Eighty-two percent of South Africa’s high net-worth individuals see the political environment as a significant risk to wealth preservation.
This was revealed in Standard Bank’s 2020 African Wealth Report. The survey provides insight into how these individuals on the African continent are creating, managing, preserving and passing on their wealth.
Standard Bank conducted the survey in partnership with Intellidex, a capital markets and financial services research house. They identified 265 high net-worth individuals from South Africa, Kenya, Nigeria, Ghana and Mauritius.
These individuals came from different industries, including education, property, oil and gas, manufacturing, financial services, banking, entertainment, retail, and construction.
These are individuals with a net worth ranging from $1 million (R17.4 million) to more than $100 million. The majority of those surveyed (67%) had a net worth in the $1 million to $5 million range.
The report revealed that the majority of the individuals still preferred to wake up and do the old nine to five. Almost two-thirds reported that they were still working at least 40 hours a week; and a number of them reported putting in 40 to 60 hours a week.
• 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 $1 million.
• In South Africa, stocks or equities (51%) are 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 see 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.
• When it comes to “passion investments” – or lifestyle assets – high net-worth individuals 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 by various degrees of importance.
Respondents overwhelmingly favoured family (82%), followed by charity (12%) and other causes, when asked how they plan to bequeath their estates.
The report shows that the majority of wealth in Africa is held by people older than 50. No one in the report was younger than 35. Countries such as Ghana (8), Kenya (7) and Nigeria (4) lead in this regard.
Only seven high net-worth individuals in South Africa were younger than 50. Out of 65 individuals in South Africa, 30 were 65 or older.
Kenya had the highest number of high net-worth individuals, with over $100 million (18). They also have the most individuals with $20 million to $100 million (8).
South Africa had the highest number of high net-worth individuals with a net worth between $1 million and $5 million (45). It also had the highest number with a net worth between $5 million and $20 million (16).
You can find the full report here.