Last year was a particularly bad year for SA millionaires, according to the latest South Africa 2016 Wealth Report by New World Wealth.<\/p>\n
The number of these so-called high net worth Individuals (HNWI) declined by 18% during 2015 – from 46,800 at the end of 2014 to 38,500 at the end of 2015.<\/p>\n
HNWIs are defined as people with net assets of $1 million (about R15 million) or more. For the purposes of the report, local HNWIs included all individuals living or working in SA, including expats.<\/p>\n
According to Andrew Amoils, head of research at New World Wealth, the decline in numbers was mainly due to poor economic conditions in South Africa. The rand depreciated by 25% against the dollar and the JSE was down 22% in dollar terms during the year. A significant number of HNWIs also left the country.<\/p>\n
Based on its 2015 migration survey, New World Wealth estimates that SA lost just over 950 millionaires to emigration in 2015. Of the ones that left, 36% went to the UK, 15% to Australia, 11% to the US, 8% to Canada, 5% to Mauritius and 4% to Israel.<\/p>\n
According to the survey, the top reasons for HNWIs leaving SA are financial concerns; the inability to deal with changing social dynamics in SA; concerns for their children\u2019s future, including education; crime; BEE requirements; and concerns that someone in the family might contract HIV\/Aids.<\/p>\n
As part of the latest wealth report, New World Wealth created a scorecard of the main factors that encourage wealth creation in a country. These factors include strong ownership rights; strong economic growth; a well-developed banking system and stock market; free and independent media; a low level of government intervention; low income tax and company tax rates; ease of investment; and a low level of trade union involvement.<\/p>\n
On the scorecard South Africa achieved an overall 4\/10. On strong ownership rights – the most critical component of successful wealth creation globally – SA scored 4\/10, while economic growth was rated at 3\/10.<\/p>\n
Amoils said arguably the largest problem in SA is the level of government intervention<\/strong>.<\/p>\n The country scored a mere 2\/10 for its\u00a0high\u00a0level of government intervention, because “the ANC government increasingly tampers with the business sector”.<\/p>\n Ongoing issues include government-owned monopolies such as Eskom, BEE ownership and compulsory affirmative action, which “create large inefficiencies within the economy”.<\/p>\n SA also did not score well due to\u00a0high\u00a0income tax and company tax rates (1\/10) and scored low for ease of investment (2\/10). Because of its\u00a0high level\u00a0of trade union involvement, the country\u00a0scored a mere 1\/10 in the category.<\/p>\n Amoils said this is because SA\u2019s unions have become increasingly active over the past five years, which has driven up wages and pushed up unemployment and inflation.<\/p>\n It has also resulted in the closure of several mines and discouraged new business formation. Postal and platinum strikes lasted almost five months, for example.<\/p>\n On the other hand, the country scored 9\/10 for its banking system and stock market and 8\/10 for its free and independent media, “preventing government from getting away with wrong-doing and setting SA apart from most other African countries”.<\/p>\n The report highlighted certain risks for SA going forward. These include a rising level of government regulation in the business sector; a rising number of strikes and labour action over the past few years, which especially impacted heavily on the mining and utilities sectors; and the HIV epidemic \u2013 it is estimated that 22% of the adult population is HIV positive.<\/p>\n Government corruption and inefficiency<\/strong>, specifically relating to tenders and personal expenses, is seen as risky for the country as well. Other risks are the unemployment rate<\/strong>, which exceeds 24%; a relatively high crime rate<\/strong>, which deters foreign investors and tourists; and the rising level of emigration of wealthy people<\/strong> out of the country.<\/p>\n Amoils said the same thing occurred in Zimbabwe just before it collapsed.<\/p>\n Student protests<\/strong>, the collapse in commodity prices<\/strong> and the current electricity crisis<\/strong> are more risks highlighted in the survey.<\/p>\n Fin24<\/a><\/p>\n These are the 6 richest billionaires in South Africa<\/a><\/strong><\/p>\n Why South Africans with money are leaving the country<\/a><\/strong><\/p>\n