Africa 2019

AfrAsia Bank

Africa Wealth Report 2019

FULL REPORT

Publication Date: September 2019

LIST OF TABLES

1 Introduction

1.1 What is this Report About?

This report provides a comprehensive review of the wealth sector in Africa, including HNWI trends, luxury trends and wealth management trends in 17 countries and 20 cities across the continent.

Table 1: Africa: HNWI wealth band definitions

Wealth Tier Definition

Billionaires

Centi-millionaires

Multi-millionaires

Millionaires (HNWIs)

Mass Affluent

Source: New World Wealth

Those individuals with wealth of US$1 billion or more.

Those individuals with wealth of US$100 million or more.

Those individuals with wealth of US$10 million or more.

Those individuals with wealth of US$1 million or more.

Those individuals with wealth of over US$100,000.

1.2 Notes and definitions

 We cover 17 major African markets in this report. Certain notable markets such as Algeria, DRC and Zimbabwe are excluded due to lack of reliable source data.

 “Wealth” refers to the net assets of a person. It includes all their assets (property, cash, equities, business interests) less any liabilities. It includes all property holdings, including primary residences.

 All the growth rates and figures in this report are in US$ terms.

 Stats mentioned in this report are from New World Wealth unless otherwise stated.

 For the purposes of this report, the “review period” relates to the years 2008 to 2018.

 For the purposes of this report, the “forecast period” relates to the years 2018 to 2028.

 “Assets under Management” or “AuM” refers to the market value of all the funds being managed by a wealth management company on behalf of its clients.

“Wealth refers to the net assets of a person. It includes all their assets (property, cash, equities, business interests) less any liabilities. It includes all property holdings, including primary residences.”

2 Country statistics

2.1 Benchmarking Africa’s Wealth in Context

2.1.1 World statistics

Worldwide stats (for Dec 2018):

 Total private wealth held worldwide amounts to approximately US$204 trillion.

 The average individual has net assets of around US$27,000 (wealth per capita).

 The wealthiest countries in the world (on a wealth per capita basis) include the likes of: Monaco, Switzerland and Australia - with wealth per capita’s of over US$200,000 in all of these countries.

 There are approximately 14 million HNWIs in the world, each with net assets of US$1 million or more.

 There are approximately 560,000 multi-millionaires in the world, each with net assets of US$10 million or more.

 There are approximately 25,000 centi-millionaires in the world, each with net assets of US$100 million or more.

 There are 2,140 billionaires in the world, each with net assets of US$1 billion or more.

2.1.2 Africa statistics

Africa stats (for Dec 2018):

 Despite accounting for 16% of the world’s population, Africa only accounts for 1% of total worldwide wealth.

 Total wealth held on the continent amounts to US$2.2 trillion. Around US$920 billion (42%) of this is held by HNWIs.

 The average individual living in Africa has net assets of approximately US$1,900 (wealth per capita)

 There are approximately 140,000 HNWIs living in Africa, each with net assets of US$1 million or more.

 There are approximately 6,900 multi-millionaires living in Africa, each with net assets of US$10 million or more.

 There are approximately 310 centi-millionaires living in Africa, each with net assets of US$100 million or more.

 There are 23 billionaires living in Africa, each with net assets of US$1 billion or more.

“Total wealth held on the continent amounts to US$2.2 trillion. Around US$920 billion (42%) of this is held by HNWIs.”

2.2 Total wealth rankings

The following table ranks major African countries by total wealth held. Larger countries obviously have an advantage here due to their higher populations. As reflected, the “Big 5” wealth markets in Africa are: South Africa, Egypt, Nigeria, Morocco and Kenya.

Note: “Total wealth” refers to the private wealth held by all the individuals living in each country. It includes all their assets (property, cash, equities, business interests) less any liabilities. We exclude government funds from our figures.

Notably, South Africa has over twice as many millionaires (HNWIs) as any other African country. Things that attract and keep HNWIs in SA include:

 Lifestyle aspects: climate, wildlife, beaches, weather and scenery.

 Good private schools.

 English speaking country. Most HNWIs worldwide know English as the first or second language.

 Well established luxury areas (Camps Bay, Sandton, Umhlanga etc.)

 A relatively good private healthcare system (when compared to other emerging markets).

 Top class shopping centers (examples: Sandton City, Gateway, Montecasino and V&A Waterfront).

