JOHANNESBURG – South Africa is expected to grow high-net-worth individuals (HNWI) 35% to 65 700 over the next ten years, according to research firm New World Wealth’s maiden Africa Wealth Report.
Between 2013 and 2023, Nigeria will grow HNWIs 40% to 22 000, while the number of HNWIs in Mozambique is projected to grow 133% to 2 100. HNWIs are classified as having net assets of $1 million (R11.3 million) or more, excluding the value of the individual’s primary residence.
Africa: HNWI growth forecast by country, 2013-2023
*Includes countries with 2000 or more HNWIs (in 2023). HNWI figures rounded to the nearest 100
Source: New World Wealth
The data in New World Wealth’s Africa Wealth Report is derived from a database of more than 120 000 HNWIs from around the world. This data is supplemented with income distribution statistics, demographics, asset allocation information and property statistics.
Coming off a low base, African HNWI numbers have increased by more than 150% between 2000 and 2013, compared to the worldwide HNWI growth rate of 73% over the same period.
While Angola had the highest growth rate of HNWIs over the 13-year period at 482%, South Africa boasts the largest number of HNWIs by a considerable margin.
Africa: HNWI growth by country 2000-2013
* Source: New World Wealth
The growth of HNWIs in Angola did not, however, keep pace with the 765% hike in GDP per capita growth over the 13-year period, according to World Bank figures. Head of research at New World Wealth, Andrew Amoils, suggests that this is because the banking sector has not developed quickly enough and so people save less. “A lot of money is tied up in government and isn’t necessarily spread around,” he adds. He believes wealth creation in Angola will eventually catch up with economic growth.
As far as wealth per capita goes, South Africans are the wealthiest individuals in Africa, with $11 310 in wealth per person, while Ethiopians are the poorest with $260 per person. “It should be noted that all these figures are well below the global average of $27 600. Countries such as Switzerland and Australia have wealth per capita’s of over $200 000,” according to the report.
Gauteng pays more after all
Johannesburg holds the largest number of HNWIs in South Africa at 23 400, which is nearly half the total HNW population in the country. This is followed by Cape Town with 9 000, Durban with 2 700 and Pretoria with 2 500.
KC Makhubele, managing executive of marketing and strategic relationships at staffing solutions firm Quest, says that surveys reflect that Gauteng salaries are higher than other provinces. “In the Quest salary survey we found that if you look at all the positions that have experience of less than five years, Gauteng pays 7.3% more than the national median, and it is followed by Western Cape, which unfortunately pays 5% less than the median. KZN pays 16.6% less than the median,” Makhubele says of findings from the company’s most recent salary survey.
According to the Africa Wealth Report, ongoing political and labour relations issues hold the performance of HNWIs in South Africa back. Amoils cautions against government intervention in an economy, particularly in regulating land ownership. “You just have to look at a place like Zimbabwe where farms were invaded. When people lose faith in ownership rights nobody will invest or buy anything,” he says.
“Other constraining factors include a high (and rising) tax rate and increasing levels of government intervention in the economy,” the report notes. Amoils says one of the major drivers of wealth globally is a low income tax level.
“Places like Singapore and Dubai have developed so rapidly in terms of wealth growth because there is very little income tax in those countries. In Dubai there is none at all and in Singapore income tax is 15%,” Amoils says. “Having a high income tax rate has a massive impact on wealth creation, there is less incentive to work.”
He predicts that economic growth and wealth creation are going to slow heavily in Nigeria, driven by escalating violence between Christians and Muslims. “I wouldn’t be surprised if the country collapsed completely in ten to 15 years,” he says.
Amoils established New World Wealth just more than a year ago, having co-founded the company Wealth Insights in the UK.