INCREASED use of technology to improve the efficiency of mature African businesses is expected to boost the number of rich individuals, as the second generation in family businesses takes over from founders.
The first generation emerged after the oil boom and liberalisation of economies, with most investing in heavy industry, trading and commercial farming, according to Faizal Bhana, director for the Middle East, Africa and India at state-funded Jersey Finance.
They became entrepreneurs in their teens and twenties, and are now in their sixties and seventies, compared with their successors who are at least in their thirties, Bhana said in an interview.
‘There will be a boom of ultra high net worth individuals in Africa over the next five to 10 years,’ he said. ‘They’re still farming, they’re still doing infrastructure projects, but increasingly using technology.’
The wealth transfer is to a generation of global citizens that are more educated and tech savvy, while the founders are keen to retain some level of control, Bhana said. There is also a new generation of tech and fintech entrepreneurs, especially in Nigeria, Kenya and South Africa, he said.
‘The impact that technology is having on the African continent is unprecedented. And as a result of that, what I would expect is that there will be a lot more entrepreneurs,’ Bhana said.
In the early days of the coronavirus pandemic, the founders were hit hardest due to advanced age, which resulted in increased focus on succession planning and governance structures to ensure business continuity and wealth preservation, he said.
Private wealth in Africa is estimated at $2.1 trillion and expected to rise 38 percent in the next decade, according to the Africa Wealth Report 2022 published in April. Half the wealth is in five countries: South Africa, Egypt, Nigeria, Morocco and Kenya. Africa has 136,000 wealthy individuals, or people worth $1m or more, it said.