As South Africa draws closer to the general elections on May 29th, an interesting development that has been noted by real estate and tax professionals in this country and was noted by The Times of London on 18 February, is the returning of expats to South Africa from Britain and mainland Europe.
This is, as the article notes, despite the multiple challenges of loadshedding, high crime and a severely underperforming economy. I should note that those are the reasons why many South Africans are choosing to emigrate. It is worth asking why people who have already escaped these debilitating challenges, and some who have been away since the 90s would come back.
While the article does offer its own reasons, I believe there are some quite rational reasons to come back and bet on South Africa, especially if an ANC/EFF coalition does not win in May.
Cost of Living
The most obvious reason is the cost-of-living crisis that is engulfing the developed world, especially around housing. It is one of the main reasons why Europe and the developed parts of Asia are having demographic crises. People have fewer children because of the cost of housing and childcare. Unlike in South Africa, very few people there can afford domestic and childcare help. The only exception to this, where there is a large population of South Africans, is the UAE.
South Africa offers exceptional value when it comes to housing costs (especially outside of Cape Town), childcare costs, schooling costs and domestic help costs. For comparison, even in the UAE, where tax-free incomes are surely a draw, sending your children to a school with a British or International Baccalaureate curriculum will set you back similar amounts (sometimes even more) to boarding at Michaelhouse and Hilton. Who can really say with absolute confidence that the education in the UAE or even Britain, Australia and New Zealand is better than South Africa’s much cheaper private and former Model C schools?
Are Dubai College or Auckland Grammar honestly better than Grey College Bloemfontein, KES or Rondebosch Boys? If anyone says yes definitively, what evidence could they possibly offer that is not denigrating those fine schools because they are in South Africa?
How about the fact that the foodie and fine dining scene in Johannesburg and Cape Town can rival any others, and I’d argue for Cape Town even outdoing many globally-fancied cities for a fraction of the cost of those cities. As an example, take FYN restaurant in Cape Town which is ranked as one of the top 50 restaurants in the world. Their dinner menu experience, while relatively expensive for locals, costs R3525 with a wine pairing. At the restaurant after it in the rankings, Danish restaurant Jordnaer’s, the dinner experience costs 3300 Danish Krone (R9200). The restaurant in front of it, Odette in Singapore, costs 733 Singaporean Dollars (R10450) with a wine pairing. Even adjusting for purchasing power parity, South Africa again offers immense value.
Weather and Fun:
South Africa also has much better weather and a lot more sunshine than places where many of our expats are, with the exception being Australia. South Africa has every possible amenity and adventure you could want, either within the country or a relatively short flight away: from wildlife in the Kruger, to the world-class wine farms of the Western Cape (five in the top 100 in the world as ranked by World’s Best Vineyard Awards in 2023), beautiful beach towns (getaways) in both the Eastern and Western Cape. Mauritius, the Seychelles and Zanzibar are a relatively short flight away and if you want a Dubai-esque desert adventure, Walvis Bay in Namibia is a two- hour flight away. There are luxury train experiences with the Blue Train and Rovos Rail. All this is just to say we have lots of pleasant weather and lots of really cool and awesome things to do at relatively cheaper prices than anywhere else.
Friends and Family:
As infuriating and frustrating as it is living in South Africa, for many expats it is still home and nothing compares to it. They miss friends and family and all the accompanying warmth and familiarity.
So what’s my point?
It is worth pondering on the fact that, relatively speaking, so many expats come back to South Africa despite all the potential frustrations and the multiple challenges. It is worth asking how many more would come back if South Africa were to fall under new management, if infrastructure and service delivery were to improve and management took on more pro-growth policies instead of redistributionist ones.
It is also worth asking what the cumulative effect would be on South Africa in terms of tax collection and revenue, if high-earning expats did come back, paying down sovereign debt. What would that mean for job creation?
It is worth asking what it would do for tourism and our international reputation if a new government prioritised public order and safety, and reduced crime and lawlessness.
Admittedly these are all big if’s, especially if an ANC/EFF coalition were to win. That is part of the real risk-and-reward nature of South Africa. We are one of the few food-exporting countries in the world, we are sufficiently developed. We have the potential to become a rather wealthy nation with all our minerals and with some really good management.
However, we could also collapse into a dreary and failed Zimbabwe-like state.
I guess we have choices to make in May.
