The CBI industry is evolving nowadays, and those who are involved in it need to look at the future generations to understand how it will change and affect others.
Many successful business people were experimenting with the metaphor of escaping to a deserted island since it has proven quite effective. There is rising interest in investment migration against a global backdrop of increasing political, economic, social, and environmental volatility on a worldwide scale. 125,000 millionaires are expected to try to emigrate in 2023 to the safest and more desirable locations all around the world. Not just wealthy individuals are considering making a move; the mid-term has also shown their keen interest in moving to these islands as everyone desires a happy and peaceful life.
According to the medium-term perspective, the trend is expected to continue till 2030. In the future, many home shores will be an unreliable bet due to political instability and rising authoritarianism, corrupt economic policy, social polarisation, and civil upheaval, as well as shifting weather conditions. All these factors encourage people to choose Citizenship by Investment (CBI) programmes. It is reasonable to anticipate that second citizenship, or even multiple citizenships, will remain popular as successful businesspeople continue to fortify their defences by protecting their finances, expanding their companies, and securing better prospects for employment, healthcare, and lifestyle prospects. CBI programmes have always been considered as Plan B for unpredictable circumstances. During the COVID-19 pandemic in 2020, it’s necessary to have a bolt-hole of safety, especially for those who are rich enough to buy it.
Meeting global imperatives CBI is often framed as an insurance strategy benefiting individuals and their families. The reciprocal benefits of investment, accrued by small, economically challenged countries receive less attention. In a world still reeling from the effects of the Covid-19 pandemic, distracted by Russian aggression in Ukraine and scrambling to address impending food and energy crises, two major existential deadlines are being put on the back burner. We must have halved our heat-trapping emissions by 2030 to avoid what the Intergovernmental Panel on Climate Change (IPCC) has deemed irreversible damage. By 2030, we also must have met the 17 Sustainable Development Goals focused on ending poverty. It will take the full mobilisation of every country, according to UN Secretary General, Antonio Guterres, who has called for “networked, inclusive and effective multilateralism.” But at global, and even regional level, this co-operation is proving difficult to achieve. For individual nations, especially low- to mid-income countries, the task is daunting.
Post-pandemic recovery in these countries will be hampered by high levels of sovereign debt. With inflation driving interest rate hikes in advanced economies, loans will be hard to pay back. Global macroeconomic conditions will be challenging, driven by what’s likely to be a protracted crisis in Ukraine and almost certain recession. Without foreign direct investment, these countries will be hard-pressed to provide funding for climate change mitigation and adaptation, and sustainable development projects.
In the lead up to 2030, CBI programmes could be part of the solution. With time running out to meet climate change and sustainable development goals, they could be valuable and legitimate revenue sources for small nations, and a spur to their sustainable economic growth.
Millennials and Gen Zs environmental, social and governance (ESG) investing is nothing new, but the complex global problems of the 21st century, such as climate change, are driving the emphasis on sustainability in investment circles. From 2020 to 2021, ESG investment doubled. Assets are predicted to reach US$30tn by 2030.
As societal values shift from ‘me’ to ‘we’, there could be implications for the CBI industry too. The 2020s are likely to see the emergence of a new profile of CBI investor, as millennials and Gen Zs assume positions of influence in political, cultural and economic spheres. Distinct in their pragmatism, innovation and willingness to take risks, they will likely see second or multiple citizenships as investment opportunities to new and bigger markets. Most importantly, as global citizens, vested in the survival and thriving of people and planet they will want to place their money where it will make a difference.
Headwinds and Unpredictability
With democracy in crisis and a growing number of authoritarian governments in power around the world, freedoms are being threatened. The 2020s could possibly see a tightening of borders and an increase of measures to prevent capital flight.
The erosion of social cohesion is identified, in the World Economic Forum Global Risks Report 2022, as the global risk that has intensified most since the start of the pandemic. Inequality, is one measure of social cohesion. The richest 10 per cent of the global population takes 52 per cent of global income and owns 76 per cent of all wealth, according to the World Inequality Report 2022. Inequality, as an issue, is likely to move front and centre in the decade ahead with the role of wealth in addressing inequality a key focus of debate.
Continued scrutiny of the CBI industry is a certainty. The European Parliament’s bid to end CBI programmes in Europe by 2025, and the US ‘No Travel for Traffickers’ bill which seeks to deny visa-free travel to countries with CBI programmes are the latest attempts to curtail the industry — believed to be enabling criminal elements, money laundering, tax evasion and corruption. As global security concerns mount, opposition to CBI programmes is not likely to abate. Growing polarisation between East and West will drive geopolitical tensions. These, alongside increased levels of corruption, terrorism and cyber threat, will fuel security paranoia.
It will demand proactive and co-ordinated intervention to mitigate concerns by demonstrating ongoing improvements in due diligence processes and to prove impact. The Caribbean nation of Dominica has declared its intention of becoming the world’s first climate-resilient nation by 2030. It will require US$4bn to US$5bn in funding to do this, and CBI could play a key enabling role. It’s a model that could be applied to other vulnerable nations needing sustainable climate solutions into the future.
A NEW ‘PLAN A’
Desert islands are symbols of isolation, self-reliance and internal resilience. In the post-pandemic reset, there’s been a shift in trust away from government as individuals obtain second, or multiple citizenships, and take control of their destinies. But looking to the future, CBI programmes will represent much more than a ‘Plan B’ escape strategy. The global citizen of the decade to come will be investing in ‘Plan A’ and a more positive future for people and planet. It will be about collaboration, empowerment, and transformation, with outcomes for the CBI industry to aspire to.
The world’s most definitive guide on citizenship by investment, the CBI Index, was published on the 22nd August 2022 by PWM Magazine, a publication of the Financial Times in collaboration with CS Global Partners and offers readers a view of an industry in metamorphosis.