South Africa needs to find ways to limit the drain of young entrepreneurs brought on by limited job opportunities, economic instability and political uncertainty, say experts. Picture: Supplied
South Africa needs to find ways to limit the drain of young entrepreneurs brought on by limited job opportunities, economic instability and political uncertainty, say experts. Picture: Supplied

Brain drain looms for struggling SA

By Joseph Booysen and Yolisa Tswanya Time of article published Dec 18, 2015

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Cape Town - Economic instability and political uncertainty are changing the face of South African society with young entrepreneurs moving abroad, established businesspeople obtaining dual citizenship and an increase in those selling property so they can emigrate.

South Africa needs to find ways to limit the drain of young entrepreneurs brought on by limited job opportunities, economic instability and political uncertainty, say experts.

Many established entrepreneurs are also obtaining duel citizenship to hedge their bets in case of a worse economic scenario but other “older” expatriates are returning after living abroad for several years.

Janine Myburgh, the president of the Cape Chamber of Commerce and Industry, said the country has lost some of the best and brightest young people and many of them have become outstanding achievers in their new countries.

“It is inevitable that any modern country will lose some of its best young people as they seek better opportunities elsewhere but I think we have lost more than our fair share.

“Unfortunately, many of them are the entrepreneurs who could have built great businesses here and created jobs for many thousands who are unemployed today.

“When businesses talk about legislation, regulations and red tape that discourage investment in this country, we include the investment of talent and expertise.”

Myburgh added that well-educated people with energy and drive are the true wealth of any country and one of the reasons why South Africa’s economy is in the doldrums is because the country has lost too many of them.

“We need to ask why so that we can find ways to slow down the brain drain.”

FNB economist John Loos said he did not have hard evidence of a renewed surge in the level of skilled people leaving the country, but he expects this to “intensify” as the economy has embarked on a longer term stagnation than expected a few years ago.

He said in his FNB Estate Agent Survey, the percentage of those selling to emigrate was about 4 percent of the total, up from nearer 3 percent a few quarter terms ago.

This level remains low compared to double digits seven years ago when much the global economy began to slide, so it doesn’t confirm a major rise in emigration.

“However, I expect the percentage of emigration-related selling to rise somewhat in 2016,” he said.

Arton Capital’s vice president for business development in Africa, Jacques Scherman, said people who approach the company for the purpose of investigating the possibility of securing a second citizenship are not necessarily interested in leaving the country.

“Instead they are establishing a safety net and preparing for a ‘worse comes to worst’ scenario.

“A Zimbabwe-style economic and political meltdown, if you will.

“These people generally have their friends, families and livelihoods here, they see South Africa as their home and they are reluctant to physically relocate abroad.”

Scherman said the firm’s clients tend to be older and well established financially and their concerns are typically with the uncertain political and economic state of the country.

“The perceived regression of academic institutions for their children also plays a part as a consequence of political and other factors.

“Youngsters appear much more upwardly mobile and willing to relocate to further their careers, although some do return after a period abroad.”

Statistics SA has reported that in 2014, research indicated that older adults dominate employment in skilled occupations. They accounted for 68.3 percent of these occupations while youth accounted for only 31.7 percent.

The research also showed that in every province, discouragement about employment is higher among youth compared with older adults. But on the other hand, many older expatriates are returning and people with financial backing from other African countries are increasingly buying property here.

The percentage of the working-age population that were discouraged was highest among the youth in Eastern Cape, Limpopo and North West, and lowest among the youth in Western Cape and Free State.

Pam Golding Property’s chief executive, Andrew Golding, said there was no noticeable variation in the established trends of people departing the country despite economic and other challenges.

Chief economist at the Institute for Race Relations, Ian Cruickshanks, said the economy has experienced a negative growth in recent years and the growth “has become past tense”.

“This is causing emigration to grow and that’s when you see lack of understanding of modern economic forces from the ANC.

“Those that are leaving are the previously privileged, not previously unprivileged. They have been denied so much for so long. People are leaving because of the mismanagement of the economy.

“We can all see the problem but most of us can’t think of living anywhere else, because we have enjoyed too much for too long. Homesickness from older generation is causing them to come home.”

Chief economist at Pan African Capitol, Iraj Abedian said it is dangerous that so many young entrepreneurs and skilled individuals were leaving the country: “The younger generation, both entrepreneurs and skilled individuals, are engines of development in any country.

“Countries that don’t take care for young talent are on the road to self destruction. That is true and has been true for many third world countries.”

He said those who are coming back to the country are older retired expatriates and are now able to live comfortably off money they made when abroad.


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