Rand weakens

Photo: Adobe Stock

Rand weakens as South Africa’s rich leave for greener pastures

The New World Wealth South African report for 2019 shows the patterns of the country’s wealthiest people.

Rand weakens

Photo: Adobe Stock

A recent report by New World Wealth showed a bleak outlook as the number of High Nett worth Individuals (HNWI) decreased. Some of this decrease is attributed to HNWI choosing to leave our shores.

For the purposes of the report, HNWI are classified as individuals with net assets of $1 million or more. The report found that there are currently 39 200 HNWI down from 43 600 last year.

The uncertain political climate, failing SOEs and apparent state capture have served to erode the value of the rand. The currency has had a torrid time, and this has affected the dollar value of South Africa’s financial elite.

“This drop was facilitated by a weakening local currency – the US$ exchange rate went to R12.30/US$ at the end of 2017 to R14.40/US$ at the end of 2018.”

With the poor outlook and seemingly no end in sight, many of those with means are choosing to leave the country in search of greater opportunity or just financial stability. According to the report:

“Based on our estimates, around 3 000 HNWIs have left South Africa over the past 10 years. Most of these individuals have gone to the UK, Australia and USA. Switzerland and Portugal are also destinations.”

The trend of HNWI leaving the country fits in with the results of a separate report by PPS.

This report highlighted the apparent “brain drain” as skilled professionals are deciding to leave the country for destinations where their skills are required.

The trend of skilled professionals leaving the country is one that should be of particular concern for policymakers.

To resource the many plans for job creation, medical reform, and improved public works, it will be critical to creating a safe and stable environment that remains appealing to South Africa’s young professionals.

Motshabi Nomvete, head of technical marketing at PPS, explained:

“If government and business can work together to create a mutually beneficial and viable platform for opportunity and success, then we will increasingly see more skilled professionals wanting, and choosing to stay. And once we reach a tipping point, not only will we stop the brain drain, it could actually start reversing.”