Cape Town – Mauritians are the wealthiest individuals in Africa with an average wealth of $25 700 per person, followed by South Africans with $11 300 per person, according to the latest Africa Wealth Report.
People in Zimbabwe count as the poorest with US$200 per person, while the country was also last on the list of total wealth of $3bn.
The Africa Wealth Report, compiled by AfrAsia Bank and New World Wealth, said there are a number of reasons why Mauritius came out tops with regard to the wealthiest individuals on the continent. These include:
- strong economic growth
- migration – a large number of wealthy individuals have moved there over the past decade, especially from France and Southern Africa. An estimate 280 millionaires have moved there from South Africa alone since 2006
- a thriving and growing financial services sector, particularly in offshore banking, fund management and private banking
- automatic permanent residency if one buys a US$500 000+ home in the country, which encourages wealthy people to move there
- secure ownership rights, which encourage locals and foreigners to invest in property and businesses in the country
- low level of government regulation in the business sector (when compared to South Africa which has exchange controls, high taxes, big trade unions and BEE hiring requirements)
- low crime rate
- low unemployment and inflation rate and
- safety – Mauritius was recently rated by New World Wealth as the safest country in Africa.
SA still holds the biggest wealth
Although Mauritius had the highest average wealth per person, South Africa as a whole ranked first by total wealth of $610bn.
Total wealth refers to the private wealth held by all the individuals living in each country. It includes all their assets, such as property, cash, equities, business interests, minus any liabilities.
South Africa also had the most high net-worth individuals at 40 400, as well as multi-millionaires at 2 130.
The growth in the number of high net-worth individuals in the period from end-2006 to end-2016, however only grew by 8%, compared to the 230%-growth in Mauritius.
The number of high net-worth individuals in South Africa is expected to grow by 30% in the next 10 years to the end of 2026.
SA households less wealthy
The Momentum Unisa Wealth Report for the first quarter of 2017 shows that South African households are slightly better off than the fourth quarter of 2016 and the money they saved and invested increased marginally between the two quarters.
Despite the slight increase net wealth was lower compared to the first quarter in 2016. “In fact, household wealth was at the same level as three years ago (first quarter of 2014), which means households lost three years of wealth accumulation.”
According to the report, the consequences of this loss in wealth have a negative effect on the economy and households, which results in less confidence and more financially vulnerable consumers. Households’ standard of living diminishes and they’re less able to improve their financial wellness.
This in turn causes slower economic growth and job creation and slows the pace of transformation.
SA household debt decrease
The real value of households’ indebtedness also decreased compared to the first quarter of 2016, which is positive for wealth accumulation. The ratio of household liabilities to their disposable income shows a decline from 76% in the first quarter of 2016 to 73.9% in the same quarter of 2017.
However, there was also a decline in mortgages and when debt for the purpose of asset accumulation is shrinking (as is the case with mortgages to acquire residential property) it is an indication of financial pressure on consumers.