A survey released by Standard Bank has found entrepreneurship to be the most reliable way to build wealth in Africa.
Out of the five countries surveyed, respondents from Nigeria, Ghana, and Kenya were most likely to mention entrepreneurship as the main driver of wealth creation. Per the survey, 148 of the 265 entrepreneurs said they made their first million dollars and continue to make more from entrepreneurship.
However, respondents from South Africa and Mauritius were more likely to opt for a traditional corporate career in a bid to attain financial freedom. This could be attributed to the more developed financial systems of the two countries.
Most entrepreneurs who took part in the survey had businesses in real estate, construction, trade, financial services, manufacturing, oil and gas, technology, and the retail sector. The high-net-worth individuals who participated in the survey were between the ages of 36 to 50 years.
Group Head, Standard Bank Wealth and Investment, Chris Browne, said, “to draw a more complete picture of the wealth sector in Africa, a total of 265 respondents were surveyed 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. Around 16% of respondents had an estimated net worth of $5 million to $20 million. At the same time, the researchers from our partners, Intellidex, also canvassed those with $20 million to more than $100 million in net worth.”
On the topic of wealth preservation, respondents from Kenya (38%), followed by Mauritius (29%), Ghana (26%), and Nigeria (23%), mentioned tangible assets as the most preferred asset class for wealth preservation.
In South Africa, the wealthy (51%) preferred to preserve their wealth in stocks or equities. However, tangible assets such as property were comparatively less important (18%).
The survey also highlighted political instability and personal security as the main concerns of the wealthy
According to the survey, “The wealthy in most markets surveyed see the political environment as a significant risk to wealth preservation. 82% of South Africans said it was of concern, followed by Ghanaians (67%), Nigerians (64%), and Kenyans (55%). By contrast, only 31% of Mauritian respondents saw the political environment as a threat.”
“It is very difficult to make informed investment decisions if one knows the long-term visibility of the policy environment. They bear in mind that a volatile political climate can dramatically affect the value of assets,” it added.
The survey concluded that the qualities of Africa’s wealthy are entrepreneurialism, eclecticism, conservative attitude to spending wealth, workaholism, and strength in diversification.