Buy a new nationality

2014-03-16 14:00

Money can buy most things, including a new nationality. Now that Africa is spawning its fair share of ultrahigh-net-worth individuals, the “citizenship planning” industry is taking note.

Arton Capital, a company that facilitates the trade in citizenship, launched an office in Cape Town this week from where it will begin targeting Africa’s newly rich.

Arton basically acts as a middleman between the handful of governments that sell residence permits or citizenship – and the rich who might need a second home.

It has even copyrighted the expression “global citizen” in Canada, the US and Europe, and markets its services as helping clients become free-roaming cosmopolitan globetrotters.

“I don’t think the demand will be as big as from the Middle East, but [the Cape Town office] can be a hub to Nigeria and Angola, where there is lots of demand, lots of new wealth,” says president and CEO Armand Arton.

The industry mostly sells developed-world citizenship to the rich of the relatively unstable developing world.

“You often see it with the first wealthy generation, like in China,” says Arton, who made his first trip to South Africa last year for the World Economic Forum in Cape Town.

Speaking to local businesspeople, it became clear they don’t really know about their options in the world of “citizenship planning”, he told City press this week.

About 60% of the market comprises rich Chinese people and much of the balance comes from the Middle East, where the Arab Spring and subsequent unrest has made the rich seek an escape plan en masse.

People in these hot spots “don’t have the luxury of waiting three years” to emigrate through normal channels, according to Arton. Tax avoidance is not the main “push factor”, although he estimates 10% of the market is rich people seeking better tax deals.

“The number one factor is having a ‘plan B’?...?to have a safe harbour in case of instability,” he says.

It’s not a huge business

The industry as a whole provides new nationalities to about 20?000 families a year. Arnot Capital is a niche player, dealing with 500 to 600 families a year, according to Arton.

The industry has a natural synergy with the financial and real estate sectors as the price of citizenship often includes prescribed investments in financial instruments and property.

Locally, the real estate group Pam Golding offers properties in Portugal tied to that country’s citizenship-for-sale scheme.

Arton Capital specialises in countries that are more difficult to get into, says Arton. These rich passport-shoppers are the “complete opposite of refugees”, he says.

“We are talking about very small numbers that won’t change the [receiving country’s] demographics.”

More importantly, they are rich.

The whole point of the exercise is also to attract wealthy people and at least some of their wealth.

But there has been a backlash against selling citizenship.

“Some countries see us as vultures but the truth is that clients are often not actually leaving their countries,” says Arton.

Buying power

The business of citizenship

The Caribbean country of St Kitts and Nevis created the first investor immigration scheme in 1984, trading citizenship either for a donation to its Sugar Industry Diversification Foundation or a large real estate investment.

With citizenship comes visa-free entry into 131 countries.

Today, the industry relies on 15 countries with schemes that allow rich immigrants basically to buy citizenship by making prescribed investments in government bonds or property.

The wide disparity in visa-free travel possible for citizens of different countries is one of the key reasons “citizenship planning” exists.

Henley & Partners, a competitor of Arton Capital, publishes an annual visa restriction index, ranking countries by how freely their citizens can move across the world. South Africans, who can visit 94 other countries without visas, rank 42nd.

But more important is which countries you have access to, making the trade a logical route for relatively impoverished EU members that can offer coveted Shengen visas to those with enough money.

Unlike Canada, the US and Australia, these countries also tend not to insist you move there physically.

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