Botswana had 2 800 high net worth individuals (HNWs) by the end of 2016 with 100 of them being multi-millionaires, says the just released Africa Wealth report produced by AfriAsia. Botswana ranked 12th in the continent. South Africa topped the charts with a staggering 40 400 HNWs with 2 130 of them being multimillionaires. As at the end of 2016 worldwide wealth held by individuals amounted to approximately US$192 trillion. The average individual had net assets of US$27,000 (wealth per capita). There were 13.6 million HNWIs in the world and worldwide HNWI wealth stood at US$69 trillion with 522,000 multi-millionaires in the world.
At the end of 2016 the average African individual had net assets of approximately US$2,000 (wealth per capita). Total individual wealth held on the continent amounted to US$2.2 trillion. There were approximately 145,000 HNWIs living in Africa, with combined wealth holdings of approximately US$800 billion. There were 7,010 multi-millionaires living in Africa. Growth rate trends: African HNWI numbers have increased by 19% during the review period (2006-2016). 2016 was a bad year for African HNWIs. Their numbers decreased by 2% during the year. HNWI numbers in Africa are expected to rise by 36% over next 10 years, reaching approximately 198,000 by 2026.
Collectables, especially art, wine and classic automobiles are an increasingly popular way for African HNWIs to store their wealth. Collectables accounted for 1.1% or US$8.8 billion of the assets of African HNWIs in 2016, compared to only 0.6% in 2006. Art in Africa New World Wealth estimates that African HNWIs held US$870 million worth of fine art at the end of 2016. Globally, fine art prices have risen by 3% over the past 10 years whilst African fine art prices have risen by 22% (source: NW-Wealth US$ collectables index). South Africa is the largest fine art market in Africa. Leading artists in SA include Irma Stern, Thomas Baines, JH Pierneef, Alexis Preller, Pieter Wenning, Gerard Sekoto, Maggie Laubser, Hugo Naude, Portchie, Isabel le Roux and Dimitrov. The value of these artists has risen appreciably – an Irma Stern painting that sold for US$20,000 in 1995 fetched over US$2 million in 2011. The majority of major art galleries are located in Johannesburg and Cape Town and in second-home hotspots such as Stellenbosch. Major dealers include Stephan Welz and Strauss & Co. Nigeria, Egypt, Kenya and Morocco also have significant fine art markets. Fine wine Prior to the review period, the global fine wine market recorded tremendous growth, with prices paid for certain vintages of Lafite Rothschild having increased more than tenfold in the 10 years from 1996 to 2006. Heavy buying by the Chinese in the Hong Kong market was the main driver of this growth. As a result of this boom, portfolio managers that specialised solely in fine wine investments began to crop up and offer unique wine denominated investments. During the review period, global fine wine price continued to rise (although not at the same rate) - they rose by 72% during the 2006 to 2016 period. 2016 was a particularly good year, with prices rising by over 20%. Wheels Over the review period, classic car prices rose by a strong 180%, making it the best performing investment class for HNWIs over this period. AfrAsia Bank Africa Wealth Report 2017 © New World Wealth Page 22 However, it should be noted that the global classic car market is showing signs of slowing down. The most recent Pebble Beach Concours d’Elegance auction held in August 2016 recorded sales of US$340 million, down from US$396 million the year before.
Why Mauritius leads
Mauritius was the top performing African country for HNWIs during this period, with growth of 230%. The strong growth in millionaires in Mauritius has been assisted by strong economic growth; Migration – a large number of wealthy individuals have moved there over the past decade, especially from France and Southern Africa. We estimate that 280 millionaires have moved there from South Africa alone since 2006. A thriving and growing financial services sector, particularly in offshore banking, fund management and private banking. Automatic permanent residency if one buys a US$500,000+ home in the country. This encourages wealthy people to move there. Secure ownership rights – this is the most critical component of successful wealth creation globally. Ownership rights are very strong in Mauritius, which encourages locals and foreigners to invest in property and businesses in the country. Neighbouring Zimbabwe offers a case in point as to what happens when ownership rights are stripped – once assets are taken away they tend to lose value as no one is willing to buy anything. Low taxes which encourage business formation and appeal to retirees. Company and personal income tax rates are only 15%, with no inheritance or capital gains tax. Low level of government regulation in the business sector (when compared to nearby countries such as South Africa which has exchange controls, high taxes, big trade unions and BEE hiring requirements). Lifestyle - beaches, weather, golf courses and scenery. Low crime rate. Ease of doing business in the country (Mauritius ranked 1st in Africa in the World Bank’s 2016 Doing Business Report). Low jobless rate and low inflation rate. It has a well-developed banking system and stock exchange. This encourages people to invest their money within the country and grow their wealth locally. It also ensures that any economic growth filters through to wealth creation. Individuals living in Mauritius are free to invest overseas (with no exchange controls) – this encourages wealthy people to use the country as a business and investment hub. It has a well-developed free media. This prevents government from getting away with wrong doing. It is a convenient base for investing and doing business in Southern and East Africa. Safety – Mauritius was recently rated by New World Wealth as the safest country in Africa. Some additional factors that are encouraging wealthy people to move to the island include: Good schools such as Northfields and International Preparatory School (IPS). Access to first class food & produce – prime shopping centres and food lovers market. [Africa Wealth Report 2017]