How Africa’s and South Africa’s super-rich make their money

New World Wealth has released new data on Africa, and South Africa’s richest population group, showing how the wealthiest people invest their money.

According to NWW’s South Africa 2017 Wealth Report, the country has a total of 40,400 dollar millionaires, and has many as 2,130 individuals with more than R125 million in their account.

According to the wealth advisory firm, at the end of 2016:

• The average African individual had net assets of approximately US$2,000 (wealth per capita).
• Total individual wealth held on the continent amounted to US$2.2 trillion.
• There were approximately 145,000 high net worth individuals (HNWIs) living in Africa, with combined wealth holdings of approximately US$800 billion.
• There were 7,010 multi-millionaires living in Africa.

The following figure highlights the inclination of different wealth bands in Africa to invest in the various asset classes.

Behavioral mapping of HNWIs in Africa 2016:

The preference rankings are based on the propensity of a particular wealth band to invest in each asset class when compared with members of the other wealth bands.

As reflected, lower-tier millionaires in Africa have a high propensity to hold cash and residential real estate, while billionaires tend to invest in collectables, commodities and other alternatives assets such as private equity.

Affluent millionaires in Africa are most likely to invest in fixed income products and equities, NWW said.

Collectibles

Collectables, especially art, wine and classic automobiles are an increasingly popular way for African HNWIs to store their wealth. Collectables accounted for 1.1% or US$8.8 billion of the assets of African HNWIs in 2016, compared to only 0.6% in 2006.

Art in Africa

New World Wealth estimates that African HNWIs held US$870 million worth of fine art at the end of 2016.

Globally, fine art prices have risen by 3% over the past 10 years, whilst African fine art prices have risen by 22%.

Super luxury watches

Super-luxury watches is a particularly fast growing collectable segment in Africa, according to NWW. According to its estimates, $46 million was generated in African sales of these watches in 2016, up from $13 million in 2006.

South Africa

When it comes to making money, South Africa’s richest people earn their wealth through real estate and construction – accounting for 20% of all wealth sources in the country.

Other important industries include financial services, basic materials and diversified interests – though the report notes that telecoms, insurance and healthcare have shown strong growth as primary sources of wealth.

These are the industries which have made the most multi-millionaires in South Africa:

Read: How many South Africans have more than R125 million in their bank account