and the United States, according to NWW.

Seeing large inflows of millionaires brings great benefits, the research group said, including, but not limited to:

  • Forex revenue: Migrating millionaires are a vital source of forex revenue as they tend to bring their money with them when they move to a new country. For instance, a migrant who brings US$10 million with them is equivalent to a country generating US$0 million in export revenue as both transactions generate US$10 million of forex revenue for the country.

  • New business: Many relocating high-net-worth individuals (around 20%) are entrepreneurs and company founders, who often start businesses in their new country and therefore create local jobs. This percentage rises to over 60% for centi-millionaires and billionaires.

  • Stock markets: Millionaires boost the local stock market via their equity investments. Also, some high-net-worth business owners publicly list their companies on the local stock exchange.

  • Job creation: High-net-worth individuals indirectly create thousands of well-paying jobs via their spending power, especially in high-value sectors such as luxury hotels, fine dining, luxury retail, fashion, hi-tech, automotive, prime property, wealth management, and family offices.

“It is also worth noting that the businesses started by millionaires have a significant positive spillover effect on the middle class as they create large numbers of well-paying jobs in their base country,” NWW said.

“If one takes the likes of Microsoft, Apple, and Tesla as examples, these companies have created thousands of high-paying jobs in the USA.”

However, while the benefits of millionaire inflows will be felt – the inverse it true for the countries left behind.

In South Africa, for example, tax revenues are increasingly under pressure and the impact of the loss of millionaire taxpayers has been felt, even if the local revenue service (SARS) has tried to downplay the impact in the past.

Actions speak louder than words, though, and SARS has made it a key objective to focus on high net worth individuals, even going as far as to set up a specialised unit to lean on this individuals.

The local stock market has also suffered as millionaire investors take more of their money offshore – and South Africa’s high unemployment rate speaks for itself when it comes to the job market.

Read: Vodacom CEO scores R61 million payday

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