Why millionaires are leaving South Africa


The number of millionaires in South Africa has plunged 18 per cent in a year; this was revealed in a report by global wealth sector researcher, New World Wealth.

According to the report titled, “The South Africa 2016 Wealth Report”, high-net-worth individual (HNWI) volumes declined from 46,800 at the end of 2014 to 38,500 at the end of 2015 as a result of the lowly economic environment in the country.

“This decline was mainly due to poor economic conditions – the rand deprecated by 25 per cent against the US dollar and the Johannesburg Stock Exchange was down 22 per cent in US dollars terms during the year,” Andrew Amoils, Head of Research at New World Wealth.

The report estimates that South Africa lost about 950 millionaires due to emigration last year, with some relocating to the United Kingdom, Australia, USA, Canada, Mauritius and Israel.

Millionaires Leaving

The working definition for “Millionaires” and “high-net worth individuals” in the report, are people with net assets of 1 million dollars or more.

As part of the report, New World Wealth also created a scorecard of the main factors that encourage wealth creation in a country where South Africa scored 4/10 overall.


Strong ownership rights

4/10 – This is the most critical component of successful wealth creation globally. Ownership rights are becoming a contentious issue in South Africa – many feel that white-owned land and businesses should be distributed back to the African majority. Neighbouring Zimbabwe offers a case in point as to what happens when ownership rights are stripped – once assets are taken away they tend to lose value as no one is willing to buy anything. Compulsory BEE ownership undermines ownership rights.

Strong economic growth

3/10 – South Africa scores moderately here, with GDP growth of 1.4% in 2015. Moderate growth of 1.5% forecast for 2016 (source: EIU Viewswire).

A well-developed banking system and stock market

9/10 – South Africa has the best developed banking system in Africa and a well-developed stock exchange. This encourages people to invest their money within the country and grow their wealth locally. It also ensures that any economic growth filters through to wealth creation.

Free and independent media

8/10 – South Africa has a well-developed free media including major independent publications such as the Beeld, the Sunday Times, the Business Day and the Mail & Guardian. This prevents government from getting away with wrong doing. It also sets South Africa apart from most other African countries.

Low level of government intervention

2/10 – This is arguably the largest problem in South Africa, as the ANC government increasingly tampers with the business sector. Ongoing issues include: government owned monopolies such as Eskom, BEE ownership and compulsory Affirmative Action hiring requirements enforced by government. All of these factors create large inefficiencies within the economy.

Low income tax and company tax rates

1/10 – South Africa has high tax rates when compared to other emerging markets in Africa and abroad. This deters business formation and expansion of businesses. Dubai and Singapore are examples of the power that tax rates can have in encouraging business formation – both have very low tax rates.

Ease of investment

2/10 – South African exchange controls are a legacy of the apartheid government. They make it difficult and complicated for foreign companies to invest in South Africa. They also discourage local companies and individuals from doing business abroad. Perhaps of most concern, they show that the local currency cannot be maintained without interference.

Low level of trade union involvement

1/10 – South Africa’s unions have become increasingly active over the past five years, which has driven up wages and hence pushed up unemployment and inflation. It has also resulted in the closure of several mines and discouraged new business formation. The recent postal and platinum strikes lasted almost five months.