South Africa

Millionaires and their money kiss South Africa goodbye

Investec economist Lara Hodes said rich and skilled South Africans are leaving the country because of crime, power cuts, political uncertainty, and economic challenges.

The South African Revenue Service’s (SARS’s) latest tax data shows that thousands of South Africans have ended their tax residency.

Since 2017, more than 40,500 taxpayers indicated that they ceased to be tax residents of South Africa.

The Africa Wealth Report 2023 further revealed that the number of millionaires in South Africa declined by 21% over the last decade.

Between 2012 and 2022, the number of South African millionaires declined from 47,800 to 37,800.

Apart from rich South Africans emigrating, there is also a skills crisis because professionals leave the country in high numbers.

Wits Professor William Gumede explained that South Africa is facing a skills exodus which has become a crisis.

He said the exodus of qualified professionals is particularly damaging because the skills leaving the country are the same skills needed at home.

Hodes told Business Day TV it is not only rich and skilled people leaving – many millionaires who reside here prefer to invest offshore.

Hodes explained that many rich South Africans move their money to offshore bank accounts and trading platforms to manage risk.

The reasons for taking money out of the country include hedging against rand weakness and for a more stable financial environment.

Many high-net-worth individuals and skilled professionals also leave the country in search of greener pastures.

She explained that it is bad news for South Africa when money or skills leave as it is needed to grow the economy.

The impact is widespread, from hurting the tax base to hampering business growth due to a shortage of skills.

“The brain drain is definitely going to affect us from an economic point of view, especially when it comes to growing the economy,” she said.