CAPE TOWN – South Africa is top of the wealth table of 15 African countries for which reliable data is available according to New World Wealth, whose report on African wealth was sponsored by AfrAsia Bank, but it lags most of the other African countries when it came to growth over the past decade, ranking only fourth from the bottom.
The top performer in terms of wealth growth was Mauritius.
Africa overall lags the rest of the world as despite the fact that it contains 10 percent of the world’s population, it has only 1 percent of the world’s wealth.
The reason why South Africa has only grown wealth by 13 percent in US dollar terms in the period 2008 to 2018 compared with 124 percent for Mauritius, was due to many factors according to New World Wealth.
A depreciating currency as the rand went from R9.30 per US dollar at the end of 2008 to R14.40 at the end of 2018 was one of the main factors.
This wealth erosion due to a weakening currency was compounded by a sluggish property market as a significant portion of assets of a High Net Worth Individual (HNWI), who has more than $1 million (R14.7m) in net assets, is in the form of property, while the emigration of HNWIs has reduced the number of wealthy individuals.
New World Wealth previously estimated that some 8 000 HNWIs emigrated from South Africa between 2000 and 2014.
The good news is that New World Wealth forecasts that wealth growth in South Africa in the next decade will be about 30 percent or more than double the performance of the past decade.
The risks to this forecast are however significant. New Word Wealth said the number one priority is safety, while the threats of land redistribution without compensation and the possible nationalisation of health care could prompt more emigration.
A more general issue according to New World Wealth is load shedding. Statistics South Africa said this month that electricity consumption declined by 1.9 percent year on year in July after a 1.5 percent decrease in June and a 1.3 percent drop in May.
The 231 432 Gigawatt hours consumed in 2018 are still 4 percent less than the annual consumption in 2007. The decline in the first seven months of 2019 was 1 percent year on year.
Despite the poor growth over the past decade, South Africa still has many attractions for HMWIs according to New World Wealth.
This includes things such as a great lifestyle due to the weather and scenery, good private schools, it is an English-speaking country, it has well-established luxury residential areas such as Camps Bay, Sandton and Umhlanga, top class shopping centres such as Sandton City and Gateway, relatively good private health care, luxury food stores and top restaurants and hotels, such as the Twelve Apostles Hotel and Spa.
That is why South Africa still has more than twice the number of HNWIs than any other African country.