The country coming after South Africa’s millionaire crown

Botswana is emerging as a surprising contender in Africa’s race to become a premier hub for millionaires on the African continent.

This competition to attract high-net-worth individuals (HNWIs) and their families is a development that could shift the continent’s wealth landscape.

Long reliant on diamond mining as its economic backbone, the country is now actively diversifying into financial services, seeking to rival South Africa and Mauritius in attracting the continent’s wealthy elite.

A recent report by investment management firm Ocorian highlights Botswana’s strategic efforts to position itself as a destination of choice for HNWIs, capitalising on its push for improved regulatory frameworks and a more business-friendly environment.

Botswana, the world’s largest producer of rough diamonds by value, has faced significant economic challenges stemming from a downturn in the diamond market.

This economic slowdown has prompted the nation to explore new avenues for growth, with financial services at the forefront of its diversification agenda.

The country is making strides to attract foreign investment, enhance transparency, and foster economic development, key factors in appealing to the global wealthy.

Yet, Ocorian’s report cautions that Botswana’s financial services sector remains constrained by a shortage of expertise, a hurdle that could impede its ambitions.

Africa’s wealth landscape is undergoing a transformation, with over 135,000 dollar millionaires currently residing on the continent.

This population is expected to grow by an impressive 65% over the next decade, according to a report by Henley & Partners and New World Wealth.

As wealth accumulates across Africa, countries like Botswana and Rwanda recognise the lucrative opportunity to attract affluent individuals through favourable tax regimes, robust regulatory environments, and a commitment to international standards of transparency.

Rwanda, known for its post-conflict recovery and pursuit of technological innovation, is also positioning itself as a rival to Mauritius.

The East African nation has cultivated a reputation for safety, stability, and long-term investment potential, making it an appealing destination for the continent’s ultra-wealthy.

However, both Botswana and Rwanda face stiff competition from Mauritius, an Indian Ocean island renowned for its pristine beaches, luxury resorts, and low-tax policies.

Mauritius has long been established as a preferred offshore base for global investors, offering a mature financial services sector and a strong appeal to HNWIs.

While these developments showcase Africa’s growing appeal to the world’s wealthy, they also pose a challenge to South Africa, which currently boasts the highest number of HNWIs on the continent, as noted by Henley & Partners.

For decades, South Africa has been the dominant economic powerhouse in Africa, attracting investors and the wealthy with its robust infrastructure and financial services.

However, as nations like Botswana and Rwanda ramp up their efforts to become financial hubs, South Africa’s position is under threat.

These emerging hotspots could lure investment and wealth away, particularly if they offer competitive advantages such as lower tax rates and streamlined regulations.

The rise of Botswana as a potential millionaire magnet signals a significant shift in Africa’s wealth dynamics.

As more nations vie for the attention of HNWIs, the competition is set to reshape the continent’s economic landscape, challenging South Africa’s long-standing dominance while spotlighting new opportunities for growth and investment.

Reported with Bloomberg

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