The ANC government has made South Africa such a hostile environment for businesses and rich people that many executives run their companies from overseas.
The government continues to implement business-unfriendly policies like black economic empowerment (BEE), affirmative action (AA), and taking farms without compensation.
Business owners and high-net-worth individuals are regularly threatened with increased taxes and other levies.
The government also interferes with industries where it has no business interfering. The NHI is a good example.
The NHI Bill, for example, threatens to collapse the health insurance industry in South Africa, which employs thousands of people and adds billions of rands in value to the economy.
The NHI Bill has already chased many doctors and other medical professionals out of the country, and it is set to continue unless the Bill is repealed.
These problems have already resulted in many businesses establishing their head office in other countries instead of South Africa.
Prominent companies like African Rainbow Capital Investments Seacom selected Mauritius as their headquarters instead of South Africa.
Another trend gaining momentum is executives moving to other countries and running their companies from overseas.
MultiChoice is a good example. Many of its top executives, including CEO Calvo Mawela, live in Dubai and run their companies from there.
Naspers is another example of a local company where very few of its top executives are still based in South Africa.
After Bob van Dijk took the reins, Naspers essentially moved its headquarters to Amsterdam. This accelerated when Prosus was established and listed on Euronext Amsterdam.
AngloGold Ashanti also recently moved its headquarters from Johannesburg to London and switched its primary listing from Johannesburg to New York.
It is not only large companies where top executives leave South Africa and run their operations from other countries.
Axxess CEO Andrew Simpson lives in Kennesaw, Georgia, in the United States, while the company’s marketing director, Franco Barbalich, moved to Parenzo in Croatia.
Adapt IT CEO Tiffany Dunsdon lives and runs the company from the United States, while Netflorist founder and CEO Ryan Bacher moved to Melbourne in Australia.
Technology has enabled people to work from anywhere and executives to run companies from a country of their choosing.
The problem for South Africa is that money flows out of the country, and these executives’ substantial tax revenue is lost.
There is no easy solution to the problem. The trend will continue unless the government creates a business-friendly environment and embraces high-net-worth individuals.
However, the ANC government has increased its anti-business and anti-rich rhetoric, which drives more businesses and executives out of the country.