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Private wealth management is an investment advisory practice incorporating financial planning, portfolio management, and other aggregated financial services for individuals instead of corporations, trusts, funds, or other institutional investors. From the client’s perspective, private wealth management is the practice of solving or enhancing their financial situation and achieving short-, medium-, and long-term financial goals with the help of a financial adviser. From the financial adviser’s perspective, private wealth management is the practice of delivering a full range of financial products and services to clients so that those clients can achieve specific financial goals.
Wealth and wealth services are where Africa needs to catch up to global trends. Many banks and wealth management firms have satellite offices in the major economies to cater to the UHNW individuals, but is it enough? The exit of Credit Suisse in 2022 raised eyebrows around the market’s viability and the global financial legislature, making it stringent for some emerging nations’ wealthy citizens to manage their money. Switzerland has always been the financial haven for global wealth; however, with the escalating worldwide depression and noose on money, the question becomes where and how will Africa’s wealthy manage their wealth.
It’s no doubt that the future is African. This has been said often; however, global economies of scale are skewed towards the African giant. Lithium and other significant minerals that dominate global growth are firmly housed on the great continent, and governments are bolting down on refusing the export of unrefined minerals. On March 2, 2017, Tanzania banned all unprocessed gold and copper concentrates exports. In December 2022, Zimbabwe banned the export of unprocessed lithium; southern Africa holds some of the world’s largest reserves of hard rock lithium, a vital mineral in producing clean energy technologies.
Regarding the global age gap, Africa is predicted 2050 to have the youngest population on Earth. This means a young workforce on a vast continent. So, slowly but surely, manufacturing will have to move to where the force is.
Africa has the only vast tracts of arable land. Therefore, food production will be focused on the continent. I am again speaking to the wealth generation.
With banks playing ping pong on the continent, who will build trust with this upcoming middle-class, high-net-worth class, and ultra-high-net-worth demographic?
African banks are sleeping on the ball, believing they will continue to hold the superiority over their clients and collaborators. Most only offering essential “private wealth” services. Others have taken a step forward and catered to their UHNW by setting up offshore satellites in global centers. Barclays remains committed to the continent, as does Standard Bank, and Nedbank and FNB also keep their customers in mind.
Education of the African HNW client is still being outsourced. Banks in the more significant part of the continent still need to see the power of educating their human resources on wealth management. FNB, amongst others, is following global trends by setting up a philanthropic arm that works with its HNW and UHNW as they set up their foundations and admit them. In addition, international banks, accounting firms, and financial services offer Family Business services that cover family governance, succession planning, and next-generation development for their clients. Just a glimpse on LinkedIn shows that the hiring of this skill set is on the up and up, and with it comes the movement of Africa’s UHNW and HNW funds to institutions that are offering more than just the essential banking services and golf days and endless cocktails to pander to the institution’s egos.
Seeing the rise in wealth on the continent, organizations such as AFF are leading the charge and collaborating with institutions by training staff and offering services and advisors who can help financial institutions cater to this rising demographic. Aside from financial offerings provided by institutions, there is a need for more data on the African NHW and UHNW individuals and their organizations outside the various lists of the wealthy. Actual data will help decision-makers. Organizations like KPMG are adding value to this landscape through annual research. The Nelson Mandela University is admirably the only university in the continent with a Family Business Unit. In collaboration with AFF, they created the African Family Business Research Conference, an annual event aimed at stimulating research past and present for African Family Businesses. With more information, the government and private sector decision-makers must make the boots on the ground (the actual family businesses) feel safe enough to share their data to allow support and services to help grow their businesses, industries, and economies.
Will we see services start to become demonstrative of these upwardly mobile elites? Or will Africa lose them as they fly the coup to open branches of their successful businesses in more cosmopolitan cities and take their funds with them? How can Africa be made to look and be the giant it is? How can governments be encouraged to tap into internal growth? The “black-led” governments seem to fear sanctions, whereby the “colonial governments” suffered from more stringent sanctions and were shunned by the West but found internal solutions. For example, the Rhodesian government pushed manufacturing to the point of local investors creating a bus that was exported, among other things. Solutions can only be found if we look within as much aid is more impactful from local philanthropy because local families understand the issues their fellow citizens face. International aid agencies are more successful when they partner with local philanthropists and organizations addressing people’s needs.
Mauritius is currently positioned as the Singapore of the future, where wealth managers are opening offices and setting up the base for businesses and the wealthy demographic to set up as a hub. With over 54 countries on the continent and the African Continental Free trade agreement and SMART Africa gaining momentum slowly but surely, is there a possibility that a country on the continent may take up the mantle and position itself as a hub to capture investment funds and become a financial haven? Will the politics of things allow it? More countries are moving towards a pseudo-democracy and cleaning up their act. Zambia, which used to be the laughing stock because of its unmitigated inflation at some point, has now led the charge, and its currency has overtaken the South African Rand in strength on the global stage. Without being overly critical, Germany was once in the same position as countries like Zimbabwe, Nigeria, Zambia et al., with citizens going to buy a loaf of bread with wheelbarrows because of inflation. However, time and experience have made Germany one of the top global economic powerhouses. These are the stories and examples that Africa needs to hear and look at for inspiration. Greatness does not come overnight, and school fees must be paid; however, we can learn from fees paid by other nations and cut the time in half.
With so many changes happening, what do 2023 and the future bring for Africa? First, the continent suffered a lot less from the COVID-19 setback that was felt globally and continues to grow in silence.
Tsitsi Mutendi is a co-founder of African Family Firms, an organization that aims to facilitate the continuity of African family businesses across generations. She is also the lead consultant at Nhaka Legacy Planning and the host of the Enterprising Families Podcast.
