By Uglobal Staff
Numbers point to an expected rise in wealth in Africa, with five countries within the continent constituting 50% of its total wealth. Africa has more than $2.1 trillion U.S. dollars in total private wealth and it is predicted to rise by 38% over the next decade, according to the Africa Wealth Report 2022 by Henley and Partners. Much of that is concentrated in the "Big 5" markets: South Africa, Egypt, Nigeria, Morocco and Kenya.
However, beyond the Big 5, the report pointed to significant growth predictions of 60% in Uganda and Rwanda by 2031, as well as 50% in Kenya and Zambia.
The Africa Wealth Report, now in its seventh year, counted 136,000 high-net-worth individuals (HNWIs) with private wealth of $1 million or more living in Africa, 305 centi-millionaires worth $100 million and more than 21 billionaires. The report was made in collaboration with New World Health, a South Africa-based global wealth intelligence firm that tracks the movements and spending habits of the world's wealthiest people.
"We certainly expect good growth in Africa over the next decade, driven by strong growth in the technology, financial services and professional services sectors,“ said Andrew Amoils, head of research for New World Wealth. “We expect the higher wealth bands, such as centi-millionaires and billionaires, to grow fastest."
Dominic Volek, Henley's head of private clients, noted the extremities within the continent's private riches. Citing venture capitalist Vusi Thembekwayo, Volek called Africa's historic story "one of polar domination, with the largest wealth management centers traditionally situated in the most extreme south, South Africa, and the most extreme north, Egypt and Morocco. However, the rise of frontier economies that are attracting new wealth by positioning themselves as preferred investment and wealth generation destinations is challenging this narrative. Mauritius and the Seychelles have recently been the most deliberate with this strategy."
Mauritius and the importance of attracting foreign direct investment
Mauritius, a tiny Indian Ocean island nation east of Madagascar, stands out among African countries for offering a successful residency-by-investment (RBI) program, with resident permits granted in exchange for a minimum $375,000 real estate investment. Those who can become citizens there even enjoy one of the continent's strongest passports in terms of global mobility for a country that is the 6th wealthiest on the continent, with a registered $44 billion in total private wealth.
In its 2022 report, the island is called an "Indian Ocean powerhouse" with the fastest growing wealth market in Africa, pointing to a projected growth of 80% over 10 years.
Volek said Mauritius' RBI program is gaining traction in the global investment migration marketplace, calling it "an excellent choice for both business owners and real estate investors."
He also pointed to reports of other African countries, like Kenya, planning to launch their own investment migration options. Certainly South Africa could benefit from one, with "doing so [being] a means of generating debt-free liquidity," Volek said.
"Countries have realized the importance of granting residence and citizenship to attract much-needed foreign direct investment, debt-free capital, talented entrepreneurs and experienced investors," he added.
Mauritius’ Economic Development Board, which was established in 2018, concurred with the findings of the Africa Wealth Report. In a statement, it pointed to several factors the country has going for it, namely the ease of doing business and low taxes. Mauritius doesn’t impose any inheritance or capital gains taxes. Furthermore, the country is safe, the Economic Development Board stated, and “safety is one of the key drivers of wealth growth in any country.”
The agency noted that Mauritius has become an attractive “destination for luxury real estate in the last decade, [which] has been pivotal for Mauritius’ growth as a wealth market. Investment migration programs which offer the possibility of investing in real estate as a means of access to residence rights or the acquisition of citizenship are particularly popular with African investors.”
South Africa tops the list of wealthy people
South Africa can be named the top African country with U.S. dollar millionaires in 2022. Private wealth in the entire country is pegged at $651 billion, the highest in Africa, and there are nearly 40,000 high-net-worth individuals living there.
Coming in a distant second is Egypt, with an estimated $307 billion in private wealth. Egypt launched its own investment migration program in 2020, attainable through buying real estate, establishing a company or a government donation.
While there is activity for investors coming into Africa, the opposite is true for the African wealthy wishing to broaden their options abroad through citizenship-by-investment programs and residency permits.
"Investment migration has been widely embraced by African investors and entrepreneurs as a mechanism to improve their global mobility and access opportunities to grow their businesses and provide great optionality to their families in terms of where they can live, study, invest and retire," Volek told Uglobal. "There is still an enormous divide when it comes to travel freedom, or visa-free travel, between countries in the global north and those in the global south, especially in Africa.”
Regarding the future of wealth in Africa, diversification is a best bet, according to the report.
"The new economies that are built on technologies, driving inclusion and the now in-vogue environmental, social and corporate governance criteria are attracting new capital into the fold and creating more liquidity in the secondary capital markets," Volek said.
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