Self-made billionaires on the rise: Report

Boniface Abudho (left) research analyst for Africa and Mark Dunford CEO of Knight Frank, Kenya, officially release a Kenya Wealth report, a perspective on Kenya wealth investment trends 2024 at Capital club, Nairobi. [Jonah Onyango, Standard]

The rise of self-made billionaires is becoming evident among high-net-worth individuals (HNWI), with the latest Wealth Report by property consultant Knight Frank showing none of the super-rich attributed more than 70 per cent of their wealth to inheritance.

The report released on Tuesday showed that a majority of the super-rich attributed inheritance to 30 to 40 per cent of their wealth.

While a portion of the wealth held by HNWI is still linked to inheritance, the report notes self-made wealth as these individuals divest their portfolios or liquidate assets such as houses that have accrued in value over the years.

The report states that the fact that 28 per cent of respondents, who include wealth managers in investment firms, reported that inherited assets account for between 30 to 40 per cent of their clients' portfolios suggests that the super-rich in Kenya are building on the foundation of what they already had.

"Often in the form of land, family business or property, while actively expanding their portfolios through entrepreneurship," the report says.

The report says 17 per cent of wealth managers indicated that inheritance accounts for 61-70 per cent of their clients' wealth.

"This suggests the existence of long-established wealthy families with extensive land holdings, legacy businesses or multi-generational assets forming a substantial part of their net worth," the report says.

The report, while acknowledging that inheritance still plays a role in wealth accumulation among Kenyan HNWIs, states that only six per cent of wealth managers reported that their clients' wealth was not inherited in any form.

"Most of Kenya's wealthy tend to inherit assets, but they typically hold these in relatively conservative portfolios while focusing their efforts on generating new wealth through more productive and venturesome investments," said Research Analyst at Knight Frank Boniface Abudho.

The report also highlights a notable decline in the influence of inherited wealth, which now constitutes a minority share of HNWI portfolios.

Half of the fund managers surveyed indicated that inheritance accounts for less than 30 per cent of their client's wealth, while 77 per cent said it represents less than 40 per cent.

"The absence of respondents indicating portfolios with more than 70 per cent inherited wealth suggests a trend where even individuals with substantial generational wealth are actively engaging in wealth creation," the report says.

"This highlights a shift towards entrepreneurship, portfolio diversification and new investment opportunities beyond inherited assets."

The report cites business innovation, real estate expansion, and the growing influence of the capital markets as some of the contributing factors to the new generation of billionaires.

Knight Frank notes that inherited wealth in Kenya is mainly channelled into the residential private rented sector (39 per cent), followed by real estate debt (17 per cent) and development land and education (each at 11 per cent).