According to New World Wealth’s 2016 South Africa Wealth Report, the number of high-net-worth individuals (HNWI) – defined as people with a net worth in excess of $1 million – declined from 46 800 people in 2014 to 38 500 at the end of 2015, while their combined wealth shrank from $184 billion (R2,8 trillion) to $159 billion (R2,5 trillion) in that period.
The report also revealed that the volumes of dollar millionaires in the country have fallen by 10% between 2007 and 2015.
Last year alone, HNWI volumes dropped by 18% as the country experienced extreme turbulence with currency fluctuations, which eroded a significant chunk of their wealth, resulting in a number of the country’s ultra wealthy seeking residence in countries abroad.
“Growth was negatively influenced by a significant depreciation of the rand against the US dollar, falling equity markets and the migration of a significant number of HNWIs out of the country,” a synopsis of the report states.
The migration of the country’s wealthy at a time when the economy is particularly fragile is concerning given the low levels of business confidence and weak investment activity.
Dr Azur Jammine, Chief Economist at Econometrix, said one of the consequences for the local economy, among others, is the loss of vital skills.
“When rich people leave, a lot of the money leaves the country and the ability of people to keep on generating that wealth leaves the country,” he says.
Last year New World Wealth reported that around 8 000 HNWIs left South Africa between 2000 and 2014, costing the government losses in revenue collection.
According to projections, the number of super-wealthy South Africans is expected to grow by 10% over the next two years to around 42 300 by 2017.
The report, however, warns that growth could be hampered by the current electricity crisis and government regulation in the business sector.