Why Africa is losing hundreds of billionaires and tons of gold to the UAE

African billionaires and gold are heading out of the continent to the UAE. Image source: AI-generated image

Africa’s wealth, both high net worth individuals (HNWIs) and valuables such as gold, is increasingly moving to the United Arab Emirates (UAE). This massive resource flight is underpinned by complex socio-economic and political factors.

We explain why hundreds of billionaires – and tons of gold – are migrating from Africa to the UAE.

The exodus of billionaires from Africa

According to Henley & Partners, South Africa and Nigeria are expected to see a significant exodus of billionaires in 2024. Forecasts suggest that South Africa is expected to see an exodus of around 600 millionaires, while Nigeria is expected to see an exodus of 300. Historically, South Africa has seen an exodus of between 300 and 400 millionaires per year, but the 2024 figures mark an unprecedented spike.

Henry’s migration data shows that a large proportion of Africa’s wealthy are heading to the UAE. This migration is not just a statistical blip, but a barometer of a country’s overall health and stability. The loss of these people, who often play a vital role in the economy through their investment and consumption, could be a harbinger of broader economic decline.

Why are billionaires leaving?

In South Africa, there are growing concerns about a new wealth tax and the possibility of phasing out private healthcare in favour of a government-run National Health Insurance (NHI) scheme ahead of upcoming elections. High crime rates and frequent power outages have exacerbated living conditions, driving many of the country’s wealthy to seek stability elsewhere.

Nigeria similarly faces serious challenges, including religious tensions, high crime rates and currency instability. These issues create an environment of uncertainty and insecurity, forcing its wealthy citizens to consider relocating.

Attractions of the UAE

The UAE, and Dubai in particular, offers attractive options such as:

Tax Benefits: The absence of personal income tax and a favourable corporate tax regime make the UAE an attractive economic destination.
business chance: With excellent connectivity and a vibrant business ecosystem, the UAE offers lucrative opportunities for entrepreneurs and investors.
Quality of life: High standards of living, safety and luxurious amenities add to its overall appeal.

The economic impact of billionaire migration

The flight of billionaires is a major blow to African economies. The wealthy not only generate significant tax revenues, but also drive economic activity through investment and spending. Their departure can lead to a loss of foreign exchange, discouraging further investment and sparking a vicious cycle of economic decline.

Gold smuggling from Africa to the UAE

Africa is not only losing its human capital, but also its natural resources, especially gold. A recent SwissAid report estimated that between $23.7 billion and $35 billion worth of gold is smuggled out of Africa each year, mainly to the UAE for processing.

Between 2012 and 2022, more than 435 tonnes of gold was illegally exported from Africa. This trade undermines economic stability by fueling conflict, funding criminal organisations and facilitating money laundering. Mali, Ghana and Zimbabwe are prominent sources of this informal trade, which deprives these countries of significant tax revenues and perpetuates a cycle of economic hardship.

Why is gold smuggled out of Africa?

There are several factors that lead to gold smuggling out of Africa.

tax evasion: Informal miners can fetch higher prices for their gold on the black market than through official channels, leading to undeclared gold exports to avoid taxes.
Regulatory loopholes: African countries have limited regulation and oversight, making it easier for smuggling activities to flourish.
Financing the conflict: Several extremist groups involved in conflicts in African countries use money from illicit gold exports to fund their operations.
Work involving child labor: Gold mining, which involves child labour, makes it difficult to sell through legitimate channels, so smuggling can be very profitable.

Dubai’s role in gold trading

Dubai’s strategic location and status as a major trading hub make it a prime destination for gold smuggling, and Dubai Multi Commodities Centre (DMCC) has established itself as a global leader in gold trading, fuelled by state-of-the-art facilities and high demand for gold.

The UAE’s regulatory environment, with loose import laws and minimal oversight, further facilitates the flow of smuggled gold. With no strict documentation requirements, gold can be traded quickly and discreetly, making Dubai an attractive market for international buyers.

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