Views Article – Sharenet Wealth

South Africa

Potatoes and emigration

In 1840, the average Irishman ate more than 6kg of potato per day. Of Ireland’s 8.2 million people, nearly half depended on potatoes as their main diet staple. Five years later potato crops across the country began rotting due to a fungus called phytophthora infestans – or simply “potato blight”. This particularly affected the Irish Lumper variety of potato. The country’s over-reliance on this one variety, among many other factors, led to what has been known as the Great Famine. By 1849, more than one million had died and at least another million emigrated – a population decrease of 25%. This began a trend of emigration for centuries to come and by 1890, 40% of Irish-born people were living abroad. With a current population of 4.8 million, Ireland has still not recovered from a century of population decline.

Present day South Africa faces a similar challenge: a skills famine. Skilled and educated individuals as well as entrepreneurs are leaving the country. This “brain drain” is a very real phenomenon plaguing most African nations. There are more African scientists and engineers employed in the US than there is in the whole of Africa. The number of practicing doctors in Zambia has reduced from 1600 to 400 over only a couple of years. The International Organisation for Migration (IOM) estimates that since 1997, the brain drain has cost Africa $9 billion in lost potential.

A 2017 academic paper estimated that there for every one skilled individual entering South Africa, 8 are leaving. Approximately 68 people skilled people and 5 wealthy individuals are leaving South Africa every day. Home Affairs does not keep record of how many South Africans emigrate (who knows what they keep record of), but fortunately most migration destinations do. The UK, Australia, and New Zealand all show a sharp increase in the number of South African arrivals.

Why are South Africans leaving?

It is close to impossible to quantify the cost of South Africans moving their wealth overseas or emigrating altogether. There are numerous reasons why people are leaving and its perhaps trivial for me to mention them – there is also a word constraint on this article. The closest source of any data on the subject is a survey conducted on MyBroadband for IT professionals planning to leave the country. The reasons are perhaps not as dramatic as widespread starvation, yet unlike 1800’s Ireland the individuals leaving are not lower class and uneducated but rather wealthy and educated.

How many South Africans have left?

Migrant stock is defined as the number of individuals born in a country other than in what they live. The number of South African migrant stock essentially means the number of South Africans who are living abroad. This graph illustrates the large trend in South Africans who find themselves living abroad. Since 1995, the number of South Africans in developing countries grew by 45%, but the number in developed companies grew by 211%! The data supports the theory that there is an ever-increasing number of South Africans leaving for better conditions offered by developed countries.

Where are they going?

The demographics of those leaving are constantly changing as well. Recent findings show that the number of skilled black individuals exceeds white emigrants – further pointing that the main reason is better employment for skilled individuals. The top destinations agree with the migrant stock data as the most favoured countries are developed nations – an obvious deduction but one supported by numbers.

One should also bear in mind the cascading effects of the brain drain and wealth drain. The current pattern is sure to dramatically alter the landscape and behaviour of the middle and higher class – as well as the lower class they employ. Even small nuances, such as changes in spending habits could filter through to retailers and schools – particularly private ones – could see a drop in enrolments.

The true costs and economic impact of South African emigration is near impossible to calculate. While it is not as severe as Ireland’s migration post-famine, it is still significant. The effects will not be as obvious as a population decline, but the economic and political impact will be notable to say the least. It is important to remember that while emigration has its own impact, it is but a symptom of a greater famine caused by potato blight.

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Aidan van Niekerk

Junior Investment Analyst

Aidan is responsible for quantitative research and stock-market analytics. He has a keen interest in all things numbers and - in addition to working for Sharenet -  is a full time BSc Mathematics and Statistics student at Unisa. Aidan has represented South Africa at a professional level in road cycling where the rigorous demands and self-discipline has prepared him for the markets. He aspires to one day complete a Master's degree in statistics and delve deeper into the world of algorithmic trading, market analytics, and financial modelling.