 Luxury food stores such as Woolworths, which appeal to wealthy consumers.

 Top restaurants and hotels.

Table 2: Africa: Total wealth rankings, 2018

Note: HNWI numbers rounded to nearest 100. Only includes people living in each country (residents). Figures for Dec 2018.

Source: New World Wealth

2.3 Wealth per capita rankings

The following table ranks these same countries by per capita wealth (average wealth per person). As reflected, Mauritians are the wealthiest individuals in Africa, followed by South Africans. Notably, North African countries such as Egypt and Morocco both rank high on the list despite recent instability.

Interesting note: GDP per capita vs. wealth per capita measures: Reasons why wealth per capita is a better measure of financial health than GDP per capita:

 In many developing countries, a large portion of GDP flows to the government and therefore has little impact on private wealth creation.

 GDP counts items multiple times (for instance, if someone is paid $100 for a product/service and they then pay someone else that $100 for another product/service, then that adds $200 to a country’s GDP, even though only $100 has been produced at the start).

 GDP disregards income levels in a country.

 GDP ignores the efficiency of the local banking sector and the local stock market at retaining wealth in a country.

 GDP largely ignores the impact of property and stock market moves. These two factors obviously have a massive impact on wealth (see methodology section).

 GDP is quite a static measure - it tends to only move slightly year on year. As a result, it is not a great gauge of the performance of an economy.

Wealth figures, on the other hand, do not have any of these limitations, making them a far better gauge of the financial health of an economy than GDP figures.

Table 3: Africa: Wealth per capita rankings, 2018

Note: Figures for Dec 2018. Refers to the average wealth of a person living in each country.

Source: New World Wealth

2.4 Wealth growth trends (2008 to 2018)

Total wealth held in Africa has risen by 14% over the past 10 years (2008 to 2018). Africa’s performance was constrained by poor performance in the three largest African markets, namely: South Africa, Egypt and Nigeria.

Mauritius was the top performing individual market during this period Ethiopia also performed well, although it should be noted that it started from a very low base, which makes growth easier - average wealth in Ethiopia currently stands at around US$650 per person which is still very low.

Botswana’s growth was impressive when considering that wealth per capita there is already quite healthy at around US$7,900 per person.

“Total wealth held in Africa has risen by 14% over the past 10 years (2008 to 2018).”

Table 4: Africa: Wealth growth by country, 2008 - 2018

Spotlight on Mauritius:

As reflected in the table, Mauritius was the best performer in Africa over the past decade. It was also the 2nd fastest growing wealth market worldwide during this period (after China). Possible reasons for this strong growth include:

 Safety - Mauritius was recently rated by New World Wealth as the safest country in Africa along with Namibia and Botswana. Notably, safety is one of the key drivers of wealth growth in a country.

 A thriving and growing financial services sector.

 Rising residential and commercial property prices.

 Strong HNWI growth - a large number of wealthy individuals (HNWIs) have moved there over the past decade, especially from Europe and Southern Africa. In addition, a large number of locally based HNWIs have reached HNWI status as the local financial sector has grown - Mauritius is now home to around 4,400 HNWIs, compared to 1,800 HNWIs ten years ago.

 Secure ownership rights. Ownership rights are very strong in Mauritius, which encourages locals and foreigners to invest in property and businesses in the country.

 Low taxes which encourage business formation and appeal to retirees. Company and personal income tax rates are only 15%, with no inheritance or capital gains tax. Mauritius has a very similar tax structure to Singapore

 Low level of government regulation in the local business sector (when compared to nearby countries such as South Africa).

 Lifestyle - beaches, weather, golf courses and scenery.

 Ease of doing business in the country (Mauritius ranked 1st in Africa and 20th worldwide in the World Bank’s 2019 Doing Business Report).

 Low jobless rate and low inflation rate.

 It has a well-developed banking system and stock exchange. This encourages people to invest their money within the country and grow their wealth locally. It also ensures that any economic growth filters through to wealth creation.

 Individuals living in Mauritius are free to invest overseas (with no exchange controls) – this encourages wealthy people to use the country as a business and investment hub.

 It has a well-developed free media. This prevents government from getting away with wrong doing.

 It is a convenient base for investing and doing business in Southern and East Africa.

 Strong FDI inflows - Countries that are investing heavily in Mauritius include: France, China, South Africa and the UAE (according to Bank of Mauritius).

