With the coronavirus pandemic continuing to create instability worldwide, and economic migration offering both an insurance policy and the option for a better life, there has been a huge spike in demand for citizenship by investment from high-net-worth investors in African, especially Nigerians and South Africans.
In fact, Nigeria and South Africa dominate economic citizenship demand from Africa with the two countries accounting for 85% of CBI business currently being done by one of the world’s largest global citizenship advisory firms, Henley & Partners.
According to a recent report by Henley & Partners, in terms of quarterly growth in the number of enquiries between Q1 and Q2 of 2020, the sharpest rise was seen in Nigeria, Africa’s largest economy, with the firm recording an “astonishing 185% increase in enquiries from Nigerian citizens and an increase of 48% from South Africa”.
While there has been an increasing rise in demand for citizenship by investment from Nigerians over the last three years, according to Henley & Partners, which opened an office in Nigeria (Lagos) in June this year in response to such demand, the last six months has been especially busy with an explosion of interest in CBI from Nigerian HNWIs.
“The reason we opened in Nigeria is because we saw significant potential in the market with growth in private wealth without global mobility for high-net-worth individuals,” Paddy Blewer, PR director at Henley & Partners, told QuartzAfrica. What you essentially have with Nigerians, he explains, is a “community of wealthy individuals who cannot travel without visas”.
Leading citizenship by investment company, Passport Legacy, which boasts a network of offices spanning the Middle East and Southeast Asia, also opened an office in Nigeria in the summer, having witnessed exponential demand on the African continent for second citizenship due to the continued growth and rising purchasing power of Nigerians.
“Some of our most important clients are in Africa and Nigeria is one of the most sophisticated emerging markets in Africa,” explains Passport Legacy’s managing partner Jeffrey Henseler.
The enormous instability driven by Covid-19 is pushing scores of HNWIs, including Nigerians, to re-evaluate their circumstances and to seek second passports to less politically and economically exposed European and Caribbean countries for both themselves and their families.
The country’s weak economy and passport are driving Nigerians to CBI
For Nigerians, the reasons for wanting to obtain second citizenship are twofold. Firstly, the oil-dependent Nigerian economy has been battered by the pandemic and is set for its worst recession in three decades.
Secondly, the weakness of the Nigerian passport, which has seen the worst decline in its power of any other passport over the past decade. Nigeria’s passport has seen a 19-place drop, falling to 95th place in the rankings in 2020, with visa-free or visa-upon-application access to just 46 countries, according to the Henley Passport Index. And even visa-on-application processes are proving increasingly complicated for Nigerian citizens.
The result is especially difficult for Nigerians when it comes to doing business and improving educational opportunities, with up to 75% of African students who applied for study permits in Canada between January and May 2019 rejected, far higher than the global rejection rate of 39%.
Nigerians are looking to the Caribbean islands especially
To counter this, HNWIs from Nigeria are increasingly looking for second citizenship in countries which offer them much greater freedom of movement. Nigerians appear to be especially interested in the Caribbean programmes from Antigua and Barbuda, Saint Kitts & Nevis, and Grenada, as well as the CBI Programme offered by Montenegro and the Residence by Investment Programme delivered by Portugal.
These programmes offer improved mobility, with Saint Lucia’s citizenship giving Nigerians triple the number of countries to which they can currently travel visa-free.
Just a year ago, Saint Lucia’s CBI Programme had not received any applications from citizens of Africa in its nearly five years of operating, however, from April to August 2020, it issued nearly 60 passports to Nigerians and reports steady increases in applications from the country.
South Africans are choosing CBI due to tax reasons
For South Africans, the sharp rise in enquiries in the securing of second citizenship is mainly about the country’s citizens wishing to cease their tax residency and avoid the expat tax. Currently, South Africans living overseas pay tax on anything above their first R1.25m made outside the country, with the rest of their earnings now being taxed according to the normal tax tables for the year, which can be up to 45%.