For Kenya’s super rich, having a second or third passport is becoming the new luxury.
Most of the very wealthy are past the stage of acquiring products that signal status and moved to services that offer comfort and the best quality of life that money can buy.
For now, this is buying residence rights or citizenship in another country, where a billionaire can easily travel with his private jet, without bothering to stand in line at immigration counters to get a visa.
Experts that help the wealthy get citizenship and residency in about 20 countries say that more affluent people, including Kenyans, are actively looking for an additional country they can call home, just as they would buy exclusive second and third holiday houses out of the country.
“More Kenyans are seeking EU or Caribbean passports,” said Armand Arton, the founder and CEO of Arton Capital, a company that specialises in investor programmes for residence and citizenship.
As wealth in Africa rises, foreigners are seeking citizenships in the region as rich Africans also look to have a second home in Europe. “In Africa, top markets are South Africa, Nigeria, Kenya, Ivory Coast, Morocco and Egypt. South Africans prefer Portugal, the US and Malta. Nigerians prefer Cyprus, which is the most expensive, and has the best investment programme. They also like the Caribbean countries especially Antigua and Barbuda. People from Ivory Coast prefer Canada and Montenegro,” explains Armand, adding that for African business people, he would recommend the EU countries such as Malta, Portugal and Montenegro.
Is it important to have a second or third passport?
In a tough global economy, and to diversify investments in ‘safe havens’, a second or third citizenship is a highly sought-after commodity because it provides an exit strategy in cases of political and economic turmoil.
According to Andrew Amoils, the head of research at New World Wealth, a market research group based in South Africa, a number of governments are also targeting globally mobile wealth.
“Some countries are actively enticing wealthy individuals to relocate with favourable tax regimes, while others are introducing overseas buyer taxation on residential purchases. In emerging markets, growing economic risk could boost demand for such schemes as money is channelled to safer havens,” he said.
Marios Rafail, the head of Henley & Partners Geneva office said investment migration has grown and has become a $26 billion (Sh2.6 trillion) industry.
“Governments are competing with each other to attract foreign direct investment through the citizenship and residence by investment programmes as they generate wider levels of both foreign investments and incremental income,” explained Marios.
Henley & Partners advises wealthy individuals and governments on residence and citizenship planning.
“In the last three years, we see that Kenya, Nigeria, followed by South Africa coming up as the key dominant countries for an alternative citizenship through investment,” he said.
“But as a region, North Africa (mainly Egypt, Algeria, and Libya) dominates the market. Each country for each own reasons: Nigeria and Kenya is mostly for visa free access purposes. In South Africa, there is a wave of entrepreneurs who want to conduct business in Europe and seek such flexibility through these programmes. Finally, North African clients — always interrelated to the Middle East, are looking for a safety pillar.”
Today, there are over 10 citizenship by investment programmes. Private clients globally, including the younger entrepreneurs are seeking such solutions for different reasons.
“Some are looking for global mobility, security (plan B) due to the current geopolitical situation, family planning, to increase investment and raise capital,” he added.
Armand said that the citizenship by investment business is growing due to the increase in political instability, especially in the Middle East and other developing countries.
Africa accounts for almost 10 percent of their services with the largest demand coming from China with 60 percent of the company’s clients.
The Middle East follows, with 20 percent of the clientele. Russia and the Commonwealth of Independent States (CIS) brings 10 percent of the clientele.
“There an increase of ultra high net worth individuals and the high net worth individuals in developing countries who lack wide mobility. Interestingly, many private jet owners lack the passports with visa free access and they have to do the normal lengthy visa application process,” he said. Holders of the African passports are familiar with the constant challenges of acquiring visas to several countries including South Africa and Nigeria. The visa process is often tedious and sometimes unsuccessful.
Femi Young, founder and CEO of Total Outsourcing Solutions, who is helping rich Nigerians get a second citizenship in Malta said having an additional passport gives one access at any time, which is crucial especially if an individual comes from a country that has political and economic instability.
“Many business people have lost huge deals due to lack of visas or visas were acquired late. These programmes give you the ability to access better education for your children, global business opportunities, healthcare and leisure. It is all dependent on the needs of the client,” said Femi.
Which countries offer second citizenships?
According to Femi, Malta, an island in south Europe has the leading citizenship programme. A Henley Passport Index Report identified Japan as having the best passport globally with visa free access to 189 countries.
The best African passport is from Seychelles with access to 150 countries, visa free.
Due diligence fees
“A Maltese passport is powerful, and it provides citizenship in a highly liveable area of the world with easy access to the rest of Europe,” Femi said.
“It is slowly becoming more desirable in Nigeria due to the challenges of getting visas to travel internationally on a Nigerian passport. The cost of citizenship in Malta starts from $1 million (Sh100 million).”
Nevertheless, an Austrian citizenship by investment programme is the one which gives the most visa-free access, to 185 countries, said Marios of Henley & Partners.
Both Malta and Cyprus allow an applicant to settle, work and live in Europe. Other super-rich people seek an alternative citizenship in Caribbean islands with Saint Kitts being their favourite choice.
For instance, a couple with two minors can spend Sh22 million to apply for citizenship in Saint Kitts or Nevis. About Sh16.8 million goes to the government with the rest paid to the adviser, due diligence and passport fees.
“The Caribbean countries offer visa free access to the Schengen zone and the UK (among other countries). But in the Schengen Zone specifically, a Caribbean passport holder can spend only three months on a six month basis, or six months cumulatively on a yearly basis,” said Rafael.
In terms of time, Cyprus, Malta and Caribbean take the shortest time to get a passport at four months.
“Malta is also a good place for offshore banking as its banks are among the top five strongest banks in the world. For most of the citizenship programmes, you need to donate the money to the government and you will not get it back. In Malta, one can invest in property, whereby you can get a return on your investment,” said Femi.