Covid has made Africa’s rich poorer

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Covid has made Africa’s rich poorer

Report gives a gloomy picture of the continent’s wealth sector after the three largest African markets perform poorly

Senior reporter
The latest Africa wealth report estimates that the number of dollar millionaires in Africa has dropped by about 9% over the past year.
BLEAK VIEW The latest Africa wealth report estimates that the number of dollar millionaires in Africa has dropped by about 9% over the past year.
Image: ISTOCK

The Covid-19 pandemic has forced the super rich to change their spending habits as private wealth levels in some of the most affluent African countries have declined in the past year.

The latest Africa wealth report, compiled by AfrAsia Bank and New World Wealth, provides a comprehensive review of the continent’s wealth sector, including SA.

Apart from the human cost, the report found that the coronavirus outbreak also had a severe economic impact.

“Our estimate shows that dollar millionaires in Africa have dropped by around 9% over the past year.”

This drop has been driven by:

  • job losses and a drop in salary levels;
  • the travel, hospitality, manufacturing and real estate sectors being most heavily affected;
  • a large number of local businesses closing down;
  • the residential property market weakening, especially the top-end market; and
  • rising household debt.
Our estimate shows that dollar millionaires in Africa have dropped by about 9% over the past year.
African wealth report

The report also showed the pandemic saw many wealthy people in Africa change their spending habits.

“There is a move away from commercial airliners towards private jet travel, especially among the super rich.

“Many high net worth individuals have chosen to work remotely and live in smaller towns. For instance, many South African wealthy individuals are now working remotely from affluent towns such as Hermanus and Franschhoek.”

The report also found with less international travel the luxury hotel sector in each country had become more dependent on local wealthy folk.

“Outdoor hobbies and sport that allow for easy social distancing such as golf, hiking, fishing, cycling and bird watching have become more popular.”

According to the report, SA is home to the largest luxury market in Africa, including luxury lodges and hotels.

“The luxury hotel sector is one of the most important sectors in Africa, as it brings large amount of forex spending into the continent.

“The coronavirus outbreak has severely affected on the sector in 2020/21, and hotel occupancy rates are down substantially ...

“A lack of international visitors has forced many luxury hotels and lodges to lower their prices to appeal to locals.”

In wealth rankings, SA features in the “big five” wealth markets in Africa. The other countries are Egypt, Nigeria, Morocco and Kenya.

“Notably, SA is home to over twice as many millionaires as any other African country,” states the report.

But wealth growth trends don’t paint a very promising picture.

“Total wealth held in Africa has fallen by 16% from 2010 to 2020. Africa’s performance was constrained by poor performance in the three largest African markets, SA, Egypt and Nigeria.”

When it came to SA, the report found the country’s total private wealth declined by 25% over the past decade when measured in US dollar terms.

Factors such as a significant loss of currency value; a large number of businesses closing down; the ongoing migration of wealthy people out of SA (an estimated 4,200 wealthy individuals have left in the past 10 years); and a sluggish prime residential market have influenced the trend.

Despite this, says the report, Johannesburg remains the wealthiest city in Africa, followed by Cape Town, Cairo, Lagos and Durban/Umhlanga, based on a review of total wealth held by rich people living there.

It includes all their assets – property, cash, equities, business interests – and liabilities.