World Economy

Africa Wealth Gap Grows as Poverty Deepens

Africa Wealth Gap Grows as Poverty DeepensAfrica Wealth Gap Grows as Poverty Deepens

Africa is home to some 160,000 people with personal fortunes worth in excess of $1m, a twofold increase in the number of wealthy individuals since the turn of the century that highlights the problem of deepening inequality as some of the world’s poorest nations register strong economic growth.

The combined wealth of African US dollar millionaires is totaled at $660 billion at the end of 2014, according to a report by New World Wealth, World Bulletin reported.

At the same time, the number of people in Africa living on less than $1.25 a day increased from 411.3 million in 2010 to 415.8 millon in 2011, World Bank data shows.

By 2024, New World Wealth expects number of millionaires to rise 45%, to approximately 234,000 people in comparison to today's 160,000.

During the past 14 years, the number of high-net-worth individuals in Africa has grown by 145%. The rate for the Middle East over the same period was 136%, while in Latin America it was 278%. The global average was 73%.

Per-Capita Wealth

The global average wealth per capita is $27,600, with top-ranking countries such as Switzerland and Australia boasting per-capita wealth of more than $200,000.

In Africa, Mauritius has the wealthiest individuals, with average per-capita wealth of $21,470, according to the report.

Whereas people of Democratic Republic of the Congo are almost ten-times poorer than Mauritians–$230 a person, which makes DRC the poorest country by average per-capita wealth on the continent.

“Over the last year, there’s been very strong growth in places like Mozambique, Zambia and Tanzania. Going forward, we expect Mozambique to continue to be the fastest growing market for high-net-worth individuals in percentage growth terms. So I’d say that Mozambique stands out in this report,” said Andrew Amoils, head of research at New World Wealth.

Amoils added that African economies benefit from rich citizens: “A lot of high-net-worth individuals keep their wealth locally, so normally, for most African countries, it’s between 50% and 70% local wealth. There are lots of advantages because a lot of these individuals are business owners and a lot of them start businesses even if they are in corporate environments.”

Dearden said: “From Nigeria to Mozambique you can see poverty rising at the same time as rapid growth. What does this mean? The growth is being gobbled up by the super-rich and transnational capital. And that means ordinary people, by comparison, find their lives even more impoverished.

“It could be different: with decent government spending on public services, progressive taxation, regulation to control capital and regional trading relationships to wean countries off dependency on western markets.”