A recent report by the New World Wealth, a consultancy stated that some 165,000 Africans have an estimated combined wealth of $660 billion in 2014.
By global standards this is not very much money.
The growing number of millionaires seeking avenues to invest their wealth is a testament that a fast-growing elite has high disposable income being spent not only on luxury goods and affluent lifestyles, but also on business investments. “There is a significant increase in the number of [millionaires] in Africa and most are looking for areas to invest,” explains Mr. Musau, adding that Africa’s millionaires are investing heavily in various sectors through private equities, hedge funds and capital markets.
On the larger scale, Africa’s millionaires have borrowed a cue from some of the world’s richest people like Bill Gates and set up foundations through which they channel millions of dollars in philanthropy.
Aliko Dangote, the Nigerian founder of Africa’s biggest industrial conglomerate, Dangote Group, recently announced he would donate $1.2 billion to the Dangote Foundation to scale up support in education, health and youth empowerment.
Patrice Motsepe, a South African mining magnate with a net worth of about $2.5 billion, has committed to give at least half of the funds generated from his family’s assets to improve the lives of poor and marginalised South Africans.
Despite the contrasting realities in Africa, the global luxury and fashion industry cannot ignore the continent in its pursuit for profits and growth.
According to Bain & Company, the world’s leading advisor to the global luxury goods industry, the industry has entered a territory that can well be described as the “new normal” because leading markets in Europe, Russia, Americas, Japan, China and Asia Pacific are floundering and growth can only be guaranteed by new markets.
Market intelligence firm Euromonitor International adds that although Africa is a long way behind both emerging Asia and Latin America in terms of the size of its middle class, the combination of rapidly growing economies and youthful populations augur well for the next ten years and beyond for the luxury industry.
It also reckons that recent spate of oil and gas discoveries in some African countries could fuel get-rich-quick opportunities for a new generation of millionaires, which translates into a growing market for the luxury industry. Erratic oil prices, like the recent plunge, however, pose real threats particularly for countries that are highly dependent on a single resource such as Nigeria, Angola and South Sudan.
Africa’s luxury market, valued at $4 billion, is still a fraction compared to the $280 billion global value. Nonetheless, the continent will be the second driver of growth over the next decade after the Middle East.