A Second Scramble for Africa

This article first appeared on Hubbis.com
African ultra high net worth (UNHW) rose by an impressive 6.9% from 2012 to 2013. The main reason for this rise in high net worth is the continent-wide resources boom, where resources like copper, cobalt and, most notably crude oil, are being exported at exponential rates. It is no coincidence that out of the seven African countries with most billionaires, six – Egypt, Nigeria, South Africa, Kenya, Tunisia and Angola – have benefitted from the resource boom. The Wealth-X and UBS Billionaire Census 2013 tells us that there are 14% of African billionaires who have made their fortunes in the oil and engineering industries. Moreover, out of South Africa’s billionaires, who account for 30% of the regions wealth, 22% are in the metals and mining industries.

Traditionally government officials and entrepreneurs have capitalised on these vast resources, based on a quick-buck strategy, importing infrastructure and scientific know-how from the rapidly expanding economies like China and India, as well as established ones like the US.  In Equatorial Guinea for an example: of the 10,000 people employed by the Equatoguinean oil industry, the majority are US citizens. This lack of local infrastructure has led to Nigeria despite being Africa’s biggest oil producer, exporting 40% of its oil to the US, Nigeria itself presently imports a staggering 85% of the oil it consumes because it lacks  basic infrastructure like oil refineries. Therefore, to continue growth, UNHW individuals in African countries should focus on long-term projects, like improving home-grown scientific and engineering knowledge in order to prolong this period of growth.

Africa’s rise is by no means a bad thing; the continent has become a major player, which is a necessity in what is now an interconnected, global market. However, if Africa’s new UHNW individuals wish to continue sustainable growth they will have to pursue strategies that benefit of the continent as a whole. Previously many African-born UHNW individuals have migrated elsewhere, to havens where they are confident that their wealth will be protected and grow in a sustainable manner. However, if opportunities are seized upon now and suitable investment made there is no reason why Africa can not sustain this boom for many years to come.

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