Africa’s ‘big 5’ economies hold over 50% of Africa’s $2.1trn private wealth

BY CHARLES ABUEDE

Private billionaires or high-net-worth individuals with more than $1 million in private wealth in Africa are on the rise and a recent 2022 Africa Wealth Report, published today by Henley & Partners, in partnership with New World Wealth, has shown that total private wealth currently held on the African continent is $2.1 trillion and is expected to rise by 38 percent to nearly $3 trillion ($2.9 trillion) over the next 10 years.

According to the new report on private wealth on the African continent, South Africa, Egypt, Nigeria, Morocco, and Kenya, known as Africa’s ‘Big 5’ private wealth markets, together account for more than 50 percent of the total wealth held on the African continent. This amount ($1.05 trillion) is equivalent to more than 38 percent of the continent’s total gross domestic product (GDP) which, according to IMF’s data, printed at $2.7 trillion in 2021.

The economy of Africa is expanding as a result of the positive growth momentum spurted by Africa’s Big 5’s over the years. Thus, there are at the moment, 136,000 high-net-worth individuals (HNWIs) with a private wealth of $1 million or more living in Africa, along with 305 centi-millionaires worth $100 million or more, and 21 US dollar billionaires.

The report stated that despite the tough past decade, South Africa is still home to over twice as many HNWIs as any other African country, while Egypt now has the most billionaires on the continent. Also, it reported that Mauritius has the highest wealth per capita (average wealth per person) in Africa, at $34,500, followed by South Africa at $10,970 and Namibia at $9,320.

The report further revealed that Mauritius is the fastest-growing wealth market in Africa, and it is projected to grow 80 percent over the next decade. This will also make it one of the fastest-growing high-income markets in the world over this period (in percentage growth terms), together with Australia, Malta, New Zealand, and Switzerland. By 2031, HNWI numbers in Mauritius are expected to reach over 8,000.

Also, South Africa, home to the largest luxury market in Africa by revenue, houses the two wealthiest cities on the continent, Johannesburg and Cape Town, with a total private wealth of $239 billion and $131 billion respectively. However, South Africa’s performance over the past decade has been poor, with total private wealth held in the country declining by 12 percent from $739 billion in 2011 to $651 billion in 2021.

Meanwhile, Cairo trails Cape Town as one of the wealthiest cities on the continent with $128 billion in privately held wealth, and Lagos is in the fourth position with $97 billion in private wealth.

South Africa, sitting atop the luxury markets ranking is followed by Kenya and Morocco. South Africa’s luxury sector, which includes exclusive hotels and lodges, cars, clothing and accessories, watches, private jets, and yachts, generates revenue of approximately $2 billion a year, making it the largest on the continent by a substantial margin. Much of this revenue is generated from the sale of luxury foreign brands such as Porsche and Louis Vuitton.

Speaking on some of the fastest-growing markets across the globe, Andrew Amoils, head, research, New World Wealth, explains that private wealth refers to all an individual’s net assets (property, cash, equities, and business interests), less any liabilities.

“Africa is home to some of the world’s fastest-growing markets, including Rwanda, Uganda, and Mauritius. We forecast private wealth growth of over 60% in all three countries in the next decade, driven by especially strong performance in the technology and professional services sectors,” Amoils said.

Vusi Thembekwayo, a leading entrepreneur, international author and CEO of MyGrowthFund, commented that the ascent of new wealth economies, along with megacities and the diversification of wealth-creating sources are just some of the exciting trends driving the creation and flow of capital across the continent.

“Africa’s story is one of polar domination, with the largest wealth management centres traditionally situated in the most extreme south — South Africa — and the most extreme north — Egypt and Morocco. The rise of frontier economies that are attracting new wealth by positioning themselves as preferred investment destinations is challenging this narrative. Mauritius and Seychelles have recently been the most deliberate with this strategy,” he said.

Amanda Smit, managing partner, Henley & Partners, South Africa, however pointed out that the country still ranks 28th in the world when it comes to private wealth, ahead of major economies such as Argentina, Malaysia, Thailand, and Turkey.

“No matter how well or poorly a country is performing today, one thing has become very clear in our new Age of Uncertainty — governments and investors alike must focus on building resilience. Preparing for the next shock is imperative, and one proven means of doing so is via investment migration, whereby investors can acquire and secure an alternative residence or second citizenship in a different jurisdiction in return for investing in a host country. Last year was a record-breaking year for Henley & Partners, in which we assisted clients representing 79 different nationalities, including citizens of 15 African countries ranging from Algeria to South Africa, and from Liberia to Ethiopia.”

Stuart Wakeling, head, Henley & Partners Nigeria, says Covid, climate change and conflict, including the war in Europe, are currently key drivers of investment and wealth migration.

Commenting on the Africa Wealth Report, Wakeling said that “in addition to the traditional benefits of enhanced global mobility, for the African investor, residence and citizenship by investment programmes offer a proven diversification strategy in terms of wealth and legacy management and domicile optionality, and many programmes also include the option to invest in real estate, which itself has multiple yields.”

Chidinma Okebalama, senior consultant at Henley & Partners Nigeria, added that many sub-Saharan countries are doubly disadvantaged, being among the most vulnerable to climate change as well as having poor global mobility, with their passports ranking consistently low on the Henley Passport Index.

She highlights in the report that African HNWIs place a particularly high value on family and leave a lasting legacy for the benefit of future generations. “Most investment migration programmes enable investors to include family members in their applications, and some allow qualifying siblings, parents and grandparents as well, making these programmes an ideal mechanism for protecting loved ones by ensuring that they have optionality in terms of where they can live, work, study, and retire to in the years ahead.”

Dominic Volek added, “The appeal of investment migration for affluent families is truly universal due to its many benefits, ranging from domicile diversification to global mobility enhancement, to accessing world-class education and healthcare, to having a plan B in times of turmoil. No matter where you were born, or where you currently reside, wealthy investors can future-proof themselves and their families for whatever might lie ahead through investment migration.”