 Good schools (such as IPS and Northfields) and quality food stores (such as Food Lovers Market). These factors encourage wealthy people to stay in the country.

Spotlight on Kenya:

Kenya had a difficult 2018 (Kenyan wealth was down by around 10% during the year) as the local stock market lost significant value. However, if one looks over the longer term, the trend there is still quite positive with wealth growth of 64% over the past 10 years. This shows that Kenya is still probably the most resilient market in Africa, among the traditional “Big 5”

Spotlight on Nigeria:

Nigeria started off the review period relatively well, but since 2014 has performed poorly. Possible reasons for Nigeria’s poor recent performance include:

 Safety concerns and religious tensions in the country, which have deterred investment and discouraged wealthy people from staying in the country. In particular, woman safety has become an issue in the North of the country.

 Clampdown on foreign companies (such as MTN) which has scared off investors.

 Loss of local currency value vs US dollar.

 Drop in oil prices. The year-end Brent crude oil price peaked at US$112.00 at the end of 2012 – it now stands at US$51.00 (as of Dec 2018).

 Outgoing migration of HNWIs. Many Nigerian HNWIs have moved abroad, mostly to countries in Europe. The UK and the UAE are also popular destinations for them.

Spotlight on Angola:

Like Nigeria, Angola also started the review period well and was actually one of the fastest growing wealth markets in the world between 2008 and 2013. However, the local economy has struggled since then as oil prices have dropped and international investors have lost interest. The downturn in Angola has also negatively impacted on neighboring Namibia and Zambia.

Notably, 2018 was a particularly bad year for Angola as total wealth held in the country dropped by 15% and the Angolan currency depreciated by around 80% against the US$ during the year.

Spotlight on Egypt:

Egypt has traditionally been home to a large number of HNWIs, multi-millionaires and billionaires. However, many of these individuals left the country following the Arab Spring (which started in 2010). Also, many of the wealthy and middle class people that stayed during this period lost significant wealth as the Egyptian currency lost value and the local stock market tumbled (in US$ terms).

Notwithstanding this, Egypt’s economy has stabilized over the past few years and some HNWIs have returned, although the country still remains very vulnerable.

Spotlight on South Africa:

SA’s performance over the past 10 years was moderate with total private wealth held by people living in the country rising by 13% from US$575 billion in 2008 to US$649 billion in 2018. SA’s performance was negatively impacted by:

 A declining currency - the Rand depreciated significantly during this period from R9.30/US$ at the end of 2008 to R14.40/US$ at the end of 2018.

 A sluggish local property market

 The ongoing migration of wealthy people out of the country

Risks highlighted in our recent SA Wealth Report include:

 Loading shedding and Eskom - the troubled power utility has a massive amount of influence over South Africa.

 Safety concerns - probably the most critical issue.

 Threats of land redistribution without compensation - this could negatively impact on residential property prices, which could in turn lead to big problems for local banks (as most banks have large mortgage debt books).

 Possible nationalization of the healthcare sector - this could damage the private healthcare system, which could cause large numbers of wealthy and middle class people to leave the country.

Note: please see our SA Wealth Report for more information on wealth trends in South Africa.

2.5 Wealth growth forecasts (to 2028)

Total private wealth held in Africa is expected to rise by 35% over the next 10 years, reaching US$3.0 trillion by 2028

Strong growth:

We expect Mauritius, Ghana, Rwanda, Ethiopia and Uganda to be the strongest performing wealth markets in Africa during this period (100%+ growth rates). Our projections for Kenya are also strong at 80%. Solid growth is also forecast in Namibia, Botswana, Mozambique and Zambia (50%+ growth rates).

Mid-range growth:

South Africa, Tanzania and Ivory Coast should all see moderate wealth growth over the forecast period of around 30%.

Low growth:

We expect Morocco, Egypt and Nigeria to struggle over the forecast period (10% to 20% growth). Our projections for Angola are also relatively poor.

3 City statistics

We recently reviewed the wealthiest cities in Africa by total wealth held. Note: “Total wealth” refers to the private wealth held by all the individuals living in each city. It includes all their assets (property, cash, equities, business interests) less any liabilities. We exclude government funds from our figures.

