Sunday, September 26, 2021

    Africa private wealth expected to rise by 30% over next decade, report finds

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    The Africa Wealth report is compiled by New World Wealth for AfrAsia Bank each year.

    The 2021 report shows that more than 4 000 people with wealth of R14 million or more left SA from 2010 to 2020.

    Yet, South Africa is still home to over twice as many dollar millionaires than any other African country.

    Mauritius remains the wealthiest country in Africa.

    This is according to the latest AfrAsia Bank, Africa Wealth Report.

    About 4 200 dollar millionaires – those with wealth of US$1 million (about R14 million) or more – have left SA since 2010.

    Most of these went to the UK, Australia and the US, while the rest went to countries such as Switzerland, Israel, Mauritius, New Zealand, the UAE, Canada, Portugal, Spain, Cyprus and Malta.

    Yet, South Africa is still home to over twice as many dollar millionaires than any other African country, according to the latest annual Africa Wealth Report released by New World Wealth and Mauritius-based AfrAsia Bank on Wednesday.

    Wealth is defined as the net assets of a person. It includes all their assets (property, cash, equities, business interests), less any liabilities.

    The report estimates there are about 125 000 dollar millionaires living in Africa, of which 6 200 have net assets of US$10 million or more and 22 are dollar billionaires, each with net assets of about R14 billion or more. South Africa has 36 500 dollar millionaires and five dollar billionaires.

    Egypt has the second-most dollar millionaires on the continent, followed by Nigeria, Morocco, Kenya and Ethiopia. However, Egypt has the most billionaires on the continent.

    Mauritius performing well

    When it comes to per capita wealth in US dollars, in Africa, Mauritius (US$31 900) tops the list, followed by SA (US$10 310), Namibia (US$8 790), Botswana (US$7 810), Morocco (US$3 050), Egypt (US$2 810), Ghana (US$1 830) and Kenya (US$1 700). Mozambique (US$610) is last on this list.

    The report describes Mauritius’ growth rate is impressive. The World Bank officially classified Mauritius as a high-income country in July 2020. Possible reasons for its strong growth, according to the report, include safety, ease of doing business, a thriving and growing financial services sector, a fast-growing local stock market (SEMDEX), secure ownership rights and low taxes – things that attract the super rich.

    SA’s performance has been poor, the report found, with total private wealth held in the country declining by 25% over the past decade, when measured in US dollar terms. Performance was negatively impacted by significant loss of currency value to the US dollar – from around R6.80/US$ in 2010 to about R14.70/US$ towards the end of 2020.

    Furthermore, a large number of businesses closed in SA, especially SMEs. Returns on the JSE all share index is down by 12% over the past decade when measured in US$ terms and there has also been an ongoing migration of wealthy people out of the country.

    Big 5

    The so-called “big 5” wealth markets in Africa are South Africa, Egypt, Nigeria, Morocco and Kenya, which together account for over 50% of Africa’s total wealth. The report defines this as the private wealth held by all the individuals living in each country. It excludes government funds.

    Total wealth held in Africa has fallen by 16% over since 2010, constrained by poor performance in the three largest African markets, namely South Africa, Egypt and Nigeria. Angola also performed poorly. Ethiopia was the top-performing individual market during this period, although from a very low base. The growth figures in this section are to December 2020 and, therefore, take into account the impact of the coronavirus outbreak.

    Total private wealth held in Africa is expected to rise by 30% over the next ten years, reaching US$2.6 trillion by 2030. This growth will be driven by strong growth in dollar billionaires and dollar centi-millionaires (those with wealth of US$100 million or more).

    The report’s wealth forecasts take into account GDP forecasts; recent wealth migration trends of HNWIs; competitiveness; safety levels; ease of doing business; education standards; the level of innovation and entrepreneurship; strength of ownership rights; tax rates and ease of investment in each country.

    The report considers wealth to be a better measure of the financial health of an economy than GDP. Reasons for this view include that in many developing countries, a large portion of GDP flows to the government and, therefore, has little impact on private wealth creation; GDP counts some items multiple times and largely ignores the impact of property and stock market moves.

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