In 2024, wealthy South Africans are employing a range of strategies to safeguard and grow their wealth, especially after the past couple of years’ unstable economic and political environment.
According to Henley & Partners, many high-net-worth individuals (HNWIs) are increasingly seeking ways to diversify their assets and reduce exposure to local risks, which include a weakening currency, high taxation, and political uncertainties.
One of the primary tactics is investment migration, where affluent South Africans opt for residency or citizenship through investment programs in countries with more stable economies, better tax regimes, and improved global mobility.
Nations such as Portugal, Malta, and Mauritius have become popular destinations for these individuals, offering not only financial security but also a hedge against local currency depreciation.
This global mobility allows them to protect their assets in stronger currencies and ensure access to international markets.
However, those who choose to stay in South Africa are increasingly turning to offshore investments.
A primary factor driving this offshore movement is the desire for diversification. As local markets struggle, with the Johannesburg Stock Exchange (JSE) showing weaker returns and a shrinking list of available companies, affluent investors are broadening their horizons.
Regulatory changes, such as the South African Treasury’s decision to allow pension funds to invest up to 45% of their assets offshore, have further facilitated this trend.
Offshore investments provide access to international sectors and industries—such as technology, healthcare, and renewable energy—that are not well represented locally.
This enables them to benefit from growth opportunities not available within the South African economy, thus lowering their risk profile while gaining exposure to stronger, more diversified economies.
Efficient Group chief economist Dawie Roodt noted there are still many investable companies on the JSE, but investors should stick to highly liquid stocks that they can sell at short notice if needed.
Furthermore, they should invest in companies that provide a rand hedge to protect them from the depreciation of the rand.
A rand hedge stock is a company listed in South Africa that earns a significant portion of its earnings outside the country in dollars, euros, or pounds.
Examples of these companies include Naspers, Prosus, Richemont, Anglo American, AB InBev, BHP Group, and Glencore, among others.
Many HNWIs are also investing in international real estate, particularly in regions like Europe and the US, which offer stable returns and the potential for capital appreciation.
Additionally, they are investing in stocks, bonds, and raw materials, such as gold, which have historically acted as hedges against inflation and currency devaluation.
With the South African rand weakening, investing in precious metals like gold, silver, and platinum is seen as a way to preserve wealth.
Private equity and venture capital are other avenues that South Africans are using to protect and grow their wealth.
By investing in innovative start-ups and expanding brands, they are tapping into the global trend of growth in sectors such as technology and renewable energy.
Philanthropy is also becoming a prominent tool for preserving wealth.
Many wealthy South Africans are strategically aligning their charitable giving with long-term financial planning.
Setting up family foundations or trusts allows them to give back to society, benefit from tax exemptions, and maintain control over resource allocation.
These strategies underscore the broader trend of South African elites looking outward for financial security.
With rising economic and political challenges in the country, these moves reflect a desire for safety, flexibility, and continued wealth generation, even as they navigate a challenging local landscape.
While some rich South Africans are taking their wealth offshore to protect against local risks, they are also carefully considering how to balance international exposure with domestic opportunities.
This complex strategy reflects both a response to current economic conditions and a forward-looking approach to wealth preservation.
