SA’s dollar millionaires: A not-so-good story for the country

Nearly 40,000 professionals in South Africa are bagging income worth millions of US dollars, but while commendable, this is only good news for the rich themselves, says economist Peter Baur.

The news is contained in the latest New World Wealth report, which reveals that 38,400 dollar millionaires currently operate in South Africa. The largest portion of the country’s high-net-worth individuals (HNWIs) acquired their wealth through the financial and professional services.

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This includes banks, law firms, accountants, fund managers and wealth managers. They are closely followed in the sector-tier list for wealthy professionals by the real-estate sector.

Commenting on the report’s implications, medical scheme group Profmed has set its sights on this growing pool of well-to-do South African professionals, according to a recent statement.

“The professional talent in South Africa is the backbone of economic progression and understanding how to leverage this talent means understanding and showcasing the success of the individuals who collectively make up the Future Professionals of South Africa,” says Profmed principal officer Craig Comrie.

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South Africa is an economic hub that contributes R1.9 trillion – one third – to the entire African continent’s gross domestic product (GDP).

These 40,000 odd professional dollar millionaires are key to South African economic success, the company says in a statement, adding that Profmed continues to invest in the future professional based on the commercial ramifications for SA Inc.

Today’s professionals are evolving, Comrie observes of the emerging rich South African professional. ”

They are leaders, innovators, disruptors and encompass the  future professional in South Africa. The professionals of today are armed with skill sets that are contrast with their predecessors and will continue to evolve to entirely new beings, tomorrow.”

SA’s top performing sectors are as follows:

• Pharmaceuticals and healthcare
• Transport and logistics
• Finance and banking
• Mining
• Communications and information technology
• Finance and banking
• Agriculture and agro-processing
• Fashion and beauty
• Automobile
• Real estate

Large wealth gap does not bode well

But according to Baur, while a more free-market approach to the economy is beneficial for investor confidence, one cannot ignore what lies at the other end of the wealth spectrum in South Africa.

Growing wealth among the wealthy in South Africa shows that despite the deepened poverty experienced by the vulnerable populace during the Covid-19 pandemic, the economic system still favours the rich by a growing margin.

“The amount of 25 year olds or under who are unemployed sits at about 60%. That is the young group of people who have come out of school, they are ambitious and want to work, but they are forced into these horrible conditions. They are unemployed and probably experiencing poverty they are brutally angry.”

The Covid-19 pandemic has not added towards job creation, argues Baur. Many of the three million people who have lost their jobs will likely not find themselves back in employment.

“If the health sector has blown up it just means that the state has failed in terms of healthcare, in my opinion. Why are we not able to give quality healthcare to everybody? Why are we forced to go to a private doctor? Why must I have a medical aid in order to get quality healthcare?” he asks.

“We need to roll out these vaccines? Why is it easier for me to go to a private healthcare facility than to go through the state system? It’s wrong! Yes, the problems that we have of inequality will take generations to fix. The apartheid legacy has created such a huge hole and we know that. My concern is why the gap is continuing to widen.”

Statistics SA recently announced that the South African GDP had grown by 1.1% in the first quarter of 2021 (January–March), translating into an annualised growth rate of 4.6%. This follows a revised 1.4% (annualised: 5,8%) rise in real GDP in the fourth quarter of 2020.

simnikiweh@citizen.co.za