Kenya losing millionaires to rival economies across Africa

Kenya’s wealth generation ability is fading compared to her rising peers.

Kenya is at the risk of losing its most affluent position to rival African countries, a new wealth report indicates.

According to new a report by a South African research firm New World Wealth (NWWealth), Kenya will be playing catch-up to some eight African countries in attracting private wealth, signalling improved investment conditions in those countries.

These countries with high growth of super-rich individuals, according to the new “Africa Wealth Report”, are from all corners of the African continent. “We expect Mauritius, Ghana, Rwanda, and Uganda to be the strongest performing wealth markets in Africa during this period with 90 to 150 growth rates,” reads part of the report.

The survey projected growth rates of between 50 and 80 per cent for Ethiopia, Mozambique, Zambia, Botswana and Namibia.

Poor policies, including punitive taxes, has been a turn off for most potential investors in Kenya, with some of them opting for neighbouring Ethiopia instead.

The report shows that in a span of 10 years to 2017, Kenya’s pool of private wealth increased by 73 per cent in 2017, a far-cry from Ethiopia’s which surged by 190 per cent in the same period, making Addis Ababa the second best in wealth generation on the continent in 2017.

Compared to its peers, Kenya is lagging behind on many of the factors that encourage wealth growth, including a safe and secure environment, strong ownership rights, a well-developed banking system, ease of doing business, media freedom.

By 2017, individual wealth on the continent was estimated at $2.3 trillion (Sh230 trillion) and is projected to rise by 34 per cent over the next 10 years — reaching $3.1 trillion (Sh310 trillion) by the end of 2027.

Currently, Africa is home to about 148,000 High Net worth Individuals (HNWIs), each with a net asset value of $1 million (Sh100 million) or more.

“There are approximately 7,100 multi-millionaires living in Africa, each with net assets of Sh1 billion ($10 million) or more,” says the report, adding that there are approximately 320 “centi-millionaires” living in Africa, each with net assets of $100 million or more.

Also, there are 24 billionaires living in Africa, each with net assets of $1 billion (Sh100 billion) or more.

Kenya’s position is worsened by the fact that its ability to attract the world’s richest is wanting with other data showing that out of the 95,000 migrating HNWIs in 2017, Kenya did not receive many. Likewise for the 108, 000 migrating in 2018.

Unlike in Africa, the story is quite different for overseas countries. Last year alone, Australia welcomed a total of 12,000 high net-worth individuals while the US hosted 10,000.

“Australia was the top country worldwide for HNWI inflows in 2018, beating out its main rival the US for the fourth year running,” reads the report. The super-rich were endeared to Australia by its secure environment, a vibrant economy and a first-class healthcare system.

Canada, Switzerland, and the UAE each hosted a total of 4,000, 3,000 and 2,000 of the world’s richest individuals respectively during the period under review.

The New World Wealth in its latest “Global Wealth Migration Review” shows that while the average wealthiest individual in the world has net assets of around $27,000, there are about 14 million high net-worth individuals (HNWIs), each with net assets of Sh1 billion ($1 million) or more.

Also, there are about 560,000 multimillionaires in the world, each with net assets of Sh100 billion ($10 million) or more. While there are approximately 25,000 “centi-millionaires”, each with net assets of Sh10 billion ($100 million) or more, there are also 2, 140 billionaires, each with net assets of 1 billion or more.

However, at the same rate of growth over 10 years, Kenya’s contribution to the stock of the world’s wealth is likely to be quite negligible.

This now means the Government has to up its game in service delivery if it has to attract such calibre of persons that the study finds are a necessary component in the growth and health of the economy.

“Wealth migration figures are an important gauge of the health of an economy. For instance, if a country is losing a large number of HNWIs to migration…, it can be a bad sign of things to come...,” reads the wealth migration report, adding that any major country collapse in history has often been preceded by a migration away of the wealthy.

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