Top 5 cities:

 Johannesburg: Total wealth held in the city amounts to US$248 billion. Most of Johannesburg’s wealth is concentrated in Sandton, which is home to the JSE (the largest stock market in Africa) and to the head offices of most of Africa’s largest banks and corporates. Exclusive suburbs in Johannesburg/Sandton include: Hyde Park, Sandhurst, Houghton and Westcliff. Major sectors in Joburg include: financial services (banks), professional services (law firms, consultancies), telecoms and basic materials.

 Cape Town: Total wealth held in the city amounts to US$133 billion. Home to Africa’s most exclusive and expensive suburbs such as Clifton, Bishopscourt, Camps Bay and Bantry Bay. Also a hotspot for wealthy second home owners from around the world. Major sectors there include: real estate, financial services (fund management), retail and tourism.

 Cairo: Total wealth held in the city amounts to US$129 billion. Home to more billionaires than any other African city. Major sectors include: financial services, telecoms, construction and basic materials.

 Lagos: Total wealth held in the city amounts to US$96 billion. The largest city in Africa, in terms of population and GDP (but not in terms of wealth) Affluent parts of Lagos include: Ikoyi and Victoria Island Major sectors in the city include: basic materials, oil & gas, transport and financial services.

 Durban & Umhlanga: Total wealth held in the city amounts to US$54 billion. This figure includes wealth held in Durban, Umhlanga, La Lucia and Ballito. Notably, Umhlanga and Ballito are two of the fastest growing areas in SA, in terms of wealth growth over the past 10 years. Major sectors include: financial services, healthcare, real estate, diversified and transport.

Note: HNWI numbers rounded to nearest 100. Only includes people living in each city (residents). Figures for Dec 2018.

Source: New World Wealth

Table 5: Africa: Major cities by total wealth, 2018

Spotlight on Nairobi:

Nairobi is the economic hub of East Africa and one of the fastest growing cities in the world. We expect Nairobi to break into the top five wealthiest cities in Africa soon, possibly replacing Lagos, which has been slipping down the list of late.

Affluent parts of Nairobi include: Runda Estate, Lavington, Kitisuru, Karen and Muthaiga. Major industries there include: financial services, real estate, tourism, media, clothing, textiles, processed foods, beverages and cigarettes.

“Most of Johannesburg’s wealth is concentrated in Sandton, which is home to the JSE (the largest stock market in Africa) and to the head offices of most of Africa’ s largest banks and corporates.

4 HNWI trends in Africa

4.1 Prime real estate

Residential property normally constitutes between 25% and 30% of the net assets of an average African HNWI. Popular properties for them include luxury apartments, beachfront villas and homes in residential estates. The most expensive cities for residential property in Africa are ranked in the following table.

It is important to note that our property indices work off a different basis from most other residential indices. Our indices track the square meter prices achieved in selected prime 200 to 400 square meter apartments in each area, which we believe is the best way to check for price movements. We focus on the most exclusive apartment complexes in each area (i.e. prime). So for Cape Town, we would focus on the best apartment complexes in Clifton and Bantry Bay.

The four main ways used to check price growth in an area include:

 Transactional indices - these are normally compiled by major banks. They are based on the total/average value of purchases that go through the bank during a period. In our view, these are the least accurate - they are often restated heavily over time.

 Average sales price indices - also normally compiled by major banks. These indices can be distorted by big sales (i.e. the sale of a mansion) during a particular month/quarter.

 Repeat sales indices - this index is very accurate but difficult to compile over a short period of time or in a small area as it requires multiple sales on the same property.

 Square meter price growth - we use this one. By focusing on sales in certain apartment complexes, one can get an idea on how square meter prices are changing. This does not require a large sample. Normally for an area such as Cape Town, tracking 3 to 4 prime apartment blocks can give one a very good indication of price movements. The only limitation of these indices is that they only work well on apartments as houses normally have gardens and additional land which is difficult to value on a square meter basis.

Note: Refers to the price of a prime 200-400 square meter apartment/villa in best part of each city/town. Figures for Dec 2018.

Source: New World Wealth

Table 6: Africa: Major cities ranked by price per square meter, 2018

4.2 Largest luxury markets by revenue

We estimate that the African luxury sector generated approximately US$6.1 billion in revenue in 2018 This figure includes: luxury cars, luxury clothing & accessories, luxury watches, private jets, yachts and luxury hotels & lodges. The largest luxury markets in Africa by revenue are listed below

Source: New World Wealth

Note: luxury sector revenue in South Africa, Kenya, Morocco and Egypt is boosted by a large luxury hotel sector in those countries.

