By: Anthony Sedzro
Ghana, West Africa’s second biggest economy, produced 200 new millionaires with more than US$1million in 2016. Ghana had 2,700 people with a net worth of US$1 million in 2015. However, this figure increased to 2,900 by the end of last year. This is the story of the new Ghana as its economy expands in recent years. Our Staff Writer, ANTHONY SEDZRO, was there at the launch of the 2017 Knight Frank Wealth Report, Accra.
The increase in the numbers of new millionaires, called High Net Worth Individuals (HNWI), follows a similar trend in Africa and globally. Those with US$10 million and above are called Multi-Millionaires and those with US$30 million and above are termed Ultra High Net Worth Individuals (UHNWIs).
These details were made known at the launch of the 2017 Knight Frank Wealth Report, done in conjunction with Stanbic Bank Ghana Limited at Stanbic Heights, Accra on March 13.
Knight Frank is a reputable London-based property and investment research firm and their annual ‘The Wealth Report’ gives insight and advice on wealth for the next decade.
In its 11th year, the report is based on an attitude survey of 900 of the world’s leading private bankers and wealth advisors, and 10,000 clients across Africa.
Andrew Shirley, the editor of the report said that there were 120 Ghanaians worth US$10 million last year, up from 110 in 2015, indicating that 10 new Ghanaians made US$10million. This is against a backdrop of a difficult few years for Ghana’s economy. The country had a record GDP rate of 14 percent in 2011 but the growth has been falling since then and last year, it recorded only 3.6 percent growth. This pre-supposes that economic challenges notwithstanding, there are individuals making good returns on their investments.
The report also projected that in the next ten years (2026), Ghana will have 5,200 new dollar millionaires, a growth of 79 percent. Shirley further said that the local HNWIs wealth was made in a few industries, with financial services being the leading one.
“It [financial services] is the primary source of wealth for 24 per cent of local HNWIs. Other important industries for them include real estate and construction (16 per cent), fast moving consumer goods (13 per cent) and mining and agriculture (10 per cent),” Shirley revealed.
Year No of HNWIs
Wealth preservation, capital growth and succession planning are the three most important factors that wealthy Ghanaians consider when making wealth and investment decisions. The survey also disclosed that wealth preservation (79 percent), followed by capital growth (68 percent) and the succession planning (56 percent) were key concerns for Ghana’s HNWIs.
Furthermore, the average age of Ghanaian HNWIs is 61 years, and 80 percent of them live in the capital Accra, the report says. Some of the local HNWIs own private jets but compared to the rest of the continent, Ghana comes 12th regarding the highest number of private jets on the continent. When leaving Accra, the most popular routes for these private jet owners are United Kingdom (UK), France, Spain, Germany, United States, Morocco and Portugal. Private jets in Africa are expected to number about 481 in a decade, a growth of 27 percent.
According to Knight Frank, while South Africa has the most HNWIs in Africa followed by Nigeria; Cote D’Ivoire and Tanzania will see 100 percent growth in the number of HNWIs in the next decade. Another fun fact from the report is that the UK is the number one destination for housing investment for HNWIs from Africa.
Andrew Shirley revealed that according to their survey, 2017 will be the riskiest year since World War two due to global developments. For those worried about political unrest and uncertainty, many people are taking advantage of ‘investment-for-residency’ schemes in other countries. For example, US$2.4 billion was spent last year by UHNWIs to acquire new citizenship/residency. About 32 percent will also invest in cross-border deals. UHNWIs will grow by 43 percent in the next decade.
Other interesting facts: The most expensive place to buy a square meter of property is Monaco, France. The Knight Frank luxury index shows that while wine was the preferred collection for wealthy people last year, classic cars will top the list in 10 years.
By the way, Knight Frank is celebrating 50 years of operating in Africa.
After the launch, GB&F asked Andrew Shirley, why they focus on the wealthy while the inequality gap was widening in the country.
“I think what is crucial is for the government to encourage the wealthy to invest within the country,” Shirley rather advises. “I think wealthy people also need to feel that there is nothing bad in being wealthy, because, when they buy things or invest in services within the country, they are helping the wider population. So, I think it’s up to governments to encourage their wealthy population to feel confident to want to invest within the country then that money will trickle down to the middle and the lower classes and, hopefully, that will lift the average wealth of everybody within the country,” he added.
A chat with Benjamin Mensah, Head, Wealth & Investment Unit of Stanbic Bank Ghana Limited
Knight Frank currently operates in 10 African countries, same as Stanbic Bank. Stanbic launched a new Wealth and Investment Unit last year, 2015, to help the wealthy in the country to manage their wealth. The two institutions have, therefore, aligned their vision, hence the joint partnership to launch the Wealth Report for the first time in Ghana.
GB&F: How has the Stanbic Wealth Unit fared a year after its launch?
Benjamin Mensah (BM): When we set up, we had a clear remit; the remit was obviously to ensure that we had all the core components of the value proposition in place, which we have done. We had set out to align ourselves to four key pillars-to help clients continue to build wealth, to give them lifestyle solutions, to be able to help them preserve their wealth overtime, and also look at all the important parts of succession planning, which is, leaving legacy behind one day when we pass on. I think that all have come together very nicely.
We started with a certain base, I’m happy to say that we’ve added a few more clients. Our remit by 2020 is to have 10 percent market share and I think we are well on course to exceed that target. What is happening is that this is not a mass market type of solution. We are very discreet and confidential, so, this is really about word-of-mouth referrals; referrals from existing clients. Again, [we are] doing a very proper prospecting and targeting of these individuals and going over to have intelligent conversations with them about how we can plan their finances going forward. And, so far, it’s been very good.
GB&F: Why launch this Knight Frank report in Ghana, the first time it has been done?
As we look to roll out our value proposition, one area we realise is quite a key asset class is real estate. So, Knight Frank is a global property company, they are probably the biggest property experts around. They have a footprint that aligns with ours on the continent and their global footprint is also very impressive.
Again, going back to the four pillars [of Stanbic Ghana’s Wealth Unit], we see that real estate is critical if you want to continue to build wealth. It ties into our commercial property so that is a sure way you can build on. People who want to enhance their lifestyle will be looking at second homes, either in Ghana, or abroad, so it becomes a critical part.
Even through sometimes buying property, you can become a citizen of another country. So again, it is something that we are able to fulfil. If you are looking to preserve wealth, some of our fund solutions are real estate; again, a critical part of our proposition. If you look again at legacy or, bequeathing something, usually it has to do with property or real estate.
So, in all the four quadrants, we have real estate forming a key part, (that’s why) we thought it wise again to partner with property experts to be able to offer that value-added service to clients and it does come that Knight Frank also does the Wealth Report. The Wealth Report, as you have heard, provides very valuable insights into the world of the High Net Worth Individuals (HNWIs) which looks at global trends, strategies, the key concerns of the wealthy.
It is important, therefore, that as players in the industry, we understand what our clients are thinking about, what matters to them and how they are reacting to global elements. In so doing, we are able to better fashion out solutions to meet their needs.