Specialists in EB-5 Investments

New emigration record predicted for 2018

*This content is brought to you by LCR Capital

2015 saw the highest emigration from South Africa since 2000. A quarter of emigrants who’ve left South Africa since 2000, did so in 2015. In 2014, the proportion was 11% and in 2013 it was 9%.

“The numbers show that there was a dramatic increase in emigration in 2015, and we expect to see even more people leaving the country in 2018,” said Marc J. Sharpe, Partner and Managing Director at LCR Capital Partners.

“We’re expecting this increase because of the unprecedented interest we’ve had from South Africans wanting to emigrate to the U.S. since 2016,” said Mr Sharpe.

“Given that it usually takes around two years to go from making arrangements to leave, to actually leaving the country, we will probably only see the full emigration impact in 2018 or 2019.”

What’s driving emigration?

It’s the usual reasons, including the pursuit of economic opportunities abroad, access to better education for your kids, and getting away from violent crime. “But we’re also seeing an increase in deep-seated pessimism about the future in South Africa,” said Mr Sharpe.

As almost every government department and state-owned entity has been dragged into the mire of corruption, people are questioning the competence of those appointed, and their ability to keep providing basic services such as water, electricity, policing, etc.

Read also: Life in America still an option for South Africans – $500k EB5 visa fee extension

“South Africans already know what an electricity crisis is like, and residents of the Western Cape are currently living with a severe water crisis. As people lose confidence in government’s ability to provide even the most basic services, they start to look for other options, particularly for their children,” said Mr Sharpe.

It’s getting more expensive to leave

Another driving factor is the ever-increasing cost of leaving. If you’d applied for an EB-5 Visa to the United States in 2015, you would have needed around R5,7m to invest. Today, that figure is around R7,2m thanks to the ongoing depreciation of the Rand.

As the situation in South Africa deteriorates, so too does the currency. This means your exit plan only becomes more expensive the longer you wait.

Changes at Congress

For those considering America’s EB-5 visa, there’s another factor to consider: The United States Congress is expected to revise the EB-5 program on or before December 2017. Industry insiders expect them to increase the minimum investment amount required from $500k to at least $800k, or more likely closer to $1m.

Those who apply before December are unlikely to be affected by any changes made, but once the minimum investment amount is increased, this program will become unaffordable for many South Africans; and certainly a lot more difficult for everyone due to exchange control regulations.

Timeline of deterioration

Given all that’s happened since 2015, the 25% of emigrants who left the country that year are probably feeling pretty happy with their decision. They missed Nenegate. They missed the violent Fees Must Fall protests on university campuses. They missed the release of the Public Protector’s report on State Capture. The firing of Pravin GordhanJunk statusBell PottingerKPMG. The endless cabinet reshuffles. The many failed motions of no-confidence.

They are reading The President’s Keepers in Los Angeles, in Sydney, in London, and they’re probably feeling relieved that they’re not still here, not still weighing up the decision, not still having to pack bags and sell property.

So where will you be when the next wave of bad news hits? If Nkosazana Dlamini-Zuma becomes president? If the nuclear deal goes ahead? And what about the long term if an already struggling economy is pushed to the brink by a sovereign debt crisis?

“Right now, it seems that many South Africans trying to find a single indicator pointing to a brighter future in the country,” said Mr Sharpe. “They are opting for emigration as a safety net. They can move to the U.S.  relatively quickly with a fairly high degree of certainty. Once they have their green cards, they can re-assess. If things are looking better, they can move back to South Africa. If not, they’ll be relieved they left when they did. For those who can afford it, it’s a very attractive option.”

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