Millionaires bid South Africa farewell

South Africa has lost 11,300 (20%) of its dollar millionaires in the past decade, the fourth-most of any African country, as high-skilled workers look for jobs in developed economies. 

This was revealed in the ninth Henley & Partners Africa Wealth Report, which outlines the key wealth trends across the continent. 

South Africa remains the wealth capital of the continent, with 37,400 dollar millionaires and 5 billionaires living in the country.

This is more than double the number of second-place Egypt. Nigeria, Kenya, and Morocco round out the top five.  However, Egypt has two more dollar billionaires than South Africa.

Africa’s millionaire population experienced a significant decline in the past decade, losing 8% as many immigrated out of the continent. 

Another major reason for the decline is the continent’s lacklustre economic growth, particularly in its main economic hub, South Africa. 

The local economy has performed poorly compared to its international counterparts. South Africa’s GDP growth rate has not exceeded 5% since 2007.

This has made it tremendously difficult to build wealth in the country as poor economic growth inevitably results in wealth-building assets, such as stocks and property, generating flat returns. 

The latest BRICS Wealth Report for 2023 by Henley & Partners explains the reasons why South African millionaires are leaving the country. 

High-net-worth individuals (HNWIs) tend to leave a country due to social, political, and economic instability. They prefer “safe haven countries” where their wealth can be protected easily. 

In South Africa, HNWIs are particularly concerned about their personal security and safety due to the rising crime rate and violence. 

Growing concerns around education and healthcare also cause rich people to want to leave the country. 

However, the future looks somewhat brighter for South Africa regarding wealth, with Henley & Partners expecting the country’s wealth to grow by 60% over the next decade. 

Due to its affordability, the country will also begin attracting foreign millionaires and billionaires. 

In particular, Cape Town is expected to see an influx of HNWIs, with its current 7,400 millionaire population set to swell by 85% over the next ten years to 13,500 in 2033.

RMB Morgan Stanley said earlier this year that South Africa stands out among its global peers because it offers an unexpected advantage in terms of affordability.

Over the last year, the rand has weakened about 9% against the dollar and euro and about 12% against the British pound.

This depreciation and South Africa’s fairly subdued inflation compared to other countries means relative prices for local goods and services on sale are cheaper than elsewhere.

“Consumers can drink nearly three cappuccinos in South Africa for the price of one in the US and could spend four nights in a Cape Town hotel for the price of only one in London,” said Mary Curtis, a strategist at the broker and Andrea Masia, an economist.

“Looking at the bigger picture, low relative prices of South African goods and services are just another example of the value in South African assets.”