Johannesburg, South Africa – Recent data indicates that approximately 6,000 South Africans emigrated overseas in the last year. Over the past five years, this number has reached an estimated 40,000. Experts believe that the decline in emigration could be due to the stringent tax compliance requirements that individuals have to meet when moving out of the country.
The majority of those who are emigrating are within the age bracket of 25 to 34. However, experts suggest that the actual number of emigrants could be higher, as many people have moved abroad without declaring their income to the South African Revenue Service (SARS).
In light of these developments, financial experts have encouraged South Africans to consider offshore investments as an alternative to emigration. This comes as an appeal to national pride and an effort to retain human capital within the country.
A financial expert opined, “As a proud South African, I don’t want to see people leaving the country. The best way to hedge against the Rand depreciating over time is to ensure that investments are largely based in foreign currencies such as Euros, Dollars, or Pounds.”
Concerns over the volatility of the South African Rand and its depreciation against major currencies have led to a rise in offshore investments. However, individuals are currently only allowed to invest a maximum of 45 percent of their earnings into offshore investments. There is a widespread apprehension about holding portfolios in Rands, and many believe that having a significant portion of investments in foreign currencies is prudent.
Furthermore, Regulation 28 has been progressively increasing the limit to which South Africans can invest abroad. This is an indication of the growing trend and demand for offshore investment opportunities.
Additionally, Cesar, a financial analyst, points out that online jobs are providing considerable opportunities for young South Africans to earn in foreign currencies. A number of these individuals choose to leave their earnings outside the country, further indicating a preference for holdings in stronger currencies.
For those looking to move more than 1 million Rand out of the country, an approval for international transfer document is required, which can be a deterrent for some.
The current trend points towards a younger demographic seeking financial stability through offshore investments and earnings in foreign currencies. This has implications for the South African economy and workforce, as the nation grapples with the retention of skilled professionals and the fluctuating strength of its currency.