On Thursday 4 July, Robert Moore Jersey Finance’s Director – UK and Jersey Finance’s Market Development Consultant for Africa, Dr. Rufaro Nyakatawa, co-hosted an invitation-only breakfast roundtable which was attended by a small group of London-based intermediaries.
Focussed on private wealth management and preservation in South Africa, Rufaro opened the event with a regional update followed by an insightful roundtable discussion on the trends, themes, opportunities and challenges in this region.
Growing Private Wealth in Africa
During her regional update, Dr Rufaro Nyakatawa referenced the 2024 Africa Wealth Report, a key publication which provides insights and analysis on the continent’s wealth trends and landscape. The report shows that there is US$2.5 tn of investable wealth in Africa with more than 135,000 dollar millionaires. It ranks South Africa as the top wealth maker country on the continent with more than 37,500 dollar millionaires, followed by Egypt, Nigeria, Morocco and Kenya. A significant trend highlighted in the report was that although the top three countries have lost more than 20% of their wealth in the past ten years, the continent will see an increase of 65% in high-net worth individuals on the African continent in the next ten years. One event attendee spoke about how this growth trend presents an opportunity for Africa’s wealthy to make ESG-led investments, particularly in the education sector.
Investing for Impact
Sustainable investments, the intergenerational wealth transfer and knowledge to ensure the smooth transition of assets and preservation of this wealth across generations, were familiar topics of conversation for London advisers working with South African private clients. One adviser who has worked in wealth management for more than 10 years described the increased demand from clients to ‘give back’, as well as a significant interest in impact investing, with a strong focus on measuring returns by impact.
Emphasis on social responsibility in ESG emerged as a key theme from the roundtable. Investing in community development and education is seen as crucial for ensuring long-term economic growth and stability.
Empowering Generations
Dr. Eugene van Rensburg, CEO of EduInnov8, highlighted the crucial role of education in Africa, where the continent, representing nearly 20% of the global population, is positioned to be the global growth hub of this century with the largest youth workforce and a significant emergent consumer base. Kenya, Nigeria and Zambia are the fastest growing African populations which presents a unique opportunity to implement sustainable support for local teachers and learners to uplift their communities. Interestingly, South Africa, a country with a developed infrastructure and business environment, is not one of the fastest-growing African populations.
But the African continent faces a significant education crisis. UNICEF estimates that 75% of African youths do not graduate from basic education at a grade 12 level in secondary school.
For EduInnov8, it is critical to reimagine education solutions to address the large, and growing, education needs of the African continent, with access to quality education at the heart – positively improving unemployment, enhancing social inclusion and preventing social destabilisation.
Further information on the EduInnov8 vision can be found here:https://eduinnov8.com/
The Shift Towards Offshore
On current trends in South Africa, Kyra Motely, Private Wealth Partner at Boodle Hatfield and co-host of the roundtable, expressed that there were no “new” trends in the region, just a continuation of those from the last few years, in particular wealth structuring outside of Africa for succession planning.
Jersey’s robust regulation, adherence to international standards and good governance were mentioned as reasons private clients, particularly in Nigeria and South Africa, favour our international finance centre (IFC). One example, seen in Kenya, was the increase in legacy structures ending up in disputes as they were not set up robustly.
Kanika Wahi, Director at UBS AG, reiterated that Jersey remains an important jurisdiction for high-net worth individual (HNWI) and ultra-high net worth individual (UHNWI) clients in South Africa. These clients are holding their private and family wealth in Jersey due to our IFCs maturity in the sector as well as its robust case law.
Securing the Future
Kim Manley, Senior Associate at Bedell Cristin, having recently travelled to Kenya and Zimbabwe discussed what was being seen from a succession and governance perspective. There is increasing openness in these regions to the Channel Islands due to the strength of the jurisdictions’ law and court system, which have become increasingly desirable as structures mature. This change in perception is shifting legacy wealth from traditional jurisdictions such as Mauritius and Seychelles favoured by African clients, though these are still integral to the operational parts of many African family businesses.
Kim also commented that patriarchs passing during Covid-19 had accelerated local recognition of the need for sophisticated family governance, succession planning and in some cases reorganisation of existing structures.
Southern Africa’s Wealth Potential
Dr Namukale Chintu, Founder of Frontier Market Consultants, provided the attendees with an update on the wealth trends in Southern Africa outside South Africa. The growth in private wealth implies that the needs of private clients increasingly require international best practice approaches and there is value to be added in considering various asset diversification and protection strategies. The SADC region has immense potential as there is continued stability, thus creating an ideal environment for investment and philanthropic opportunities for families.
Conclusion
The private wealth sector in Africa, with a focus on South Africa reflects a dynamic market with sophistication, investment opportunities and evolving family needs. The increasing demand for succession planning and strategic restructuring presents opportunities for UK and Jersey advisers to engage in the African market, ensuring the prosperity of families and their wealth. Additionally continued investments in community development and education are essential foundations for maintaining economic growth and stability.