Standard Bank has published its inaugaral African Wealth Report, highlighting how South Africa’s richest people create and spend their wealth.
The report is based on 265 surveyed respondents, and 75 face-to-face interviews conducted across five key markets – Ghana, Kenya, Mauritius, Nigeria and South Africa – with the estimated net worth of 67% of participants in the $1 million to $5 million range (R17.5 million – R87.3 million).
Around 16% of respondents had an estimated net worth of $5 million to $20 million (R87 million – R350 million), while researchers from Intellidex also canvassed those with $20 million to more than $100 million (R350 million – R1.7 billion) in net worth.
The report shows that the most widespread way that high-net worth Africans build wealth is through entrepreneurship. More than half (148) of the 265 respondents cited entrepreneurship as their chosen path towards accumulating their first $1 million.
More than a quarter (71) chose an executive career while 51 made use of the family business as a viable path towards wealth creation.
Notably, the data shows that this is not the case in South Africa where the highest proportion of people made their money through working – primarily in executive careers (45%). This is followed by growth in investments assets as well as through professional work (37% respectively).
Standard Bank explained that entrepreneurship is often constrained in the continent’s comparatively wealthier markets like South Africa and Mauritius, where the dominant perception is that the formal sector is the smoothest route to both employment and wealth.
“The high number of executive careers and the professions of South African respondents also highlight a critical shortcoming of the nation’s economy – an over-reliance on the established formal sector and not enough disruptive entrepreneurial activity.
“This implies that the continent’s richest country can learn much from the entrepreneurial experiences of its northern counterparts,” it said.
It added that countries like South Africa need better and more innovative financial support; greater access to markets and supply chains; as well as targeted training and mentoring programmes from both the public and private sector supply chains.
Notably, the data shows that once South Africans have made their initial wealth, they have continued to grow this wealth through growth in investment assets.
Standard Bank’s data indicates that this was primarily done through investments in stocks or equities (51%) and ‘tangible assets’ (18%) such as property.
When looking at the industries where South Africans made their money, the respondents indicated that they primarily worked in:
- Manufacturing (18%);
- Real estate (17%);
- Technology (15%);
- Financial services (11%)