- The 2020 Knight Frank’s Wealth Report classified 2,900 Kenyans among the world’s High Net-Worth Individuals (HNWIs) last year, representing a 14.6 percent drop compared to the 2017 count.
- Six Kenyans also dropped from an elite group of super-wealthy persons known as Ultra High Net-Worth Individuals (UHNWI) with a net worth of more than Sh3 billion, cutting their number to 42.
- The shifts emerged in a year of relatively hard economic times in the country, which has resulted in a drop in corporate profits that has seen thousands of people lose their jobs and cut dividends from firms owned by the wealthy.
An estimated 499 Kenyans dropped from the rank of dollar millionaires last year, highlighting how the impact of Kenya’s soft economy has hurt persons who each had a net worth of more than Sh100 million.
The 2020 Knight Frank’s Wealth Report classified 2,900 Kenyans among the world’s High Net-Worth Individuals (HNWIs) last year, representing a 14.6 percent drop compared to the 2017 count.
Six Kenyans also dropped from an elite group of super-wealthy persons known as Ultra High Net-Worth Individuals (UHNWI) with a net worth of more than Sh3 billion, cutting their number to 42.
The shifts emerged in a year of relatively hard economic times in the country, which has resulted in a drop in corporate profits that has seen thousands of people lose their jobs and cut dividends from firms owned by the wealthy.
Over the three years, Kenya has elevated political uncertainties following a bruising presidential election in 2017 that put on hold many investment decisions. This was compounded by poor weather that held back farming — which accounts for a third of the country’s gross domestic product (GDP)—last year.
“The drop in number of dollar millionaires was a reaction to the slowdown of the Kenyan economy,” said Andrew Shirley, one of the researchers behind the Wealth Report.
The manufacturing, real estate and technology sectors have the biggest contributors to the number of new dollar millionaires in recent years.
The sectors bore the brunt of Kenya’s reduced economic activity with real estate, which has over the past decade been a favourite investment home for the wealthy, being hit hardest.
Business people and workers who took mortgages on the strength of their pay slips and expected earnings defaulted on their loans with the slowdown in real estate hurting property developers who are finding it difficult to sell units that were also built on debt.
But Kenya had the sixth highest concentration of wealthy persons with a net worth in excess of Sh3 billion or UHNWI in Africa among the countries captured by the Wealth Report.
South Africa led the pack with 1,033 ultra-rich persons followed by Egypt (764) Nigeria (724) Morocco (215) and Tanzania (114)—despite Kenya’s neighbouring country having a smaller economy.
The Knight Frank report does not name individuals but other wealth reports have in the past singled out President Uhuru Kenyatta’s family, former president Daniel arap Moi’s family 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.
Mr Shirley said Kenya reported a faster rise in the number of under 35 year-olds HNWIs or investors with a net worth of at least Sh100 million when compared to its peers in Africa.
He did not explain the source of the wealth for youth with analysts linking a bigger share of the rise to inheritance,
“In Kenya, we had the highest number of Generation Z, people born after 1995, who are considered HNWIs and who are the clients of wealth advisers in Kenya. It also showed a very large number of millennials who are wealthy,” said Mr Shirley.
“So what we are seeing in Kenya is an outperformance of young entrepreneurial wealth creation and in terms of sectors they are coming from technology.”
The report reckons that Kenya’s wealthy are increasingly becoming conservative in their investments, preferring less risky and low returns assets like bonds, gold and cash—where they pocket interest payments.
The study describes wealth as the net assets of a person that includes property, cash, equities, business interests less any liabilities and their primary residences.
The tracking of the millionaires through established units like private bankers as well as wealth advisers and managers suggests that it does not capture super-rich people with no links to formal wealth managers.
The number of people with net worth of more than Sh100 million has grown more than four times from 800 in 2014 to 2, 900 last year, according to the Knight Frank report, while individuals with a net worth of more than Sh3 billion have nearly tripled from 16 to 42 over the period.
The report shows that Kenya lacks dollar billionaires.
“Our assumptions may be more conservative than previous data suppliers,” said Mr Shirley.
“A lack of robust data to feed into our complex econometric model on certain countries means we have to make assumptions.”
The significant share of Kenya’s super-wealthy has attracted dealers in luxury brands including car dealers, hotels and fashion products.
Some of the global brands that have a presence in Nairobi include Germany’s Volkswagen Group’s Porsche cars, German automaker Daimler AG and British manufacturer of luxury cars and SUVs Bentley Motors Limited.
Private sector activity in Kenya fell further in February as orders for new goods dropped for the first time in more than two years, a survey showed yesterday, as imports from China tumbled due to the coronavirus outbreak
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for manufacturing and services fell to 49.0 in February from 49.7 in January. Readings above 50.0 indicate growth.
Companies reported the first fall in new business orders since November 2017, the survey found, attributing the decline to hard-up consumers in the economy amid a wider cash crunch.