WEALTH-X WORLD ULTRA WEALTH REPORT 2013: SOUTH AFRICA & AFRICA

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Wealth-X, the boutique consultancy firm that provides intelligence on the ultra wealthy recently released their annual World Ultra Wealth Report for 2013 and over the coming weeks we will be taking a look at their findings. Who has faired well? Who has not been as fortunate? Where do the prospects of both the developed and developing economies lie, and so forth?

Of course, The Luxury Lifestyle Guide being of African origin, we begin our series with Wealth-X’s analysis of Africa (and by necessity, by and large, South Africa).

Most interesting concerning the condition of Africa’s ultra wealthy is the mixed bag of results that demonstrate that whilst the continent’s community of UHNWIs has risen by 125 from 2410 the previous year to 2535, its total wealth has declined by US$5 billion from US$330 in the same period.

The slight decline in total wealth among African UHNWIs is accounted for in countries whose conditions are not specifically detailed by the report, whilst listed countries the likes of South Africa, Egypt, Nigeria, Tunisia and Algeria have predominantly remained the same. Only Angola and Tanzania showed growth in both wealth and number of UHNWIs by US$1billion and 10 each, respectively. Conversely, Morocco alone declined, in both.

Expected are the results indicating that the growth in Africa’s UHNW community came from its largest economy, South Africa, where it grew by 60 from 725 from the previous year. Being the category of country that it is socio-politically, South Africa’s growth in its UHNW population, while its total wealth stagnated at US$100 billion from 2012, would, at face value, seem to indicate that it’s governments policies for the redistribution of wealth, Black Economic Empowerment and the economic empowerment of women are slowly but definitively beginning to yield results.

On the other hand, 2013 saw the South African rand lose significant value against the US dollar. Exports to its largest trade partner, the Euro Zone, suffered as a direct effect of the economic union’s debt woes and lack of competitiveness in the post-crisis global market. Domestically, South Africa’s economy was hampered by mine workers’ strikes – not unrelated to the ill-fated
Marikana strike – unimpressive retail performance, increase in both energy and food prices, and, by extension, lack of meaningful business confidence in both small and big enterprises. It would further seem clear that South Africa, maybe more so than its peers, still suffers from an enabling entrepreneurial environment, driven by knowledge, skills, innovation and well-coordinated support for small to medium enterprises, particularly.

It is exactly because of these conditions of the South African business and labour environment that Wealth-X forecasts that its UHNW population will only gain 6.2% whilst its total wealth will grow by 12.4 % over the next five years, respectively. Comparatively, the firm predicts that UHNW population growth within Africa will be led by Tanzania at 13.8% and Kenya at 11.3%. Not that it is a surprise but Tanzania’s economy will continue to be fueled by its export of gold and coffee, its most value produce.

One matter that the Wealth-X Ultra Wealth Report 2013 makes clear is that in so far as South Africa and the rest of the SADC region countries are unable to retain their competitiveness, investors and the markets will continue to progressively look for greener pastures in East Africa, Nigeria and oil and gas abundant North Africa. Yet, whilst this may be the case, major challenges remain for business and investors in these regions. Governments need to excellerate infrastructure development, invest in educate and skills development, and prioritize technology and innovation. Equally, good governance – or should we say the volatility thereof – is one of the greatest concerns in these regions – and the so-called Arab Uprising has not helped.

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