Table 7: Africa: Largest luxury markets by revenue, 2008 - 2018

4.3 Luxury hotels & lodges

A large portion of luxury sector revenue in Africa comes from luxury hotels and lodges.

South Africa is the main luxury tourist destination in Africa. Major SA destinations for wealthy people include: Cape Town, Umhlanga, Franschhoek and the Kruger Park area (especially Sabi Sands and the Timbavati).

Major destinations for them in the rest of Africa include: Grand Baie in Mauritius, Mahe in Seychelles, Marrakech in Morocco, Cairo in Egypt, the Serengeti in Tanzania, Sharm El Sheikh in Egypt, the Masai Mara in Kenya, Livingstone in Zambia and the Okavango Swamps in Botswana. Gorilla safaris in the Virunga Mountains (Rwanda) and the Bwindi Forest (Uganda) are also popular.

Africa is home to a large number of top-end hotels. Our top picks include: the 12 Apostles Hotel & Spa in South Africa, the Royal Livingstone in Zambia, the Four Seasons in Seychelles and the Royal Mansour in Morocco. Our top game lodge picks include: Ngorongoro Crater Lodge in Tanzania, Cottar’s 1920s Safari Camp in Kenya, Sanctuary Gorilla Forest Camp in Uganda, Bateleur Camp in Kenya, Savanna Lodge in South Africa, Xaranna Tented Camp in Botswana and Ngala Tented Camp in South Africa.

Note: see our annual hotel ratings for more information on the top luxury hotels and lodges in Africa.

4.4 Luxury cars

Luxury car brands with dealerships in Africa are listed below, ranked by African revenue. As reflected Porsche has dealerships in South Africa, Kenya, Egypt, Nigeria, Mauritius and Morocco. Porsche sells around 2,000 cars in Africa per annum (of which around 1,300 are sold in South Africa)

Table 8: Africa: Top selling luxury cars, 2018

Brand ranked by African revenue

Dealership locations

Porsche South Africa, Kenya, Egypt, Nigeria, Mauritius, Morocco

Ferrari South Africa, Morocco, Egypt

Bentley South Africa, Egypt, Kenya, Morocco

Rolls Royce South Africa

Aston Martin South Africa, Egypt

Lamborghini South Africa

Mclaren South Africa

Source: New World Wealth

“Porsche has dealerships in South Africa, Kenya, Egypt, Nigeria, Mauritius and Morocco.”

Notably, luxury SUVs are especially popular in Africa. Reasons for their popularity include:

 High road clearance. SUVs handle potholes and bad roads better than luxury sedans and sports cars.

 Safety aspects.

 Space for children.

 Useful for holidays – off road, game reserves etc.

Some of the more popular SUVs for HNWIs in Africa include:

 Range Rover (Autobiography, Vogue, Velar and Sport ranges)

 Porsche Cayenne

 Mercedes GLE

 BMW X6

 Jaguar F-Pace.

 Bentley Bentayga (new).

 Rolls Royce Cullinan (new).

 Lamborghini Urus (new).

The new Range Rover series (Vogue, Velar and Sport ranges) is particularly popular in Africa.

The Rolls Royce Cullinan, Bentley Bentayga and Lamborghini Urus were all just released in the past year or so. Aston Martin and Ferrari also plan to release SUVs soon - the Aston Martin DBX is due in 2020 whilst the Ferrari Purosangue is due in 2022.

4.5 Luxury clothing & accessory brands

A large number of exclusive brand stores were put up in Africa between 2002 and 2007 during the global consumer boom period. Since then growth in this sector has slowed. Notable luxury brands with stores in Africa are listed below. Most of these stores are based in exclusive shopping centers such as Sandton City in Johannesburg and the V&A Waterfront in Cape Town.

Table 9: Africa: Luxury brand stores, 2018

Brand ranked by no. of stores Specialty Store locations

Zegna Mens clothing

Louis Vuitton

Burberry

Clothing & Accessories

Clothing & Accessories

Gucci Clothing & Accessories

Prada

Clothing & Accessories

Salvatore Ferragamo Clothing & Accessories

Paul Smith Mens clothing

Dolce & Gabbana Clothing & Accessories

Paul & Shark Mens clothing

Jimmy Choo Womans shoes

Patek Philippe Watches

Source: New World Wealth

South Africa, Nigeria, Egypt

South Africa, Morocco

South Africa, Egypt

South Africa, Morocco

South Africa, Morocco

South Africa, Egypt

South Africa

South Africa

South Africa

South Africa

South Africa

The following luxury brands are likely to open brand stores in Africa over the next decade. Most of these brands already have several stores in other emerging markets such as China, Korea and the UAE.

