Newly rich Africans are young, millennials willing to spend
The profile of a rich African is shifting from older white-haired males to younger, hip millennials who have found new ways to make and keep money in a changing global scene.
There will be 3,933 ultra-wealthy individuals on the continent by 2025, from 2,650 last year, according to the Knight Frank Wealth Report 2016. In Kenya, for example, ultra high net worth individuals have increased 122 percent since 2005, rising 2 percent in 2015 alone, despite a struggling economy. Some of them are 20 to 30 year-old rich Africans.
“The ultra-high net worth individual is younger in emerging markets, like China and Africa, than in developed markets,” Andrew Shirley, editor of the report, told reporters in the Kenyan capital, Nairobi.
The entry of the younger and better educated people into the exclusive club in Africa is also bringing fresh and non-traditional ways in which the wealthy grow and spend their money. More ultra-rich Africans are buying jets to avoid spending inordinate amounts of time in airport terminals waiting for the next connection to their destination on a continent with poor transport links, according to Shirley.
“The route from Lagos to London is the eighth-fastest growing private-jet route in the world,” Shirley said. “If you go to the Wilson airport in Nairobi, it’s full of private jets.”
In the past year, Kenya’s CFC Stanbic Bank has had a 40 percent increase in the number of clients worth more than $1 million, according to Anjali Harkoo, the head of its wealth and investment division.
Part of the wealth shift to younger Africans is due to succession management in family businesses and on inheritance, according to the study. Worried that their children may waste their inheritance, some wealthy people are bringing their children into the fold early to pass on the management and financial skills needed when they take the reins.
“A lot of people say they just don’t feel their children will be responsible enough, that they will just whittle their inheritance away,” Shirley said. “So it makes sense to involve the children at a much earlier age.”