Stock market performance, tax fears concern SA high net-worth individuals
CAPE TOWN – Most of the wealth of high-net-worth individuals (HNWIs) in South Africa was invested in equities, whereas in other countries much of the wealth was invested in assets such as residential, commercial or agricultural properties, businesses and other tangible assets, according to the African Wealth Report compiled by Intellidex.
The report focuses on how wealth is sustained, created and passed on to the next generation in the context of 265 HNWIs from South Africa, Nigeria, Ghana, Kenya and Mauritius.
Africa is rich in entrepreneurship, and the interests and investments of HNWIs differ in every country on the continent, Standard Bank group head of Wealth and Investment Christopher Browne said yesterday.
For the purposes of compiling the report, the HNWIs had completed a questionnaire, while 75 of them were interviewed, said Intellidex partner Stuart Theobald. Intellidex compiled the report for Standard Bank. He said the research was important, because although HNWIs were well researched in developed markets, there was little information available about entrepreneurs in Africa.
Theobald said the combined wealth of the HNWIs was equal to 58 percent of the gross domestic product of the entire continent.
Many of the HNWIs had net asset values of $1 million (R17.4m) to $2m, which was at the bottom end of the wealth accumulated by the entrepreneurs. Real estate was a top industry for wealth creation by the entrepreneurs across the five countries. Real estate formed an important component in HNWIs’ investment portfolios in South Africa (18 percent) and Mauritius (18 percent).
African HNWIs also created wealth through the construction industry, oil and gas in Nigeria, and financial services in Mauritius, while manufacturing was in the middle of the list of all the countries, but was among the top industries participated in by South African entrepreneurs.
In Mauritius and South Africa, HNWIs tended to have successful careers from which to build their first $1m of wealth.
Most of the HNWIs rated their idea to create wealth as the most important aspect of their success, compared with other aspects, such as the timing, team, business model and finding access to funding.
South African HNWIs tended to be closer to retirement age than the entrepreneurs in the other African countries. Most of the HNWIs (65 percent) rated spending time with their families as the most important aspect of their leisure time, while they spent fewer than five hours a week on hobbies. Health and exercise, reading and dining stood out as hobbies.
The political environment, stock market performance and fears of wealth taxes were the top concerns among South African HNWIs. Political factors were of no concern to the Mauritian respondents, while personal security and safety were rated as biggest concerns among Nigerian HNWIs in preserving their wealth.