State Capture and its economic aftermath: Why young Jewish professionals are leaving South Africa

by dan brotman

​communal matters

exploring the concerns of the south african jewish community

In this article, Dan Brotman looks at why so many young Jewish professionals are leaving South Africa and how this might impact the future of the South African Jewish community. 

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​IN 2010, I spent my last three months as a student at the University of Oregon conducting research in Cape Town. My project explored whether young Jews in the city saw their future in South Africa following the highly successful FIFA World Cup. Much of my research was a response to the 2005 nationwide survey, on the Jews of South Africa, conducted by the Kaplan Centre for Jewish Studies at UCT. The 2005 Kaplan Centre survey found that 92% of respondents characterised themselves as likely to stay in South Africa over the next five years, which was the highest recorded preponderance of Jews ever wanting to stay in the country. My 2010 thesis concluded that “as long as young Jews feel that there is political stability and promising economic opportunities in Cape Town...they will remain for the foreseeable future, living in cautious optimism...”.

​When I arrived in South Africa ten years ago, I never would have imagined that I would not board my return flight home. Instead I have spent the last decade transforming into a member of the population group I originally interviewed. My transformation from an exclusively American Jew to a hybrid American/South African Jew began in May 2011, when I took up a position as Head of Media & Public Affairs at the Cape SA Jewish Board of Deputies. I then relocated to Johannesburg to take up the position of Executive Director of the South Africa-Israel Forum (SAIF), and eventually co-founded a business called En-novate with Investec in May 2016. I naturalized as a South African citizen in September 2018, and regularly contribute to publications on the state of the nation and the local Jewish community.

Between the 2005 survey and my arrival in South Africa in 2010, a number of noteworthy developments occurred in the country, some perceived as positive and others as negative by the mainstream Jewish community. Positive developments during this five-year period included strong GDP growth, which reached 5.6% in 2006, the Democratic Alliance taking control of Cape Town in 2006 and the Western Cape in 2009, and South Africa hosting the 2010 FIFA World Cup. However, a number of worrying developments also began to emerge, including nationwide load-shedding in 2007/08, the 2008 election of Julius Malema as President of the ANC Youth League, and the ascent in 2009 of Jacob Zuma to the Presidency. 

"What distinguishes this latest wave of Jewish emigration from those of the past is that this one is primarily financially-driven, whereas previous waves were largely the result of political uncertainty and crime."

​At the time I wrote my thesis, many of the above-mentioned trends were very new, and their impact on the psyche (and bank accounts) of South Africans was yet to be felt. When asked about the then newly-elected President Zuma, one of my interviewees remarked with relief, “He [Zuma] has not done that much now as a president, but he has not done anything wrong.” The interviewee’s brother, who expressed pride in South Africa’s economic stability, reflected on their experience growing up in Zimbabwe, saying, “it takes one shmuck to stand on top...and completely screw everything over.” Between my interview with the brothers in 2010 and former President Zuma’s resignation on 14 February 2018, an estimated R250 billion was stolen through what is now known as ‘State Capture’.

The late South African-born professor, Colin Tatz, who himself immigrated to Australia, believed that Jews in South Africa have not historically left the country due to one particular event, but rather in response to a multitude of political, social, and economic reasons. He used the term “aggregate of events” to describe a build-up of factors, as opposed to a single event, which led to various waves of emigration by South African Jews. Prof. Tatz identified four main periods of Jewish mass emigration from South Africa:

1. Before the 1960 Sharpeville Massacre;
2. From Sharpeville to the 1976 Soweto Uprising;
3. Periods of states of emergency and wars; and
4. The period leading up to and since the release of Nelson Mandela. 

​Were he still alive today, I believe Tatz would have since identified a fifth aggregate set of events resulting in another wave of Jewish emigration from South Africa. This, he may have called “State Capture and its economic aftermath”. This period began roughly between the 2008 general elections and is ongoing. The ramifications of State Capture are still emerging as the nation continues to experience load-shedding, the hollowing of the public service, economic decline and resulting job losses. What distinguishes this latest wave of Jewish emigration from those of the past is that this one is primarily financially-driven, whereas previous waves were largely the result of political uncertainty and crime. 

"... the current economic climate .... should be of grave concern to the Jewish community, as highly educated young professionals with limited career mobility in South Africa are increasingly migrating to growing economies in developed nations."

​When giving their top three reasons for wanting to stay in South Africa in the 2005 survey, 90% of respondents mentioned financial/business/career factors. However, 15 years later, many of the positive economic trends that made South African Jews feel optimistic about staying in the country have drastically reversed: GDP growth has dropped from 3.3% in 2011 to an estimated 0.9% in 2020, our unemployment rate has reached a 16-year high at 29.1%, and some economists estimate that the rand could significantly further weaken following Moody’s impending downgrade of our sovereign credit rating to junk status.

