Africa’s wealth, both in terms of high-net-worth individuals (HNWIs) and precious commodities like gold, has been increasingly shifting to the United Arab Emirates (UAE). This significant outflow of resources is underpinned by complex socio-economic and political factors. We explain why hundreds of millionaires, and separately, tonnes of gold, are moving out of Africa and into the UAE.
According to Henley & Partners, South Africa and Nigeria are set to experience a notable exodus of millionaires in 2024. Projections indicate that South Africa will lose approximately 600 HNWIs, while Nigeria is expected to see 300 millionaires depart. Historically, South Africa has witnessed an annual outflow of 300 to 400 HNWIs, but the 2024 figures represent an unprecedented surge. Henley’s migration data shows that a majority of wealthy individuals from Africa are headed for the UAE.
Such migration is more than a statistical blip; it is a barometer of a country’s overall health and stability. The loss of these individuals, who often play pivotal roles in the economy through investments and consumption, could foreshadow a broader economic decline.
In South Africa, the upcoming elections have raised fears of new wealth taxes and the potential phasing out of private healthcare in favor of a government-run National Health Insurance model (NHI). High crime rates and persistent power cuts further exacerbate the living conditions, prompting many HNWIs to seek stability elsewhere. Nigeria, similarly, faces severe challenges, including religious tensions, high crime rates, and currency instability. These issues create an environment of uncertainty and insecurity, pushing wealthy individuals to consider relocation.
The UAE, particularly Dubai, offers an attractive alternative with its:
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Tax benefits:
The absence of personal income tax and favorable corporate tax regimes make the UAE a financially appealing destination.*
Business opportunities:
With excellent connectivity and a thriving business ecosystem, the UAE provides lucrative opportunities for entrepreneurs and investors.*
Quality of life:
High standards of living, safety, and luxury amenities enhance the overall appeal.The departure of millionaires is a significant blow to African economies. HNWIs not only contribute substantial tax revenue but also drive economic activities through investments and spending. Their migration results in a loss of foreign exchange and can deter further investments, leading to a vicious cycle of economic decline.
Beyond human capital, Africa is also witnessing a substantial outflow of its natural wealth, particularly gold. According to a recent report by Swissaid, an estimated $23.7 billion to $35 billion worth of gold is smuggled out of Africa annually, primarily ending up in the UAE for processing. Between 2012 and 2022, over 435 tons of gold were illicitly exported from Africa. This trade undermines economic stability by fueling conflicts, financing criminal networks, and facilitating money laundering. Mali, Ghana, and Zimbabwe are notable sources of this informal trade, which deprives these nations of significant tax revenues and perpetuates a cycle of economic hardship.
Several factors drive the smuggling of gold out of Africa:
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Tax evasion:
Informal miners can fetch better prices on the black market compared to official channels, leading to undeclared gold exports to avoid taxes.*
Regulatory loopholes:
Limited regulation and oversight in African countries make it easier for smuggling operations to thrive.*
Funding for conflicts:
Several militant groups involved in conflicts in African nations use the money generated from illicit gold exports to fund their activities.*
Operations involving child labor:
For gold mining operations that involve child labor, selling through official channels is difficult. As such, smuggling it is quite profitable.Dubai’s strategic location and status as a major trade hub make it a prime destination for gold smuggling. The Dubai Multi Commodities Centre (DMCC) has positioned itself as a global leader in gold trading, supported by state-of-the-art facilities and high demand for gold. The UAE’s regulatory environment, marked by relaxed import laws and minimal oversight, further facilitates the entry of smuggled gold. The lack of stringent documentation requirements allows gold to be traded quickly and discreetly, making Dubai an appealing market for international buyers.