Table 10: Africa: Upcoming luxury brand stores, 2018

Brand (alphabetical) Specialty

Berluti Mens shoes

Christian Louboutin Womans shoes

Hermes Clothing & accessories

Mulberry Clothing & accessories

Source: New World Wealth

“

A large number of exclusive brand stores were put up in Africa between 2002 and 2007 during the global consumer boom period. Since then growth in this sector has slowed.”

Table 11: Africa: Items commonly found in the wardrobe of a HNWI in Africa, 2018

4.6 Collectables

Collectables are a growing segment in Africa. Collectables include any luxury item that holds its value reasonably well over time. Prominent examples include: art, classic cars, top-end watches, fine wine and stamps. Note: Collectables do not include yachts, private jets and new cars as these items are unlikely to hold their value.

Spotlight on Art:

The global top-end art market is valued at around US$75 billion. African art accounts for around US$1 billion of this, with US$460 million held in South Africa specifically.

Some of the best known African artists include:

 JH Pierneef (South Africa)

 Irma Stern (South Africa)

 Gerard Sekoto (South Africa)

 Alexis Preller (South Africa)

 Ben Enwonwu (Nigeria)

 El Anatsui (Ghana)

Irma Stern is currently the most valuable African artist. Her paintings can fetch up to US$2.5 million each, with an average price of around US$350,000 per painting.

4.7 Wealth management sector

Approximately US$145 billion of African HNWI wealth is tied up with wealth managers and private banks. Typically, wealth managers in Africa target individuals with over US$500,000 in investable assets. Services that are most in demand from them include: asset management services, financial planning and inheritance planning.

Other findings:

 South Africa (mainly Johannesburg) is the main wealth management hub in Africa with US$85 billion in AuM.

 We estimate the African wealth management market will grow by around 7% per annum over the next 10 years.

 The most promising local markets for private banking going forward are: Mauritius and Kenya.

Spotlight on family offices:

Family offices are a fast growing wealth management segment in Africa and throughout the world. They traditionally provide a more customized offering than wealth managers and private banks. Services they offer include: managing household staff, property management, philanthropy coordination, managing family education, intergenerational transfer and legal and tax services, on top of the usual investment services.

Typically family offices are exclusively for family members and family related trusts, foundations, charities and venture capital companies.

Single-family offices (SFO)

Single-family offices generally take the form of a private company that manages the investments and trusts of ultra-wealthy individuals (normally with net assets of more than US$100 million) and their extended family. Typically, an SFO has a small team consisting of a lawyer, an investment specialist and an accountant.

Multi-family offices (MFO)

There are a significant number of families with between US$10 million and US$100 million in assets that do not have the economies of scale to establish stand-alone family offices. MFOs cater to these families and allow them to share administrative costs. Stonehage Fleming is a notable MFO with a presence in Africa - it has an office in SA.

“South Africa (mainly Johannesburg) is the main wealth management hub in Africa with US$85 billion in AuM.”

5 Drivers of wealth growth

Based on our research, the top factors that encourage wealth growth in a country include:

 Strong safety & security - woman and child safety is particularly important. Based on our recent woman safety index, the safest countries in Africa are: Mauritius, Botswana and Namibia.

 Media freedom and neutrality - it is important that major news outlets in a country are neutral and objective.

 Strong ownership rights - Zimbabwe offers a case in point as to what happens when ownership rights are stripped – once assets are taken away they tend to lose value as no one is willing to buy anything.

 Strong economic growth - economic growth is usually linked to wealth growth.

 A well-developed banking system and stock market - ensures that people invest and grow their wealth locally. Also ensures that GDP growth leads to wealth growth.

 Low level of government intervention - government tampering in the business sector creates large inefficiencies within an economy. Government owned enterprises and parastatals are also a problem.

 Low income tax and company tax rates - Dubai and Singapore are examples of the power that tax rates can have in encouraging business formation – both have very low tax rates.

 Ease of investment - barriers such as exchange controls inhibit wealth growth.

 HNWI migration - the migration of HNWIs to a country helps build wealth Australia is perhaps the best example of this - it has benefited heavily from inward HNWI migration over the past 20 years.

