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Kenya mints 900 new dollar millionaires as wealth gap widens

Dollar millionaires are individuals with assets worth more than Sh102 million ($1 million at current exchange rates) excluding primary assets such as a home. GRAPHIC | FILE
Dollar millionaires are individuals with assets worth more than Sh102 million ($1 million at current exchange rates) excluding primary assets such as a home. GRAPHIC | FILE 

Kenya created 900 dollar millionaires in 2016, according to a new report that points to the fact that hard economic times that prevailed in the year did not slow down wealth accumulation.

This brings the number of Kenya’s super rich to 9,400, representing an eight per cent growth from 2015’s total of 8,500.

The new group of super rich Kenyans includes 30 individuals whose assets are valued at more than Sh1 billion each, 10 ultra-high-net-worth individuals (HNWI) with more than Sh3 billion each and two centa dollar millionaires with more than Sh10.2 billion each.

Knight Frank’s 2017 wealth report shows that Nairobi’s population of the super rich grew at the fastest rate in 2016, beating Uganda, Tanzania and Rwanda.

Dollar millionaires are individuals with assets worth more than Sh102 million ($1 million at current exchange rates) excluding primary assets such as a home.

During the year, Uganda created 100 new dollar millionaires to take its total to 1,400 while 200 Tanzanian entered the club of dollar millionaires, taking the country’s total to 2,400.

Rwanda, whose ranks of dollar millionaires increased by 100 individuals, now has a total of 600 dollar millionaires – meaning that Kenya has more dollar millionaires than Rwanda, Uganda and Tanzania combined.

Kenya, however, still lags far behind Africa’s two top economies – Nigeria which added 4,100 individuals to the club of dollar millionaires for a total of 15,400 and South Africa, which created 1,900 dollar millionaires in 2016 to hit the 40,400 mark.

Kenya is expected to create 7,500 new dollar millionaires in the next 10 years, a development that would take the country’s total to nearly 17,000 in 2026.

Of these, 670 individuals will have accumulated assets worth Sh1 billion, 220 Sh3 billion each while 32 will be worth more than Sh10.2 billion each.

Dramatic increase

Kenya witnessed a dramatic increase in the population of the super-rich even as millions of her citizens wallow in abject poverty – pointing to a widening rift of inequality in the country.

900 individuals managed to cross the million-dollar line in a year in which nearly half of the Nairobi Security Exchange (NSE)-listed companies reported sharp drops in profits leading to massive job losses.

Besides, more than 2.2 million small enterprises closed shop in the last five years, underlining the tough business environment in the country.

Kenya’s economy expanded by 6.2 per cent in the second quarter of 2016 compared to 5.9 per cent during the same period the previous year.

The growth was, however, driven by heavy government spending on mega infrastructure projects that has covered the tough realities facing the private sector.

University of Nairobi Economics lecturer Michael Chege said earlier the average income of the richest 10 per cent of Kenyans was 15 times bigger than that of the bottom 10 per cent, but that has now widened to more than 100 times.

“Conspicuous consumption marked by heavy spending on high end luxury goods (top of the range cars and whiskeys) has taken root to become the new normal in Kenya,” he said adding that it happens in all rapidly-growing economies where the newly-rich want to flaunt their wealth.

Prof Chege said Kenya’s newly-rich have mainly built their wealth portfolio in real estate, ICT, finance and international trade. 

The Knight Frank report corroborates estimates by economic analysts and luxury brand makers that Kenya is rapidly becoming the new the Mecca for luxury brands targeting the super-rich.

“There is a rapidly rising Middle Class that is internationalised taking holidays abroad and with aspirations that are at par with cities like New York, London and Tokyo,” Nairobi-based analyst Aly-Khan Satchu told the Business Daily in an earlier interview.

Extravagant lifestyles

The Knight Frank report also reveals the lifestyles of Kenya’s super rich – documenting their love for private helicopters, private elite education and philanthropy.

“They use private aviation for the majority of their business and personal flights to enable them travel efficiently with maximum privacy,” says the report.

The survey also found that Kenya’s super rich are likely to settle in Nairobi’s leafy suburb of Runda, which offers them a serene and controlled environment.

“The influential residents’ association in the traditionally high-end suburb of Runda works hard to ensure that new developments are in line with the character of the area, which was first developed in the 1970s to house United Nations staff,” said Ben Woodhams, the managing director of the property agent Knight Frank Kenya.

Scarcity of plots and development opportunities in the area is however leaving buyers with limited options.

Knight Frank Wealth study is based on responses from 900 of the world’s private bankers and wealth advisors managing more than 10,000 clients with a combined wealth of around $2 trillion(Sh205 trillion).

The report projects growth in ultra-wealthy populations in Africa (33 per cent) and Latin America (37per cent) to outpace Europe and North America.

“In Africa, sharp rises are expected in countries such as Mauritius, Ethiopia, Tanzania, Uganda, Kenya and Rwanda,” it says.

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