The number of millionaires in Africa continues to grow, prompting a race among banks to capture the continent’s emerging demand wealth management and private banking services. Barclays PLC, Citigroup Inc., and UBS AG are already positioning themselves.
The boom in African millionaires comes as economic growth on the continent, particularly south of the Sahara, outstrips that of developed regions, including North America and Europe and lifts local incomes. The International Monetary Fund projects economic growth in sub-Saharan Africa to accelerate to 5.9 percent in 2014 from 5.1 percent this year.
Overall, the number of Africans with a net-worth of at least $1 million grew by almost 10 percent to 140,000 in 2012 – the fastest rate increase outside North America, according to BloombergBusinessweek, citing a report published on June 18 by Cap Gemini SA and Royal Bank of Canada.
“It’s a great time for private banking, wealth management and asset management in Africa,” BloombergBusinessweek quoted Mark Mobius, executive chairman of Templeton Emerging Markets Group, as saying.
A survey released this month by New World Wealth, a British company that tracks wealth trends in Africa, shows Johannesburg, South Africa, as the city with the highest number of millionaires on the continent. The city has 23,400 individuals with a net worth of at least $30 million, according to the survey carried out earlier this year. Cairo, Egypt; Lagos, Nigeria; and Cape Town, South Africa, follow, with 12,300, 9,800 and 9,000, respectively, according to the New World Wealth survey carried out early this year.
Nairobi rounds out the top five cities with 5,000 super-wealthy individuals. The next five cities in order are Durban, South Africa; Casablanca, Morocco; Pretoria, South Africa; Luanda, Angola; and Algiers, Algeria.
Accra, Ghana’s capital city, is projected to have the fastest growing rate of the high-net-worth group, with the number rising from 800 in 2012 to 1,500 in 2020.
In terms of African countries with the most millionaires, South Africa, Egypt, Nigeria and Kenya rank the highest, with 48,800, 23,000, 15,900 and 8,400 millionaires respectively. Tunisia follows with 6,500; Angola with 6,400; Tanzania with 5,700; Libya with 5,400; Morocco with 4,900 and Algeria with 4,100, rounding out the top ten millionaire countries.
Ethiopia and the Ivory Coast are expected to be the fastest-growing African markets for millionaires, with growth of 7.4 percent a year to 2020. Zambia, Ghana and Angola are also expected to grow strongly.
To capitalize on this market, Zurich-based UBS says it will expand operations in Africa as economic growth boosts demand. Citigroup, which is mainly involved in project financing and business and investment banking on the continent, sees increased sales from the continent this year as customers expand on the continent.
“We expect Africa revenues to grow and to grow from our client business,” Bloomberg.com quoted Donna Oosthuyse, Citigroup’s South Africa head, as saying in Johannesburg in July.
Meanwhile, London-based Barclays will hold a 62.3 percent stake in Barclays Africa Group Ltd., and says it hopes to build on experience managing wealth in South Africa after buying eight African operations previously run by its parent. That expansion depends on regulators in countries including Kenya, Ghana and Mauritius, said CEO Maria Ramos.
Barclays’s merger with what was Absa Group Ltd. (ASA) in South Africa gives Barclays Africa 1,200 branches across the continent.
Not to be outdone, BNY Mellon since 2011 has made several appointments with responsibility for Africa as a whole, a sign of its growing interest in the continent beyond its longstanding operations in South Africa and Egypt. These appointments include:
* Alex Johnstone, Country Executive and Head of the company’s Representative Office in South Africa, based in Johannesburg, with oversight responsibilities for South Africa and other key sub-Saharan markets.
* Mark Fenner, Head of Relationship Management and Sales for Treasury Services across the Middle East and Africa region.
* Dean Fletcher, regional head of BNY Mellon Corporate Trust, Europe, Middle East and Africa.
* Michael Cole-Fontayn, Chairman of Europe, Middle East and Africa.
* Jim McEleney, Chief Operating Officer for Europe, Middle East & Africa.
* Bill Williams, Chairman of Middle East & Africa.
