Kenya Adds 300 Dollar Millionaires In 2018

Kenya’s population of high-net-worth individuals (HNWIs) – those with a net worth of over US$1 million excluding their primary residence – increased by 306 in 2018, according to the 2019 edition of The Wealth Report published by Knight Frank.

Data compiled by Global Data Wealth Insight exclusively for The Wealth Report showed the number of dollar millionaires in Kenya grew to 9,482 in 2018, increasing by 3.3% from 9,176 in the previous year. The number is projected to increase by 22% to 11,584 individuals over the next five years to 2023, a much faster growth compared to the 13% increase recorded since 2013 (8,400 HNWIs).

Out of the 9,482 HNWIs in 2018, 125 were ultra-high-net-worth individuals (UHNWIs) – those with a net worth of over US$30 million excluding their primary residences. Only four individuals crossed into this wealth bracket last year, with the number expected to jump to 155 UHNWIs by 2023, a 24% growth.

Nairobi hosts most of the country’s ultra-wealthy (net worth of at least Sh3 billion) with 82 residing in the capital as of 2018 and the number is projected to rise to 102 over the next five years.

Global Data Wealth Insight’s data showed the top sectors that generated wealth in the country last year were financial services and investments at 17% of the total; technology and telecommunications at 15%; retail, fashion and luxury goods at 11%; transport and logistics, manufacture of FMCG, and media at 7%; and basic materials (the extractive industry e.g. mining, oil and gas etc.) at 6%.

According to The Wealth Report’s Attitudes Survey, 62% of Kenyan wealth advisors and managers said their clients’ wealth increased in 2018, with 8% recording no change, while 30% said it decreased. The majority of respondents (88%) anticipate their clients’ wealth will grow in 2019, with 4% forecasting no change while 8% project a decrease.

The majority of respondents (85%) said the country’s political and economic environment made it more difficult for their clients to create and protect wealth in 2018 compared to the previous year.

Some 58% of the respondents still expect the political and economic environment will make it more difficult for their clients to make and safeguard wealth this year, with 11% expecting no change while 31% anticipate it will be easier.

Andrew Shirley, Editor of The Wealth Report, said: “Last year was an overwhelmingly positive one for UHNWIs globally in terms of wealth growth, but the results of the Attitudes Survey highlight that there is growing awareness around the world regarding the increasing number of emerging challenges that wealth creators will need to overcome over the next few years and beyond.”

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On average, Kenya’s super-rich allocated 25% of their investment portfolios to equities, 22% to investment properties, 22% to cash or cash equivalents, 20% to bonds, 3% to private equity, 3% to luxury investments (art, wine, classic cars etc.), and 1% to gold, with the remaining 4% going into other asset classes.

Transferring wealth is still a delicate matter among Kenya’s rich, with only 43% of respondents to the Attitudes Survey saying their clients have robust succession plans in place to pass their wealth to the next generation. Globally, countries with the highest levels of succession planning include Saudi Arabia (65%), UK (62%), US (61%), and South Africa and Spain (60%).

According to the survey, only 24% of Kenya’s UHNWIs have a second passport or dual nationality. A further 20% of Kenya’s ultra-rich are considering acquiring a second passport/dual nationality. However, only 9% of Kenyan UHNWIs are considering emigrating permanently to other countries, with the most popular destinations being the UK (67%), Canada (48%), US (33%), Germany (14%), Australia and UAE (10%).

Ben Woodhams, Knight Frank Kenya Managing Director, said: “It’s telling that less than 10% of Kenya’s ultrawealthy
are considering emigration, which is an indication that the social and economic challenges we may be
experiencing in the country are not insurmountable.”

On sharing wealth, the country’s super-rich continued giving to charitable causes in 2018, with 60% of the respondents saying their clients maintained their philanthropic activities, some 10% gave more, while 30% reduced.
On education, almost half of wealthy Kenyans (49%) send their children overseas for primary and secondary
education, with 80% of respondents expecting this trend to increase over the coming few years. The majority (63%) of Kenya’s super-rich already send their children overseas for university education, with 95% of respondents expecting the trend to rise further over the next few years.