In the last one or two decades, Africa has taken concrete steps to take city and nation branding to a new level. The Africa Wealth Report is one unique instrument serving this purpose. The report provides in details the continent’s annual benchmark on institutional and private wealth research.
The Africa Wealth Report is published by Henley & Partners, the global leader in residence and citizenship by investment, in partnership with South African wealth intelligence firm New World Wealth.
Tilted ‘Africa Wealth Report 2023’ the report released about two weeks ago provides a comprehensive review of private wealth in Africa, including high-net-worth-individual, and wealth management trends, as well as expert insights on investing in Africa.
Top Vacation Destinations For High-Net-Worth Families
The data showed that the number of individuals with $1 million or more in the continent grew by 5,800 in 2022. According to the report, the ‘Big 5’ account for 56% of Africa’s high-net-worth individuals and over 90% of the continent’s billionaires. The ‘Big 5’ wealth markets in Africa include South Africa, Egypt, Nigeria, Morocco and Kenya.
Although Nigeria is among the big five, nothing about the country is mentioned in the luxury hotel sector which is key because it brings “substantial foreign exchange spending into the continent.”
Marrakech is listed among the top vacation destinations for high-net-worth families and the Royal Mansour hotel among the top hotels on the continent.
The report’s top hotels on the continent feature South Africa’s Oyster Box and Ellerman House hotels, Egypt’s Four Seasons Resort Sharm El Sheikh as well Zambia’s Royal Livingstone hotel.
Other popular hotel groups for HNWIs visiting Africa include Singita, &Beyond, Red Carnation, Sanctuary Retreats, Belmond, Wilderness Safaris, Virgin Limited Edition, Four Seasons and the Royal Portfolio. Cape Town, Umhlanga, Franschhoek and the Kruger National Park area (especially Sabi Sands). Major destinations for HNWIs in the rest of Africa include Marrakech in Morocco, Cairo in Egypt, the Serengeti in Tanzania, Sharm El Sheikh in Egypt, the Masai Mara in Kenya, Livingstone in Zambia and the Okavango Delta in Botswana. Gorilla safaris in the Virunga Mountains in Rwanda and the Bwindi Forest in Uganda are also popular. Popular hotel groups for HNWIs visiting Africa include Singita, &Beyond, Red Carnation, Sanctuary Retreats, Belmond, Wilderness Safaris, Virgin Limited Edition, Four Seasons and the Royal Portfolio.
The luxury hotel sector is one of the most important sectors in Africa as it brings in a large amount of forex spending to the continent. It also creates a large number of well-paying jobs for local hoteliers, chefs, game rangers, waiters etc. Much of this income is seasonal in the form of tips. A lack of international visitors has forced many luxury hotels and lodges to lower their prices to appeal to the local population. South Africa is the main luxury tourist destination in Africa. Major South African destinations for wealthy people include South Africa is home to the largest luxury market in Africa by revenue, followed by Kenya and then Morocco. Major components of this include luxury hotels and lodges, cars, clothing and accessories, watches, private jets and yachts.
The report also sheds light on African art stressing that art collecting is one of the top pursuits for wealthy people in Africa and globally.
According to the report’s data, the African fine art market is valued at just over $ 1.8 billion (as of December 2022.)
Wealth Projections For The Future
The Africa Wealth Report is the benchmark of the luxury sector research in the continent. Knowing where affluent individuals live, understanding their spending habits and being aware of their preferences is critically important to the providers of wealth management and luxury services in Africa and globally. Africa is home to some of the world’s fastest growing markets, including the likes of Rwanda and Mauritius. There are also several well-established wealth hubs on the continent, including South Africa, Egypt and Morocco, that already host large numbers of High Net Worth individuals (HNWIs). HNWIs in Africa are extremely mobile and their movements provide a valuable insight into future economic trends in each country. For instance, countries such as Mauritius that deliberately attract HNWIs through migration have a significant economic advantage over the rest.
South Africa is home to over twice as many millionaires as any other African country, while Egypt has the most billionaires on the continent.
Smaller Economies Are The Frontliners
The total wealth held in Africa has fallen by 7% over the past decade (2011 to 2021).
Performance was constrained by poor returns in the three largest African markets, namely South Africa, Egypt and Nigeria. Angola and few average size economies also performed poorly.
Mauritius was the fastest-growing market in Africa during the review period (in percentage growth terms), followed by Rwanda. Ethiopia came in 3rd place. It should be noted that wealth in Ethiopia grew rapidly until 2019, but has struggled over the past two years (2020 and 2021). Quite embarrassing that Nigeria had the lowest in growth and it was consistently negative at – 27. Indeed, the worst in Africa.
Delving into the future, the Africa Wealth Reports states in part, ‘Total private wealth held in Africa is expected to rise by 38% over the next 10 years, reaching US$3 trillion by 2031.
‘We expect Mauritius, Rwanda and Uganda to be the strongest-performing wealth markets in Africa during this period (60%+ growth rates)’.
The report also made strong growth forecast for Kenya, Morocco, Mozambique and Zambia (50%+ growth rates).
Other countries on the list are predicted to see positive wealth growth of between 20% and 40% over the forecast period.
Overall, a 38% growth forecast for Africa was seen as very healthy when compared to most other regions globally. It is expected to be driven by especially strong growth in the technology and professional services sectors in Africa.
Lessons From The Trailblazers.
It is quite interesting that the wealth report did not have much cheery news for the big guns in Africa like Nigeria. Not even for the future. Are there lessons for the laggards like Nigeria, especially with a new government coming in this May at Abuja?
Mauritius, with a huge wealth per capita, is presently at the forefront and predicted to remain in front for a very long time, offers a lot of lessons in the following areas.
Ease of doing business in the country – Mauritius ranks 1st in Africa and 13th worldwide in the World Bank’s 2020 Doing Business Report. Low taxes, which encourage business creation and appeal to retirees. Notably, there is no inheritance tax or capital gains tax in Mauritius.
Safety – Mauritius was recently rated by New World Wealth as the safest country in Africa, along with Namibia and Botswana. Notably, safety is one of the key drivers of wealth growth in any country.
Strong millionaire growth – a large number of wealthy individuals has relocated to Mauritius over the past decade. In addition, many locally born HNWIs have been created as the economy has grown. Mauritius is now home to around 4,800 HNWIs, compared to 2,700 HNWIs a decade ago. A fast-growing local financial services sector and stock market (SEMDEX). High per capita income levels. In July 2020, the World Bank officially classified Mauritius as a high-income country.
Obviously, if Nigeria or any other country brand would sincerely want to give Mauritius, Rwanda and other trailblazing brands a serious run, then a lot of comparisons and lessons would be needed. Any other might push the so-called big gun further down the drain.