Amanda Smit is the Managing Partner at Henley & Partners South Africa.
The demand from South Africans for residence and citizenship by investment programs has increased significantly in recent months for multiple reasons, including concerns over the worsening energy crisis, currency volatility, crime and corruption, high unemployment and a failing education system, all of which continue to loom large.
In late February 2023, the Financial Action Task Force plenary officially grey listed South Africa, which could impact the country’s ability to access international financial markets and may lead to increased scrutiny from financial institutions and regulators.
In late April 2023, the South African Revenue Service implemented new changes to the tax clearance process for individual cross-border capital flows, specifically relating to foreign investment and emigration. While these are essentially system enhancements, the process has become more complex, which will impact anyone wanting to take money out of South Africa.
Henley & Partners has seen enquiries by South Africans shoot up by 66.8% between Q4 2022 and Q1 2023. They were also up by 49% in Q1 2023 compared to enquiries made in the same period in 2022. The percentage of applications made by South African nationals as a result increased by 340% in Q1 2023 when compared to Q1 2022.
The most popular program South Africans have enquired about in 2023 is the Portugal Golden Residence Permit Program, which received 28% of the enquiries. The reasons South Africans continue to favor Portugal typically revolve around the cost-effective real estate investment options starting from EUR 280,000, the very low physical presence required of seven days per year, the possibility to apply for citizenship after five years, and the climate-friendly, safe, and secure environment that the country has to offer. Namibia’s Residence by Investment offering, which is entirely real estate-linked, is close behind in second place with 24% of enquiries. Caribbean citizenship by investment options are also popular, particularly the St. Kitts and Nevis Citizenship by Investment Program which came in third with 17% , followed by the UK Innovator Program and the Mauritius Residence by Investment Program, which both received 15% of enquiries.
Africa’s second investment migration option after Mauritius, Namibia’s residence by investment offering, is particularly attractive for South Africans who wish to obtain a work permit and the right to reside or retire in Namibia. The requirements involve real estate-linked investment in the modern and sophisticated President’s Links Estate, an eco-friendly residential and golf estate in Walvis Bay, the ‘Bay of Whales’. Namibia is one of Africa’s most stable democracies, providing an excellent quality of life and a business-friendly environment. It is a country with a similar culture to South Africa, as well as being a mere two-hour flight from Johannesburg and Cape Town. Namibia also has a territorial tax system, which is beneficial for high-net-worth individuals from South Africa.
In most cases, our South African clients are not opting for investment migration to leave South Africa immediately, but rather to acquire alternative residence or citizenship. In diversifying their options, they can obtain greater global mobility, increased security, improved access to premium education for their children, and more extensive business opportunities. It provides them with an insurance policy, a ‘Plan B’ that enables them to safeguard their wealth, and significantly enhances their prosperity.