Boston Consulting Group’s Global Wealth 2021 report shows that financial wealth in South Africa among wealthy individuals has picked up over the last year, despite the challenges presented by the Covid-19 pandemic and pressures from lockdown.
According to the report, global financial wealth reached an all-time high of $250 trillion in 2020 as household savings rose and markets showed unexpected resilience in the face of the protracted Covid-19 pandemic.
Africa, and South Africa, also enjoyed increased financial wealth – particularly for ultra-high-net-worth individuals.
Africa’s financial assets, real assets and liabilities are forecast to grow at a compound annual growth rate (CAGR) of 7.1% to $5.8 trillion by 2025, above the global forecast of 4.8% and second only to Latin America’s forecast growth of 7.8%.
South Africa’s financial wealth grew by 4.5% from 2015 to 2020 to $700 billion and is expected to grow by 3.9% to $800 billion by 2025.
Despite the pandemic’s enduring financial impact, the report reveals that global prosperity and wealth grew significantly throughout the crisis and is likely to continue to expand significantly over the next five years, in line with the emerging economic recovery.
South Africa’s ultra-rich
Boston Consulting Group defines ultra-rich individuals as those whose personal wealth exceeds $100 million – or around R1.5 billion.
In monetary terms, the group’s data shows that South Africa’s ‘ultras’ have about 8% of the country’s financial wealth of $700 billion – or $56 billion. In rand terms, this means the average ultra has approximately $430.8 million (R6.4 billion).
In 2020, more than 6,000 people globally became ‘ultras’, it said, on the back of year-on-year growth of 9% since 2015.
“As it stands, South Africa has a small pool of ultras compared to the global, and Middle East & Africa average: the country’s ultras comprise 8% of its financial wealth segments, compared to 13% and 27%respectively,” it said.
This translates to 130 ultra-high-net-worth individuals in South Africa – a figure that is expected to grow at a CAGR of 5% to approximately 160 by 2025.
“Despite the relatively small number of ultra-high-net-worth individuals in the country, they are the fastest-growing financial wealth segment – and their wealth increased due to the lockdown,” the group said.
“They also make up 4.7% of South Africans’ total wealth, and this will grow to 5% by 2025.”