Nairobi accounted for 75.8 per cent of Kenya’s billionaires, reflecting the county’s economic dominance over the other 46 devolved units created eight years ago to address the wealth imbalance, a new wealth report shows.
About 250 of 330 Kenyans with a net worth of at least $10 million (Sh1.08 billion) reside in the capital city, according to an annual study of the fortunes of Africa’s wealthiest people by Mauritius-based AfrAsia Bank.
The heavy concentration of billionaires in Nairobi indicates inequality in the country’s economic development, partly attributed to the previous centralised system of government which guided sharing of resources since independence.
The devolved system of government raised hopes of addressing the economic imbalance, but analysts say there is a need to offer incentives to attract private investors to the other counties.
Overall, 26 Kenyans dropped out of the ultra-rich list in 2020 as the Covid-19 pandemic disrupted businesses and hammered most asset classes across Africa.
Their ranks of billionaires shrank from 356 in 2019 and 370 in 2017, signalling that effects of Covid-19 helped to accelerate the drop of those with net assets of at least Sh1.08 billion.
Africa’s rich have suffered the most from the economic impact of the pandemic, with AfrAsia Bank saying the share of super-rich persons in the continent dropped by nine percent last year.
The shifts emerged in a year of hard economic times in the country in the wake of Covid-19, which resulted in a drop in corporate profits, and triggered job cuts and dividends freeze in firms owned by the wealthy.
The pandemic last year also saw the bear run on the Nairobi Securities Exchange intensify and lowered property prices and valuation of private companies as lockdowns and other restrictions eroded revenues.
In Nairobi, the number of billionaires shrank by 10, accounting for 38 per cent of the persons whose net assets fell below $10 million.
Nairobi’s contribution to the GDP stands at 21.7 percent, according to a past study by the Kenya National Bureau of Statistics (KNBS) on economic performance of the 47 counties.
This is followed by Nakuru (6.1 percent), Kiambu (5.5 percent), Mombasa (4.7 percent) and Machakos (3.2 percent).
Kenya was ranked fourth among countries with the highest concentration of billionaires in Africa.
The Africa Wealth report for 2020 ranked South Africa top with 1,930 billionaires followed by Egypt (810) and Nigeria (460).
Nairobi is placed sixth in the cities’ ranking.
The study describes wealth as the net assets of a person that includes all assets like property, cash, equities, and business interests less any liabilities.
AfrAsia Bank says that it uses its asset management arm and responses from private bankers as well as wealth advisers and managers to track the billionaires.
This suggests that it does not capture super-rich people with no links to formal wealth managers.
The Africa Wealth report does not name individuals but others have in the past named 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.
Kenya’s group of high-net-worth individuals, defined as those with at least $1 million (Sh108 million) including their primary residence, also recorded a drop.
The report says that 300 Kenyans fell out of this club last year when their numbers stood at 8,300 compared to 8,600 in 2019.
The decline in this category shows the impact of the pandemic on small and medium-sized firms and the professional class who constitute the membership of the emerging rich.
Top executives, lawyers, doctors and accountants are among the professionals who can build up a net worth exceeding $1 million (Sh108 million) from salaries, stock options and profit-sharing arrangements.
At least 10 chief executives of NSE-listed firms have each earned salaries and other perks exceeding Sh400 million in the past five years alone.
Companies implemented austerity measures last year in response to the economic fallout from the pandemic, including retrenchments, salary cuts and bonus freezes, that have hit the professional class.