Standard Bank Group, Africa’s largest financial organisation by assets with operations in 21 markets on the continent, has released its Africa Wealth Report 2020 – a ground breaking survey that provides deep insight into how high-net-worth individuals (HNWIs) in Africa are creating, managing, preserving and passing on their wealth.
To draw a more complete picture of the continent’s wealthy cohort, the survey – conducted in partnership with leading capital markets and financial services research house Intellidex – polled a total of 265 HNWIs across South Africa, Kenya, Nigeria, Ghana and Mauritius.
Respondents hailed from a diverse array of industries including real estate, manufacturing, construction, financial services, technology, oil and gas as well as education, entertainment, retail, trade and banking.
Chris Browne, Group Head: Standard Bank Wealth & Investment, explains that a unique feature of the report’s methodology is the 75 face-to-face interviews (not specific to Standard Bank clients) that were conducted as they speak directly to the client-centric approach that is critical to serving this segment.
“With a greater understanding of the nuances, challenges and opportunities that define the wealth journey in key African markets, we are better positioned to develop and deliver unique, tailored solutions to our clients that can be used to grow and preserve wealth over time,” explains Browne.
Around 67% of participants in the study had an estimated net worth in the $1 million to $5 million range. Approximately 16% of respondents had an estimated net worth of $5 million to $20 million, while the research from Intellidex also canvassed those with $20 million to more than $100 million in net worth.
The report provides a comprehensive view on how Africa’s HNWIs are accumulating their wealth, the preferred assets classes for preserving it and the concerns they have about risks to their wealth in the future. Other key findings include how wealthier people in Africa spend their leisure time and which lifestyle, or passion assets are most favoured.
“Sharpening our knowledge on the unique complexities associated with wealth creation and preservation in African markets, and the desires of Africa’s HNWIs, enables Standard Bank Wealth and Investment experts to sculpt wealth portfolios into something that will live on for generations to come” says Browne.
Here are some of the top findings from the report:
- Africa is truly a continent of entrepreneurs with no less than 148 of the 265 respondents citing entrepreneurship as their chosen path towards accumulating their first $1m.
- In South Africa, stocks or equities (51%) were by far the most popular asset class for preserving wealth, with tangible assets such as property comparatively less important (18%). By contrast tangible assets emerged as the most favoured asset class for wealth preservation in all other markets surveyed with the figure being highest in Kenya (38%) followed by Mauritius (29%), Ghana (26%) and Nigeria (23%).
- The political environment is seen as a significant risk to wealth preservation in the majority of markets surveyed, with 82% of South Africans highlighting it as a concern followed by Ghana (67%), Nigeria (64%) and Kenya (55%). By contrast, only 31% of Mauritian respondents saw the political environment as a threat.
- The report reveals that Africa’s wealthy exhibit a strong understanding of the need for diversification. Some spoke of the importance of having a diverse portfolio of assets, including property and financial assets, but also about the importance of diversifying sources of revenue across multiple business activities and supply chains.
- Relatively few respondents opted to give up working after accumulating their wealth, with just shy of two-thirds still working at least 40 hours a week. A significant portion of respondents from all countries still maintain long office hours – between 40 and 60 hours a week – with many still working more than 60 hours a week.
- When it comes to “passion investments”, or lifestyle assets, HNWIs in Africa favour furniture, watches, luxury homes, jewellery and luxury automobiles.
- Respondents placed great emphasis on leaving wealth to heirs with 87% of respondents ranking it as either extremely important, very important or important. Respondents overwhelmingly favoured family (82%) followed by charity (12%) and other causes when asked how they plan to bequeath their estates.
“With the limited amount of information and data on how Africans actually earn, invest, spend or preserve their wealth, as well as on their attitudes and desires toward wealth creation, it is our hope that the Standard Bank Wealth Report 2020 closes this gap and enhances the approach of wealth managers in key African markets so that wealth is preserved for generations and communities to come,” concludes Browne.
Click here for the full report.