Prospects for Africa’s internet economy and growing demand for top skills is seen supercharging the investment migration industry across Africa and is also fueling a new set of wealth hubs on the continent, according to a report.
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A rise in the demand for top talent and robust growth in Africa’s technology sector will drive far faster growth in private wealth in some of Africa’s smaller economies – particularly, Uganda, Rwanda, Zambia and Mozambique – over the next decade, according to Africa Wealth Report 2022.
The report projects private wealth growth of at least 50 percent by 2031 in these markets.
“It will be driven by especially strong growth in the technology and professional services sectors,” according to the latest report by research firm New World Wealth and Henley & Partners, which helps high-net-worth individuals to acquire residence or citizenship through investment.
East African countries are set to record the biggest wealth growth in the coming decade, driven by an over-60-percent rise in Uganda and Rwanda, with Zambia rising from a negative position and Mozambique also tipped to see a rise of more than 50 percent.
Rwanda and Zambia are ranked at the bottom of the table of Africa’s 17 “wealthiest”, with total private wealth of 11 billion US dollars and 14 billion US dollars respectively.
Uganda is ranked 12th, with 37 billion US dollars and Mozambique is in position 14, with 20 billion US dollars after increasing its total wealth by 20 percent since 2011.
“The tide is swinging in the direction of smaller emerging economies. The delta in new wealth creation has been strongest in countries such as Mauritius and Rwanda,” said Venture capitalist and MyGrowthFund Venture Partners, Chief Executive Officer, Vusi Thembekwayo.
Over the last decade, Mauritius (74 percent), Rwanda (60 percent) and Ethiopia (50 percent) have been the fastest-growing wealth markets in Africa.
Mauritius is the 10th wealthiest country in Africa in terms of absolute total private wealth but ranks top in the continent in terms of wealth per capita.
A growing recognition by these economies that they can attract substantial capital if they have the right regulatory framework and are able to position themselves as preferred investment destinations have also been linked to the shifting tide in wealth creation across the continent.
“The new economies that are built on technologies, driving inclusion and the now in-vogue environmental, social and corporate governance criteria are attracting new capital into the fold and creating more liquidity in the secondary capital markets,” said Thembekwayo.
South Africa, Egypt, Nigeria, Morocco and Kenya are the current ‘Big 5’ wealth markets in Africa, accounting for over 50 percent of the continent’s total wealth.
However, the over-50-percent growth projections in Kenya and Morocco over the next decade could alter the current ranking in the top wealth tier.
Already, the wealth creation rate of the top three incumbents, South Africa (12 percent), Egypt (23 percent) and Nigeria (27 percent) have declined in the last 10 years.
The report has projected overall wealth growth of 38 percent for Africa in the next decade, to 3 trillion dollars – a move that could begin to bridge inequality as wealth creation spreads across bigger and smaller economies through investment migration.
Group Head of Private Clients Henley & Partners, Dominic Volek said Africa is growing as an investment migration market in line with sustained global growth over the last 25 years.
“The appeal of investment migration for affluent families is truly universal due to its many benefits, ranging from domicile diversification to global mobility enhancement, to accessing world-class education and healthcare, to having a plan B in times of turmoil,” said Volek.
However, while the growth in the tech ecosystem and the growing need for skilled workers is attracting inward migration to key African economies, especially from other African countries, migration out of Africa has increased in some key markets.
According to Volek, there has been an overall increase of 18 percent in enquiries from Africans seeking either alternative residence or citizenship or both, last year. By the end of Q1 2022, the number of enquiries was 29 percent higher than the total for 2021.
South Africa, Nigeria and Egypt were Africa’s top three investment migration markets, with active investment migration both inwards and outwards.
Algeria and Morocco were joint-4th, and Ghana took 5th place in terms of the number of applications received for investment migration programs over the period.
A notable surge of interest from Algerians (up 70 percent) and Tunisians (up 63 percent) over the whole of 2021 was also recorded in the first quarter of 2022.
This story was republished with the permission of bird, a story agency under Africa No Filter.
