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South Africa’s centre is not holding and as the South African state fails, its citizens need to take practical steps to ‘state-proof’ themselves. That was the crux of a message delivered by Free Market Foundation CEO David Ansara at the Rand Club in Johannesburg recently.
In tandem with diminishing state capacity, the state is expanding into more and more areas, including economic and industrial policy. This expansion, explained Ansara to BizNews’ Alex Hogg the day after the Rand Club address, represents a threat to ordinary South Africans given that the state – far from being a neutral actor – consists of a set of competing interest groups, many of which are hostile to the private sector and even basic freedoms. Which is why, he said, South Africans need to protect their assets, their way of life and even their property from malevolent state actions.
Ansara advised minimizing your tax burden as far as possible by, for example, incorporating a holding company in Mauritius to lower your corporate tax rate. He also advocated for offshore investments, mirroring the advice that independent financial adviser Magnus Heystek has been giving people for more than a decade.
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Writing in BizNews recently, Heystek said all wealthy South Africans should be “offshoring” as much of their wealth as possible – what he calls a “get-off-the-grid strategy - to protect their lifestyle in South Africa.
“A simple analysis of the investment returns of offshore versus local investments over the past 10 to 15 years shows that anyone without some kind of offshore assets has become substantially poorer in global terms, whether it be property (listed and residential), shares and pension funds,” wrote Heystek.
Click here to view investment opportunities in Mauritius
Heystek goes on to write that the best way to “state-proof” you and your family is to “create structures in a place such as Mauritius by setting up trusts, companies or foundations, whenever such structures are applicable to your personal situation. The more you can break the hold the state has or ever could have over your financial affairs, the better.”
Heystek has been advising clients to invest offshore for the past 15 years, many of whom have invested in Mauritius. Few, however, have physically emigrated despite the fact that their assets have emigrated, he reveals, adding that these clients “have prospered”.
Amongst the advice Heystek offers to clients to state-proof themselves from a failing South African state is to sell down local property assets as much and as soon as possible and consider renting rather than buying, especially when retiring. The only exception to this is certain pockets in the Western Cape.
Move all your discretionary investment offshore while you still can as the offshore investment allowance could be cancelled overnight.
Consider moving your offshore assets and investment portfolio into a Mauritian trust and if you have a business which can offshore some of its operations, do it.
If you decide to buy property in Mauritius, do so in the name of a trust with your children as beneficiaries. Many South African families, he reports, have used this route to get residency for the whole family in Mauritius.
For more information, contact Marc d’Argent, +23052564477, marc@harcourts.co.mu
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