The 2022 CBI Index: The evolution of a new CBI programme

The perceptions of dual citizenship have markedly shifted.  Up until the end of the 20th century, the status was widely shunned. However, in recent years, it has become widely accepted — even coveted.

The investment migration space in general, and specifically citizenship by investment (CBI), are now burgeoning industries.  The value of the industry is expected to reach US$100bn in the next three years, thanks to a growing number of global citizens who are recognising the manifold benefits of geographical and jurisdictional diversification through acquiring and maintaining multiple citizenships. 

Increasing value

People seek to acquire second citizenship for various reasons, but these commonly include: greater business opportunities and favourable tax arrangements; enjoying social guarantees in multiple countries; enhanced global mobility; improved education prospects, healthcare and employment opportunities for themselves and their families; or to have a ‘plan B’ in case of significant political and/or economic instability in their country of residence.

The CBI programme for each country differs, but the core concept remains the same: successful individuals from other countries invest in real estate, bonds, banks or local businesses in exchange for receiving citizenship of that country and the additional benefits that come with it.

Some countries ask for investments in the form of donations to a government-approved fund, while others offer a hybrid approach that includes real estate investment and donations to a government fund.

Consequently, many more countries, especially those that lack foreign direct investment, are recognising the mutual benefits for their economies and prospective investors in operating CBI programmes, and are starting to develop new programmes to compete in this increasingly popular market. 

However, as is evident from the fate of many newly launched programmes that have failed to achieve their potential, a successful programme requires both a clear vision of the return on investment for the country and prospective investors, and a well-organised procedural framework with clear policies between the CBI unit, the government, state entities and banks.

Misalignment between these entities can cause delays in approving applicants, poor perception in the industry and resultantly a lack of investor interest in a particular programme.

Growing pains

Looking at the North Macedonian CBI programme as an example, it is evident that buy-in and a comprehensive legislative framework are important for the success of any CBI programme. 

While the North Macedonian CBI programme has existed for several years, it was restructured and re-introduced in 2020 to boost the country’s economy by raising capital and stimulating development. Its government is committed to promoting industries in the country and encouraging investors to increase direct investment in local industries and factories.

The main issue with the former North Macedonian CBI programme was its procedural difficulties. The government did not streamline it — a lack of clear guidelines and a procedural standardisation resulted in a highly fragmented process from the very entities that needed to clearly communicate and work together. According to industry experts, these issues continue to plague the new programme.

Furthermore, the lack of promotion and marketing around the enticing attributes of North Macedonian citizenship — which include a favourable tax regime, advantageous global mobility and the country’s potential accession into the EU — means that despite these benefits, the North Macedonian programme is often overlooked by prospective applicants. Accordingly, only a handful of people have ever submitted applications. 

It is accepted that new programmes will take time to operate fully and smoothly; for example the Montenegrin programme took two years to start accepting applications. However, the first application was approved five months later.

In contrast, applicants who applied for the North Macedonian CBI programme in the second quarter of last year and received approvals in principle are still waiting for final approvals and their citizenship. Indeed, the government is yet to approve a single investment-based citizenship application, while 32 applications remain in processing. 

The delay has been blamed on the compliance departments of North Macedonia’s banks, which are not accustomed to receiving foreign money from senders who do not have a business in the country.

Another problem is that while the legal basis for North Macedonian CBI has been established for some time, numerous bylaws pertaining to the operating specifics of the programme have yet to be ratified for unknown reasons, according to local sources. 

Much work remains to be done, therefore, to formalise and streamline the application process by creating a clear legislative framework and guidelines for coordination between the different government agencies, banks, and authorised agents to enable them to work together efficiently and seamlessly. Despite this, the North Macedonian programme has the potential to succeed and will likely see an uptick in investor interest once the government finally announces its first end-to-end approval.