Since 2000, over 8000 dollar millionaires have left South Africa. Every year New World Wealth releases a report about the high net worth individuals (HNWI) -people with net assets of $1m – and every year, the number declines and shows that these people are leaving the country.
This year’s report is no different. New World Wealth’s migration survey shows that around 950 millionaires left the country with 36% going to the UK, 15% to Australia, 11% to the US, 8% to Canada, 5% to Mauritius and 4% to Israel.
The overall number of HNWI also declined by 18% in 2015 from 46 800 at the end of 2014 to 38 500 at the end of 2015.
The decline in numbers is largely down to the decline in the rand, but over ten percent of the decline was down to emigration.
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’s future, including education; crime; BEE requirements; and concerns that someone in the family might contract HIV/Aids.
The survey also created a scorecard of the main factors that encourage wealth creation in a country. Strong ownership rights, economic growth, a good banking system and stock market, media freedom, low level of government intervention, low tax rates, ease investment and a low level of trade union involvement are all factors.
South Africa scored 4/10 overall. 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. South Africa’s lowest score (2/10) was for government intervention, according to the report, because “the ANC government increasingly tampers with the business sector”.
Low income tax and company tax rates (1/10), ease of investment (2/10) and low level of trade union involvement (1/10) also yielded low scores.
But there was some good news. South Africa’s banking system and stock market (9/10) and media freedom (8/10) had high scores.
Fin24 reports that the report highlights a number of risks for South Africa going forward. 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 – it is estimated that 22% of the adult population is HIV positive.
Government corruption and inefficiency, specifically relating to tenders and personal expenses, is also seen as a risk as is the unemployment rate (currently over 24%), a high crime rate which puts off foreign investors and tourists and the rising level of emigration of wealthy people out of the country.
source: the south africa