​South African Jews, particularly young professionals, tend to be well educated with internationally transferable skills that are coveted by developed economies. Based on my experience in both business and the Jewish community, young South African Jews, whose skills and life circumstances make them highly mobile, on the whole aspire to either start their own businesses or become white-collar professionals at large corporations. The effect of the current economic climate on the two career trajectories should be of grave concern to the Jewish community, as highly educated young professionals with limited career mobility in South Africa are increasingly migrating to growing economies in developed nations.

On the entrepreneurship front, according to the Small Business Institute, South Africa currently has 250 000 formal SMMEs (small, medium and micro enterprises), a drop of nearly 45% from a previously reported 554 000. Although 98.5% of all registered businesses in the country are SMMEs, they only provide 28% of employment, whereas the international norm is 60%-70%. According to the Small Business Association, 70% of SMMEs in South Africa fail within their first two years, versus 30% in the US. As a small business owner in South Africa, I can attest to how our regulatory policies, which fail to meaningfully differentiate between large and small businesses in compliance and regulatory matters, have created an unnecessarily challenging environment in which to run a business. 

Commercial, office and retail property, one of the popular sectors amongst South African Jewish entrepreneurs, is in serious trouble. FNB’s Fourth Quarter Commercial Property Broker Survey shows that the percentage of respondents who believe market conditions to have been satisfactory, has fallen for the 3rd consecutive quarter, from 49% in the third quarter, to 31% in the fourth quarter.

​The Small Business Institute found that 56% of jobs in South Africa are created by the 1 000 largest employers, including government. As it is safe to assume that most young Jews do not aspire to work in the public sector, this creates a very limited pool of prospective private sector employers from which to choose. A number of large corporates have instituted hiring freezes, if not retrenchments, which often results in limited career mobility for those lucky enough to remain employed. In January alone, South Africa saw at least 8 000 jobs at large companies such as Telkom, Massmart, Sibanye Gold and Glencore under threat, and it is likely we will see many more retrenchments throughout 2020.

​The trend of young professionals and entrepreneurs leaving South Africa is not limited to the Jewish population, but is especially prevalent within our community. If we use the Absa Jewish Achiever Awards as an anecdotal litmus test, the trends become alarming. My 26 year-old former business partner and I were nominated for the 2017 Creative Counsel Young Jewish Entrepreneur Award. He has since relocated to Amsterdam, and recently told me that he only has three friends left in the country. The entrepreneur who actually won that award in 2017 has since immigrated to the US, as has the co-founder of the company that sponsored that award category. The Entrepreneur of the Year winner from the following year has also since immigrated to the US. The Jewish Agency for Israel reported that 321 South Africans immigrated to Israel between January-October 2019, whereas between 2005 and 2014, the average annual number of South Africans immigrating to Israel was just 75.

"... our community should expect and prepare to continue to lose a substantial number of young professionals who would otherwise be taxpayers, job creators, heads of households, affiliated community members and prospective communal donors."

​The exodus of what is essentially our community’s current and future donors, and our resulting dependence on the same small pool of overstretched individuals, has led to retrenchments at Jewish organisations, which are struggling to stay afloat. In August last year, news broke that Johannesburg’s CSO (Community Security Organisation) faces an uncertain future “due to the substantial reduction in financial support from its primary fundraiser, the United Communal Fund (UCF).” According to UCF Chairman Avrom Krengel, “over the past few years, the funding base of the community has shrunk significantly due to emigration, the passing away of major donors, and the adverse economic situation that has prevailed in South Africa over the past decade. This has forced almost all communal organisations to work with reduced budgets and retrench staff.” 

In a Jewish Telegraphic Agency article from December 1994, then Yeshiva College head Rabbi Avraham Tanzer said: “One or two families have left — but if we lose children, they usually go to Israel… If people leave, they are replaced by others.” Just three months ago, the school’s current head, Rabbi Lenor Bernstein, was quoted in the SA Jewish Report as saying that the school was facing a difficult future due to “reduced numbers [of pupils] and the rising need for subsidies in a difficult economic climate”. This has resulted in increased calls to consolidate the city’s Torah schools. A Jewish organisation I ran from 2014-16 has effectively ceased operating this year due to donor fatigue and the deteriorating economic climate.

"Things aren’t as bad as we think, says expert panel” was how the SA Jewish Report described the SA Jewish Board of Deputies’ November 2019 National Conference. This upbeat outlook, like that of Rabbi Tanzer in 1994, likely reflects the official position that South African Jewish organisations have historically held during periods of national uncertainty. While positivity in the face of adversity is essential in order to instil widespread confidence, Jewish communal leadership should balance their public messages of optimism with an acknowledgement that many skilled young professionals in South Africa, including Jews, have lost patience with a system that has betrayed its tax base. A consequence of this growing resentment by the professional class likely means that our community should expect and prepare to continue to lose a substantial number of young professionals who would otherwise be taxpayers, job creators, heads of households, affiliated community members and prospective communal donors. 

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Originally from Boston, Dan Brotman is 33 years-old and resides in Johannesburg. He is an active member of the South African Jewish community.