4 Reasons for South Africa’s Private Wealth Decline

Data from New World Wealth and Henley & Partners show that South Africa has continued to lose millionaires over the past decade, with net wealth also falling precipitously over the same period.

The report focuses on High Net Worth Individuals (HNWIs) with wealth of $1 million (R15.70 million) or more. Total wealth refers to the private wealth held by all individuals living in each country. It includes all of their assets – property, cash, stocks, business interests – minus liabilities.

The data shows that the country had 39,300 HNWIs in 2021, approximately 5,500 individuals less than in 2011 (44,800).

Over the same period, the total private wealth held in the country has decreased by 12%, from $739 billion in 2011 to $651 billion in 2021. The country is home to approximately 2,080 people with a net worth of over of 10 million dollars (158 million rand) and 94 centi-millionaires. with a net worth of $100 million+ (R1.58 billion).

New World Wealth said this decline in wealth over the past decade can be attributed to several factors, including:

  • A falling currency – the rand depreciated from R8.10/dollar at the end of 2011 to R15.90/dollar at the end of 2021 (this has since weakened to R16.28 in May 2022);
  • A sluggish local real estate market – prime residential indices are down significantly when measured in dollars;
  • A large number of local businesses closed during the period, particularly in the small and medium-sized business sector;
  • The continued migration of wealthy people out of the country, data from New World Wealth shows that around 4,500 HNWIs have left South Africa in the last decade.

“In particular, a large number of South African billionaires have left the country in the last 10 to 20 years. Notably, there are 15 South African-born billionaires in the world, but only five of them still live in South Africa,” New World Wealth said.

Security levels in a country and the effectiveness of local policing are probably the most critical factors in encouraging long-term wealth growth, the report showed, once a region that has a miserable record in South Africa, and is a big reason many have left.

Economic growth is another reason to stay and thrive, while government manipulation in the business sector also creates great inefficiencies within an economy, the report’s authors said.

“State and parastatal companies can pose problems – as in the case of the electricity company Eskom in South Africa.”

He pointed out that South Africa is by no means alone in losing wealthy people. All BRICS countries (Brazil, Russia, India, China and South Africa) have lost large numbers of HNWIs to migration over the past decade. Egypt, Turkey and Nigeria also lost substantial numbers, he added.

On a positive note, the group said there was a trend of wealthy people returning to South Africa, particularly from the UK. “This is a notable trend that we are tracking, and we should have more statistics available on this in the next report,” the report’s authors said.

Read: The South African rand is undervalued – here’s where it’s currently heading, according to Absa

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