The first point (safety) is probably the most critical. Safety is the key driver of wealth growth in a country over the long term. For instance, emerging markets with strong wealth growth tend to also be experiencing rising levels of safety. For example, China, which has been the fastest growing economy worldwide over the past 20 years, has also experienced improved safety levels during this period.

Notably, if one looks at the wealthiest countries in the world by wealth per capita - the likes of Australia, the US and Switzerland - they are all very safe, especially for woman and children. Road safety is also criticalwealthy countries such as Australia and Switzerland rank among the safest worldwide for pedestrians and motorists.

6 Sources and methodology

We use a model to calculate wealth breakdowns for each country, with key inputs including:

 Stock market stats in each market.

 Property stats in each market.

 Income stats in each market.

 GDP per capita stats in each market.

 Wealth data from our in-house HNWI database.

These metrics are combined together in our model to calculate the total wealth held in each country and to calculate the number of people in each wealth tier. For the top wealth tiers (such as billionaires and centimillionaires) we mainly rely on our in-house HNWI database.

Our model also maps historical wealth growth trends in each country by considering:

 Currency movements in each market vs. the US$ (note: all our stats are in US$ terms).

 Stock market movements in each market (in US$ terms).

 Property price movements in each market (in US$ terms).

The average person worldwide has around 50% of their wealth tied up in residential property and equities so large residential property market and stock market moves heavily impact on the total private wealth held in a country.

We then use our HNWI database for the demographic splits within each country (i.e. city, sector, age and suburb wealth breakdowns). So for instance if 30% of the HNWIs in our UK database are living in London, then that would mean that London should account for around 30% of the UK’s HNWIs.

We have a sample of around 150,000 HNWIs worldwide in our database. Most of the individuals in our database have the following work titles: Directors, Chairman, CEOs, Founders and Partners. We do not give out the names of these individuals to anyone. We purely use this database for in-house statistical studies.

We also use public prime property stats (property registers and property sales stats) as a sanity check on all our city and suburb wealth breakdowns. Specifically, we look at the number of homes valued at over a million US$ in each area.

Our wealth forecasts take into account:

 GDP forecasts.

 Recent wealth migration trends - which we see as an insight into future wealth trends. So for instance if a large number of HNWIs are leaving a country that is probably a bad sign for future wealth growth.

 Competitiveness of country’s wages relative to worldwide peers.

 Competitive advantages of each economy.

 Safety levels in country and the efficiency of the local police service.

 Ease of doing business in country.

 Education standard in country - special focus on Science, Maths and Literacy.

 Level of innovation and entrepreneurship in country.

7 About the Sponsor / Author

AfrAsia Bank - Sponsor

Strategically based in Mauritius with a representative office in South Africa, AfrAsia Bank is continuously leveraging its African footprint and positioning itself as a boutique financial services provider. The Bank’s entrepreneurial approach helps to tailor innovative banking solutions for both local and international markets, by connecting Africa, Asia and the World using Mauritius as the gateway for investment.

AfrAsia Bank develops tailored financial solutions in four distinct business lines:

 Corporate Banking.

 Global Business Banking.

 Private Banking and Wealth Management.

 Treasury and Markets.

In addition to its anchor Mauritian shareholder, IBL, the largest conglomerate in the country, other strong strategic partners include National Bank of Canada, and Intrasia Capital (Singapore).

The Bank’s core banking and transactional capabilities are also complemented by its asset management arm, AfrAsia Capital Management Limited. With an experienced team and regional foundations giving customers the reliability and trust of a global banking network, the Bank helps clients achieve their financial aspirations, all delivered with boutique agility and service. AfrAsia Bank is an award-winning bank who has bagged several awards from reputed institutions namely Euromoney, The Banker and EMEA Finance.

For more information on AfrAsia Bank please visit www.afrasiabank.com

New World Wealth - Author

New World Wealth is a global market research group, based in Johannesburg, South Africa. We specialize in ratings, surveys, country reports and wealth statistics. We also provide management consulting and public relations services to our clients. Our research covers 90 countries and 150 cities worldwide.

Services on offer include:

 Ratings and surveys.

 Country, city and regional wealth statistics.

 Residential property surveys.

 Wealth migration studies.

 Management consulting.

 Custom research.

For more information on New World Wealth please visit www.newworldwealth.com