Tech firms churn out most dollar billionaires

The sector’s billionaire wealth increased last year by 3.4 per cent to Sh130 trillion at a time when numbers worldwide dropped.
The technology sector defied a difficult period last year to create the highest number of dollar billionaires - making it the most attractive to aspiring entrepreneurs.

The increase comes at the time when many entrepreneurs have fizzled out of the billionaires club.

The technology sector stands out as the only industry where billionaire wealth increased last year by 3.4 per cent to Sh130 trillion ($1.3 trillion) - at a time when the number of billionaires worldwide dropped.

This is according to the Billionaire Effect 2019 Report prepared by consultancy firm PwC and UBS. According to the report, the number of billionaire-controlled technology companies has almost doubled - from 76 to 148 over the past five years.

“It is no accident that technology is the only industry where billionaire wealth increased in 2018, rising 3.4 per cent to $1.3 trillion,” said the report.

Their net wealth has almost doubled over the last five years, growing 91.4 per cent. This has seen software, internet, and electronic equipment entrepreneurs built powerful business conglomerates over the past 30 years.

In Kenya, the top sectors that generated wealth last year included financial services and investments, technology and telecommunications, retail, fashion and luxury goods, transport and logistics, manufacture of fast-moving consumer good (FMCG), media and mining.

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Kenya’s strong position in technology, especially financial technology (Fintech) and e-commerce is seen helping to grow the number of tech billionaires.

The report notes that banks and fund managers are now on the hunt for technology founders as the new emerging crop of money minters to boost deposits and investment portfolios.

The number of billionaires worldwide dropped from 2,158 to 2,101 with a total wealth of Sh8.5 trillion. However, pioneers driving the future of sub-sectors such as e-commerce, fintech, ride-hailing, and data systems are emerging fast.

All other sectors such as manufacturing, real estate, mining and agricultural cut the number of billionaires in the respective sectors. 103 people’s wealth dipped below a billion dollars. Profitability is highest in the consumer and retail, technology, and financial services sectors.

By contrast, companies in entertainment and media, materials, and utilities had the lowest return on investment. Media firms have struggled against the digital disruption, materials businesses have experienced headwinds from depressed commodity prices, and utilities are facing stiffer competition from new renewable energy sources.

The stock market was the worst performer, trimming down the number of global billionaires with Africa and Middle East billionaires dropping from 52 to 50 in 2018. The analysis shows that many are leveraging technology to enable new business models in sectors ranging from retail to transport to finance.

By contrast, the industrial sector was the worst-performing – falling by 15.1 per cent to Sh60.9 trillion ($608.9 billion) – against a backdrop of declining commodity prices. By the end of 2018, tech billionaires’ assets totalled Sh130 trillion ($1.3 trillion). Their net wealth has almost doubled over five years, growing by 91.4 per cent. If tech billionaires’ wealth were a country, it would rank second only to the US.

Looking back over five years, tech billionaires have driven almost a third of the growth in billionaire wealth.

The report notes that US tech billionaires accounted for more than half of that growth.

Over the five years to the end of 2018, billionaire wealth grew by more than a third or 34.5 per cent, reaching a total of Sh850 trillion ($8.5 trillion), Sh220 trillion ($2.2 trillion) higher than five years earlier.

In the same period, 589 individuals became dollar billionaires, increasing the population by 38.9 per cent to 2,101.

Women became billionaires at a faster rate than men over the five years to the end of 2018.

The number of female dollar billionaires increased by almost half 46 per cent in the period, rising from 160 to 233.

Meanwhile, the number of men expanded by 39. The average age of billionaires was 64. Tech creates industries of the future, tech entrepreneurs, mainly from the US, are injecting dynamism.

The data also shows that the number of female billionaires rose faster than men and their wealth was up by 46 per cent.  

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