A new report indicates that South Africa’s political problems have not yet smashed the wealth of ordinary citizens as has been the case in Zimbabwe – once the breadbasket of Africa and now home to the continent’s poorest people. Mauritians, meanwhile, have benefited from the island’s low taxation, with its citizens the wealthiest individuals in Africa. The report’s authors underscore the long-term economic misery that accompanies policies like land expropriation, with property ownership rights a key to facilitating wealth creation. Other factors that contributed to the demise of Zimbabwe include vote-rigging and the elimination of an independent media – and emigration. – Jackie Cameron
By Carin Smith
Cape Town – South Africans are the second wealthiest people in Africa, according to a new report by AfrAsia Bank and New World Wealth, which reviewed the wealthiest and poorest countries on the continent.
The average wealth of a person living in SA (wealth per capita) was $11 300 (about R149 000) in 2016, up from $10 800 (about R142 500) in 2015.
Mauritians were found to be the wealthiest individuals in Africa, with $25 700 (about R339 000) in wealth per person. The report showed that Zimbabweans, with just $200 (about R2 600) per person, were the poorest people in Africa.
Namibians were the third wealthiest people with average individual wealth of $10 800 (about R142 500), followed by people in Botswana at $6 700 (about R88 400).
For the purpose of the report, “wealth” refers to the net assets of a person and includes all their assets – property, cash, equity and business interests – less any liabilities.
According to the researchers, they preferred to use wealth per capita rather than gross domestic product (GDP) per capita. This is because GDP counts certain items more than once and disregards income levels in a country.
“GDP ignores the efficiency of the local banking sector and the local stock market at retaining wealth in a country,” according to the report.
“In certain countries, a large portion of GDP flows to the government and, therefore, has little impact on private wealth creation – for example in Zimbabwe.”
The average wealth of individuals in North African countries like Egypt ($3 700), Algeria ($3 300) and Morocco ($3 300) ranked high on the list despite recent instability.
Who has the most millionaires?
With a total of 40 400, South Africa was also home to the most high net worth individuals (HNWIs). These were defined as individuals with wealth of $1m (about R13.2m) or more. SA also had the most millionaires, namely 2 130. According to the report, these were defined as individuals with wealth of $10m (about R132m) or more.
Egypt came in second place, followed by Nigeria, Kenya, Angola and Morocco. The Democratic Republic of Congo had the least HNWIs and millionaires.
The report also lists countries according to the “total wealth” of those living in each country – again, including all their assets less any liabilities. Government funds are excluded.
Here South Africa came out tops with $610bn, followed by Egypt ($313bn), Nigeria ($270bn), Algeria ($119bn), Morocco ($109bn) and Kenya ($95bn).
Zimbabwe was once again in last place with a total wealth of its people of $3bn.
The case of Zimbabwe
According to the report, Zimbabwe was one of the wealthiest countries in sub-Saharan Africa in 2000 on a wealth per capita basis. However, the researchers found that certain factors contributed to the poor performance of Zimbabwe’s people on an average wealth and total wealth ranking.
The erosion of ownership rights was found to be one such factor.
“Ownership rights are key to facilitating wealth creation. In Zimbabwe, business owners are unsure as to whether their businesses or property will still belong to them a year down the line, which creates a situation where no one will take the chance of investing in the country,” according to the report.
“Ongoing political intimidation” and the alleged fixing of elections in 2002, 2005, 2008 and 2013 were other factors.
The report also listed the banning of the independent media in the early 2000s as a factor which impacted wealth, as it created a situation where it was impossible for investors to tell what was happening there.
The report pointed out that about 20% of Zimbabweans have fled the country since 2000, taking their remaining wealth with them. This has also led to a brain drain. – Fin24