Africa’s UHNWI’s: The Wealth Report 2014

Knight Frank’s 8th annual Wealth Report provides an overview on what the report means for Africa, providing insight on prime property, wealth distribution and investment sentiment. The report survey’s the attitudes of the world’s UHNWI (Ultra High Net Wealth Individuals). In this years report where Africa is concerned 67% of respondents where positive about wealth creation.

Porsche Victoria Island: Photography Reuters

Porsche Victoria Island: Photography Reuters

The fastest growing UHNWI population in Africa, ranked by forecast growth, and by country are:

  1. Cote d’Ivoire – 144%
  2. Tanzania – 97%
  3. Ethiopia – 93%
  4. Ghana – 93%
  5. Nigeria – 92%

 

MINT Countries

Most individual will be familiar with the BRIC countries, however 2014 see’s emphasis on the MINT (Mexico, Indonesia, Nigeria and Turkey) economies. Countries which are said to have the right fundamentals to accelerate their economic growth. Possess large populations, and have a good balance between the elderly and the young. Nigeria is the only African country to feature within this economic group, which are said to share the commonalities of having large, growing populations with a large number of young workers.

 

Opportunities for Global Growth

Over the next decade the biggest rise in growth of UHNWI’s is predicted to be in Africa. The number of African’s with £30m assets is set to grow by 53% to 2,858 by 2023, exceeding average growth across the rest of the word. The number of UHNWI’s in Nigeria is set to double over the next decade.

Centa millionaires, those with 100m in assets are set to rise by 51%, and there is also set to be an increase in billionaires, with the numbers reaching 38 by 2023. Ledbury Research were quoted a 50% increase in the number of millionaires in Ghana by 2016. The report also quoted that given the amount of foreign and social investment Africa has received, and is likely to receive in the future, Africa’s potential for wealth creation should not be underestimated.

However investors must not overlook the requirement for infrastructure to be in place for significant wealth creation to flow into an expanding economy. In some countries strong GDP has not translated into UHNWI.

 

Africa’s Money Making Industries

As in previous years the key areas for investment are Natural Resources and Telecoms. Most Africans own a mobile phone, and now have significant internet coverage. However the main attraction for foreign investment is still Minerals and Commodities, with significant investment from China and Brazil.

The following countries where highlighted as major players within the key industries within Africa:

Oil Production

  • Nigeria
  • Gabon
  • Equatorial Guinea
  • Angola
  • Algeria
  • Libya
  • Egypt
  • Chad
  • Republic of Congo.

Gas Production

  • Nigeria
  • Algeria
  • Egypt
  • Libya.

Off-Shore Gas Production

  • Tanzania
  • Angola
  • Ghana
  • Kenya
  • Gabon
  • Mozambique.

Mining Copper

  • Zambia
  • DR Congo.

Diamonds

  • Botswana
  • Namibia
  • South Africa
  • Angola
  • DR Congo
  • Sierra Leone.

Emerging Technology Hubs

  • Kenya
  • Nigeria
  • Ghana
  • South Africa
  • Rwanda
  • Mauritius
  • Ethiopia
  • Uganda.

Modern Shopping Developments

  • Nigeria
  • Kenya
  • Ghana
  • Zambia
  • South Africa
  • Morocco
  • Egypt
  • Angola
  • Uganda
  • Tunisia.

Large Mobile Phone Market

  • Nigeria
  • Egypt
  • South Africa
  • Morocco
  • Algeria
  • Kenya
  • Tanzania
  • Ghana
  • Sudan.

Africa is currently a huge market for mobile phones, due to its growing middle class, young population and urban growth. The IMF predict that Sub-Saharan Africa will grow by 5.7% per annum until 2018.

Nairobi is now perceived to be an important hub between the Mediterranean and Johannesburg. Google, JP Morgan Chase, Colgate-Palmolive have chosen to base their operations there, rather than in South Africa. Porsche is also set to enter the Kenyan market this year.

Property investors have seen opportunities across the Retail, Hotel and Residential Housing sectors, with regional variations within emerging markets creating popularity in investment within the hotel industry particularly within emerging market economies such as Russia and Africa.

 

Future Trends

Half of the respondents surveyed anticipated higher levels of luxury purchasing activity within the African market, with the expectation of the greatest growth of UHNWI spending within this region.

According to Ledbury Research, of the top 10 locations for countries with the fastest growth in luxury spending, 5 were in Africa. This was measured by analysing the following:

  • The number of luxury outlets
  • Premium air travel
  • Wealth creation
  • Economic growth.

Africa’s wealthiest hubs were listed as:

  1. Johannesburg
  2. Cape Town
  3. Cairo
  4. Lagos
  5. Nairobi.

Of the cities that matter most to the worlds wealthy London is still number 1. No African cities were featured, and non were proposed to feature by 2024, however Africa’s UHNWI’s are contributing towards the luxury market abroad. Some luxury retailers account for Nigerians being the third highest non-EU spenders in London during 2012.

Although Africa’s UHNWI’s make a contribution to the luxury market, most luxury brands have restricted themselves to South Africa, the luxury sector in Africa is still in its infancy, and still growing.

 

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