Opening doors to the world with a second passport

Opening doors to the world with a second passport

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None of us have control over where we are born or the limitations that may come with carrying the passport of our native country. 

Predictably, travel freedom and opportunity confines as well as economic, political and security concerns are fuelling investment into second passports.

The citizenship-by-investment (CBI) industry has seen significant growth in recent years, says Nigel Barnes, managing partner for Southern Africa at Henley & Partners, a global residence and citizenship advisory firm. 

Global freedom of movement and opportunity comes with the strength and quality of one’s passport, the crème de la crème of these the German passport, allowing access and visa-free travel to 176 countries, says Barnes. 

Travel and settlement freedom for South Africans has declined over the last decade. According to Henley & Partners, the SA passport now only allows visa-free travel to 98 countries, many not main economic areas. 

For those able to afford it, CBI programmes offer a direct route to citizenship through investment. 

Citizenship programmes are generally not for the poor-of-purse; residency programmes often the more ‘inexpensive’ option. But apart from Portugal with its option of a €350 000 or €500 000 property investment, few residency programmes offer a path to citizenship without lengthy stay requirements.

Programmes generally offer different asset class options with real estate as a redeemable asset the most popular, says Barnes.

The practice of buying a passport through investment into a country is not that new, St Kitts and Nevis the first country to drum up much needed cash with its passport selling idea in 1984. 

Today, the Caribbean island’s CBI programme, which offers citizenship from $250 000, contributes 25% to its GDP, Henley & Partners’ Dominic Volek tells finweek.

Barnes says wealth planners and financial advisers are now including alternative citizenship and residence programmes as part of the review process for families.

In the last few years, 75% of work conducted for South Africans has been motivated by family considerations, says Barnes. 

Significantly, 85% to 90% want to remain in SA so programmes with low physical presence requirements are appealing. 

“Only a small proportion of South Africans want to leave.” 

Aside from enhancing global access and settlement rights, most clients are exploring options that will allow them to provide opportunities for their families and secure their futures, he says. This includes the legacy of citizenship, often able to be passed on by descent.

INVESTING IN ALTERNATIVE CITIZENSHIP

The cost of citizenship can be staggering. Take EU countries Malta and Cyprus, whose CBI programmes come in at €1m and €2m respectively. 

The Maltese passport, ranked among the top 10 most powerful in the world, offers visa-free access to 167 countries including the US. 

It also offers its holder the right of settlement in all 28 EU countries as well as Switzerland. Compare this to SA with full settlement access to one state, Georgia.

Cyprus’ €2m citizenship programme, offers a passport ranked 16th and visa-free access to 158 countries. The programme, which requires no residence, has attracted €4bn in foreign investment.

Long stay requirement programmes include the UK’s minimum £2m Tier 1 investor programme and the USA’s $500 000 or $1m EB-5 Program.

Programmes with no residence or visitation requirements include those of the Caribbean islands. The island nations also offer some of the most competitive CBI programmes.

St Lucia’s passport, granting visa-free access to 127 countries including the UK and Schengen countries, can be bought for $100 000. Grenadian citizenship requires a capital outlay of $200 000 or $350 000 (property) and offers access to 124 countries, including the UK, Schengen area, Brazil and China.

Several countries grant entrée to citizenship, like Croatia’s €50 000 option. But some come without established or transparent processes requiring the exercising of caution.

Source: Henley & Partners

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