A report tracking wealthy individuals in Africa expects 88,000 dollar millionaires on the continent to relocate to new countries as confidence levels drop.
The “Africa Wealth Report”, published by Henley & Partners in partnership with New World Wealth, says that though the expected relocation figure is 22,000 fewer than in 2019, when 110,000 moved, droves of affluent investors and their families are preparing for the new post-Covid world, with a “yet-to-be-revealed rearrangement of the global order and the ever-present threat of climate change as a constant backdrop”.
“A large number of billionaires have left Africa over the past 20 years or so. Notably, there are 52 Africa-born billionaires globally, of whom only 23 still live on African soil.
This is a significant concern as many billionaires are entrepreneurs and company founders who therefore have the ability to create significant employment in their host countries. Billionaires rarely move for tax reasons. They usually relocate to expand their businesses or due to safety concerns,” the report notes.
Amanda Smit, managing partner at Henley & Partners South Africa, said high-net-worth individuals (HNWIs) were deserting countries they had lost confidence in.
“The increasing outflow of affluent individuals often points to a drop in confidence in a country, since HNWIs and ultra-HNWIs have the means to leave and are thus the first to exit and vote with their feet when circumstances deteriorate,” said Smit.
Between 2012 and 2022, 18,500 HNWIs left Africa for the UK, the US, the United Arab Emirates, Australia, Canada, France, Israel, Monaco, New Zealand, Portugal and Switzerland. About 1,200 HNWIs have moved between African countries over the same period, with most relocating to Mauritius and South Africa.
The total private wealth held on the continent is $2.4-trillion.
Africa is home to 23 dollar billionaires, 328 centi-millionaires ($100m-plus net worth) and 138,000 dollar millionaires. Five of the dollar billionaires live in South Africa, eight in Egypt, four in Nigeria, four in Morocco, one in Algeria and one in Tanzania. Two of the five South African dollar billionaires live in Johannesburg, two in the Cape winelands and one in Cape Town.
Thirty of the 93 centi-millionaires in South Africa live in Johannesburg, 26 in Cape Town, 15 in the Cape winelands, 10 in Durban, five along the Garden Route, five on the Whale Coast in the Western Cape, and two in Pretoria.
Johann Rupert remains the richest person in South Africa, with a net worth of $11bn. Nicky Oppenheimer is second, with a net worth of $8.3bn, followed by Koos Bekker, who’s worth $2.7bn. Patrice Motsepe, with a $2bn net worth, is fourth and Michiel le Roux trails him, with a net worth of $1.1bn.
Aliko Dangote of Nigeria is the richest African, with a $13.5bn net worth. Nassef Sawiris of Egypt has a net worth of $7.3bn.
Smit said this migration could be detrimental to the economies and real estate markets of the countries the millionaires left behind. In some cases, affluent individuals relocated their businesses — and the employment the businesses generated — as well as their skills, qualifications and influence.
While millionaires may reflect only a fraction of a country’s population, producing, attracting and retaining them is an important endeavour for any country.
According to the report, despite a tough past decade, South Africa is still home to at least twice as many HNWIs as any other African country
Armien Tyer, managing executive of Absa Private Wealth Banking, said while the overall decline in HNWIs over the past decade was a reality, it was also encouraging that the region had significant growth potential over the foreseeable future.
This was due to a combination of factors such as demography, infrastructure, resources and a low base level of economic development, among other factors.
“Most importantly, [due to] the resilience of the people across the region and its entrepreneurship, despite great odds. This is evident in Sub-Saharan Africa, East and West Africa, and smaller countries such as Mauritius. In short, the recent past is not a predictor of the future,” he said.
According to the report, despite a tough past decade, South Africa is still home to at least twice as many HNWIs as any other African country, and 30% of the continent’s centi-millionaires. Egypt takes the prize for the most billionaires, and Mauritius boasts the highest wealth per capita (average wealth per person) in Africa, at $37,500, followed by South Africa at $10,880 and Namibia at $10,050.
Smit said millionaires were often the founders of large companies, so having lots of them was a good sign for any economy. They also contributed to tax revenue and kept the banking, retail and real estate sectors liquid due to their high spending power.
“HNWI migration figures are an excellent barometer of the health of an economy,” she said.
“Affluent individuals are extremely mobile, and their movements can provide an early warning signal of future country trends. Countries that draw affluent individuals and families to migrate to their shores tend to be robust, with low crime rates, competitive tax rates and attractive business opportunities,” said Smit.
In South Africa, most millionaires are in the financial services sector, followed by real estate and mining.
According to the report, millionaire migration has been a rising trend over the past decade, but dipped in 2020/2021 because of Covid. Pandemic-related disruptions were rapidly followed by the war in Ukraine, which is having global repercussions.
Dominic Volek, group head of private clients at Henley & Partners, said more African countries were setting their sights on attracting HNWIs by providing residence and citizenship to secure investment opportunities that had the potential to transform their economies.
“As wealth grows on the continent, we expect to see investment migration continue to gain ground in Africa — not only on the demand side from African HNWIs looking to improve their travel freedom and economic mobility, secure location optionality and mitigate risk, but also on the supply side, with more and more African nations looking to launch their own programmes to increase the inflow of capital and talent,” he said.
In terms of migration trends, Tyer said some individuals emigrated completely, while others retained links to their country of origin, including some physical residency, though some remained cognisant of the tax implications of doing so.
“For all South Africa’s obvious issues, some of which appear insurmountable right now, it still offers great opportunities in many commercial endeavours, with lifestyles that are incomparable to almost anywhere in the world. Lastly, the ability to make a difference and create a legacy is tremendous if the quest is not just about how much money you can accumulate,” he said.
The report predicts that Africa’s millionaire population will rise by 42% over the next decade, reaching 195,000 by 2032.
Smit said: “We expect especially strong HNWI growth from the financial services, manufacturing, technology, entertainment, tourism and health-care sectors in Africa over the next decade.”
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