Kenya dollar millionaires rose to 3,362 last year on the back of young entrepreneurs making fortunes in sectors such as ICT and business recovery from the Covid-19 economic fallout.
The latest instalment of the Knight Frank Wealth Report shows the number of Kenyans with a net worth of at least $1 million (Sh113.9 million) grew by 39 last year from 3,323 in 2020 and is expected to hit 4,274 by 2026.
This points to recovery from the effects of Covid-19 that hammered most asset classes and prompted business closures, drops in corporate profits and dividends freeze in firms owned by the wealthy.
Twenty-seven percent of the dollar millionaires or 803 of them are self-made and aged under 40, indicating new opportunities for young people in a country where the lucky few have previously relied on inherited wealth to join the club of the super-rich.
The dollar millionaires dropped from 4,235 in 2019, underlying the economic impact of the pandemic.
The number of ultra-rich Kenyans with a net worth higher than $30 million (Sh3.4 billion) fell by two to 88 last year, reflecting the difficulty of adding wealth in this segment compared to the lower threshold of $1 million.
The net worth includes the tycoons’ primary residence, but excludes liabilities like bank loans, locking out heavily indebted individuals from the rich list.
“The entrepreneurship of Kenyan wealth creators and individuals actually helped during the pandemic, although we did see the ultra-high-net-worth group drop slightly because it is more difficult get into the $30 million bracket than it is to get into the $1 million bracket,” said Andrew Shirley, the editor of the wealth report.
“Taking into account those aged under 40 who have created their own wealth rather than inherited it…the level of entrepreneurial wealth is higher in Kenya than the global average of 22 percent, especially when you consider the wealth is being created in sectors such as in technology, metaverse and blockchain.”
There is a growing number of young millionaires and entrepreneurs who are making money in Kenya’s technology sector, especially fintechs, with their key focus ranging from digital payments, loans and insurance to share trading and cryptocurrency.
They are also offering digital solutions in agribusiness, health and logistics, helping establish Kenya as East Africa’s hi-tech hub.
These firms have in turn attracted billions in funding from venture capital and private equity funds from developed countries, with the founders raking in millions from stake sales.
Data from Disrupt Africa shows that the funds pumped in Sh33.3 billion into 87 Kenyan technology companies last year, benefiting start-ups such as Twiga Foods and Gro Intelligence.
Globally, tech companies have offered the shortest route to the billionaires club, with the world’s wealthiest individuals such as Jeff Bezos (Amazon) and Mark Zuckerberg (Facebook) deriving outsize riches from tech companies.
Since pioneering mobile money services like M-Pesa in the late 2000s, Kenya has become a hotbed of fintechs.
Nairobi has long been a trading hub and a source of wealth in East Africa, based around traditional brick-and-mortar industries like manufacturing, retail and banking.
But over the last decade, it has begun to transform itself into a digital hub.
It is already home to a large number of tech firms -- including Google, IBM and Nokia -- that have helped seed skills and have given the region credibility.
Start-ups are able to take advantage of the country’s advanced education system relative to the neighbouring countries, which churns out a steady supply of skilled developers.
Top executives, lawyers, doctors and accountants are among the professionals who can build up a net worth exceeding $1 million (Sh109 million) from salaries, stock options and profit-sharing arrangements.
At least 10 chief executives of Nairobi bourse-listed firms have each earned salaries and other perks exceeding Sh400 million in the past five years alone.
Owners of thriving small businesses can also rack up a net worth running into hundreds of millions of shillings.
A previous report by the Kenya Revenue Authority (KRA) showed that there were more than 100 little-known individuals with businesses posting gross annual turnovers of between Sh350 million and Sh1 billion.
By the end of last year, 49 percent of the wealth held by Kenya’s dollar millionaires was allocated to property, with the bulk of this in land and private residential property.
They are now shifting to new areas such as data centres, whose demand has gone up due to the requirement for banks to store their data within Kenya’s physical jurisdiction.
“We are seeing much more localised data centres coming up now. Logistics and warehousing, education and healthcare, which includes assisted living facilitates for the elderly, are also big growth areas that are attracting a lot of wealth,” said Knight Frank Kenya managing director Ben Woodhams.
“They are also investing their money in agriculture, in partnership with investors from countries where food security is a concern, to produce for the export market.”
The Knight Frank report does not name individuals but other wealth reports have in the past singled out the families of former presidents Jomo Kenyatta and Daniel arap Moi and the late Cabinet minister Nicholas Biwott among Kenya’s wealthiest.
Business tycoons who have appeared in past wealth reports include Vimal Shah, Chris Kirubi and Manu Chandaria.
Previous wealth reports on Kenya have shown strong linkages between politics and wealth accumulation.
Knight Frank tracks millionaires through established financial sector units like banks, wealth advisors and asset managers, meaning that it does not capture super-rich people with no links to formal wealth managers.
Local financial institutions which participated in the 2022 survey include NCBA Bank #ticker:NCBA , Absa Kenya #ticker:ABSA , Stanbic Bank Kenya #ticker:SBIC , insurers ICEA Lion, Sanlam Kenya #ticker:SLAM and CIC Insurance #ticker:CIC, Genghis Capital, Nabo Capital and Dry Associates.
Across the continent, South Africa is home to the biggest number of high-net-worth individuals at 31,852. This wealth base has been built on natural resources, industry and finance.
It is followed by Nigeria at 28,996 and Egypt at 15,740 individuals, with both countries being oil producers. Egypt is also a major manufacturing and agriculture hub.
In East Africa, Tanzania trails Kenya with 2,599 dollar millionaires, while Uganda has 1,704 such individuals.