TOP line numbers about Africa’s economy generate a lot of global references, but tend to conceal a lot of details about the daily circumstances of the continent’s 1.1 billion people.
Now a new report shows just how events like coups, civil wars and even just poor economic mismanagement hurts ordinary citizens in Africa, with new data showing a shrinking of wealth in some countries, some unexpected, while in others the personal fortunes of citizens grew by as much as 1,000% in just over a decade.
Zurich-based bank Credit Suisse Group AG this week released its annual global wealth report and the change in recent years of the continent’s fortunes is not a myth—the total wealth in private hands is estimated at $2.6 trillion—from $1.1 trillion in 2000.
Sharing that out among the continent’s 572 million adults, those aged 20 and over, leaves each with a theoretical wealth of $4,356, Credit Suisse, the world’s fourth largest wealth manager said.
The pie has grown
But despite Africa having 12% of the world’s adults, they hold only one per cent of the world’s wealth, the research shows. This is just ahead of India, which together with China are disaggregated as separate regions in the report.
To put this in context, adults in Africa’s largest trading partner China, and who currently number one billion or a fifth of the world’s total, hold $22.8 trillion in private wealth, or a 9.1% share of the world’s $250 trillion private wealth. In 2000, this figure was about $4.7 trillion, highlighting the turbo-charged economic growth in the world’s most populous country.
The report says that the emphasis is on adult wealth because while a case can be made for basing the analysis on households or families, many personal assets and debts are typically owned by individuals in these units.
“Furthermore, even though some household assets, such as housing, provide communal benefits, it is unusual for household members to have an equal say in the management of assets, or to share equally in the proceeds if the asset is sold,” the authors say.
Additionally, the patterns of households vary deeply across countries, while in many others the number of households in unknown.
But the more than doubling in Africa’s private wealth masks great differences across individual nations, many which strengthen the claim that not all have been lifted by the continent’s tide, but other countries show great leaps and bounds, from both weak and strong bases.
Malawi shrinks sharply
Malawi saw the steepest decline in wealth per adult, shrinking 53.3% to $169, from $362 in 2000, with total wealth estimated at $1 billion. The southern African country has struggled with governance challenges it can ill afford given its weak economic base, and remains heavily dependent on aid. Its current wealth of $169 puts it at the same level as DR Congo was in 2000, at the height of the Second Congo War (1998-2003).
Madagascar, the Indian Ocean island that has in recent years struggled with recurrent political upheaval, also saw its private wealth halve in the 15 years since 2000, the period the report covers.
In 2000, the island’s wealth per adult was $682, but by mid this year this number had shrunk to just $340, with total wealth estimated at $4 billion. By contrast, the island of Seychelles had its wealth per adult estimated at $58,651—by far the highest on the continent.
While the reduction in private wealth in Libya and Egypt is perhaps understandable due to their revolutions, it comes from a strong base—the former, seeking a post-Gaddafi order, has seen theoretical individual fortunes shrink from nearly $34,000 in 2000 to the current $28,628—which places it third on the continent just behind Seychelles and Mauritius.
But the reduction in private wealth in Ghana is rather surprising, coming off a decade when it became an oil exporter. In 2000, the west African country’s wealth per adult was estimated at $1,098; fifteen years later this is at $773, a reduction of nearly 30%. It baffles.
On the other end of the scale are countries that have seen private wealth expand rapidly over the past 15 years. Equatorial Guinea grew each citizen’s individual fortune by a staggering 1,318%. In 2000, an Equatoguinean adult was worth $1,160, now the same citizen would count his net assets at $16,450.
Angola, sub-Saharan Africa’s second largest crude exporter, saw private wealth expand 584% to the current $15,302.
A surprise package is Eritrea, for years isolated internationally but which grew individual private wealth 486%, albeit from a low base of just over $400 in 2000.
Other countries—Liberia, Lesotho, Zimbabwe and both the Congos also grew private wealth by over 200% in that period, but they also started from a weak base. Of note is Seychelles, which achieved a growth in individual fortunes of 70%, from an already strong starting point of more than $34,000 in 2000.
The overall wealth growth on the continent also masks its high inequality. Seychelles has a Gini index of 94.8 or near perfect inequality (the index measures the income distribution of a country’s residents—zero represents perfect equality and 1 (or 100%) represents perfect inequality). Libya, South Africa, Botswana, Nigeria and Egypt also come in among the continent’s 10 most unequal states, while on the other end is Ethiopia, which is not as gung-ho on capitalism, Burundi where poverty is a great equaliser and Tanzania, which still nurses romanticism over socialism.
According to the report, the continent has 126,000 people worth over a million dollars (compared to North America’s 16.6 million) or just 0.4% of the world’s nearly 34 million dollar millionaires. Globally, the richest 0.7% of the world’s population own 45.2% of global wealth.
The continent’s old bugbear of a lack of data also comes to the fore—the researchers say they had to rely on econometric techniques, including doubling back from the more available income distributions, to estimate the level of wealth in the majority of African countries, in the absence of influential household balance sheet or survey data.
The alternative would have been omitting dozens of countries, they say, even if the majority of wealth—174 countries with 97% of two world’s population— had already been accounted for in their model.
Another challenge was that finding information on wealthy individuals is hard enough—rich people the world over are just less likely to be open about their assets and debts, or have ownership scattered across complex arrangements.
Globally, the bank sees private wealth expanding at a weaker pace than forecast previously, as the global economy eases up. To 2020, private wealth is expected to grow 6.6% annually to reach $345 trillion, less than the $369 trillion seen ton 2019 on growth of 7%