The Ghanaian capital of Accra is expected to add dollar millionaires at the fastest rate of any African city over the next decade, as a stable political regime and developed banking system help boost financial services, telecommunications and property development.
The number of people with net assets, excluding their primary residence, of more than $1 million will surge by 78% to 4,100 individuals in Accra by 2025, according to an AfrAsia Bank New World Wealth report into African cities published Wednesday.
The number of millionaires in Nairobi, the Kenyan capital, will climb 71%, while those in the Nigerian city of Lagos, Africa’s biggest, will advance 46%.
“Ghana has one of the best developed banking systems in Africa,” Andrew Amoils, an analyst at Johannesburg-based New World, said in an e-mailed response to questions.
“It also has a strong free media and a competitive political structure, unlike most other African countries.” Accra’s expansion of wealthy people will also be spurred by “significant growth” in media and healthcare, he said.
Johannesburg is the African city with the most millionaires in 2015 and is expected to retain that position with a 39% surge to 32,600 over the next decade. The South African city, which has the continent’s largest stock exchange and more entrepreneurs than anywhere else in Africa, has more than twice as many millionaires as Cairo, which is second on the 2015 list at 10,200 individuals.
Only cities with a minimum of 2,000 millionaires were included in the report.
There are about dollar 163,000 millionaires living in Africa as of June 2015, with combined wealth of $670 billion, according to the report.
According to Africa’s biggest lender Standard Bank Group, the number of dollar millionaires in Kenya will grow at more than double the global rate over the next decade. Kenya currently has about 8,700 millionaires out of 18 million globally.
Early last month, the Johannesburg-based research company New World Wealth said Mozambique is the country expected to add dollar millionaires at the fastest rate in Africa over the next decade followed by Ivory Coast and Zambia.
Although their absolute numbers will still be fewer than those of the other countries on the leaderboard, the number of people with net assets, excluding their primary residence, of more than $1 million will surge 120% in Mozambique by 2024 to 2,200, the firm predicted.
The number of millionaires in Ivory Coast will jump 109% to 4,800 while those in Zambia will double, the company forecast.
South Africa currently has 46,800 millionaires, and Egypt 20,200, but growth in the numbers of the rich have been held back by emigration from a stuttering economy in South Africa and instability in Egypt.
Still, South Africa is expected to remain home to most of the continent’s wealthy, with their numbers rising 40% in the next decade to 65,700.
According to the Knight Frank LLP’s Wealth Report 2015, the pace will be even faster, with the number of millionaires in Africa increasing by 54% over the next decade compared with 31% across the rest of the world.
In Ethiopia, the number of ultra-high-net-worth individuals, defined by Knight Frank as those who earn more than $30 million a year, is forecast to double to 2,600 by 2024, according to the report.
The total wealth held by UHNWIs last year on the continent was $200 billion of the $20.8 trillion they hold in total globally.
Art in Fashion exhibition in Germancy, featuring Vlisco fabric in the photo and draped on the picture. (Photo: Flickr/Marcdubach).
African central banks are currently burning through their foreign reserves at a rate faster than any other in the region in a bid to shore up their currencies, but going by recent events in Asia, they are likely to soon throw in the towel and relinquish control of their exchange rates altogether.
Thursday’s move by Kazakhstan, central Asia’s largest crude exporter, to abandon its currency peg has intensified speculation that authorities in Africa will devalue or halt intervening in their foreign-exchange markets.
Commodity-dependent nations such as Zambia and Ghana are struggling to cope with currency declines of more than 20% against the dollar since January, as global commodity prices tank. Bloomberg’s Commodity Index tumbled to its lowest this week since 2002; South Africa’s rand touched 13 to the dollar this week for the first time in 14 years.
Gold is traditionally the investment of refuge when currencies are volatile, but this year, even gold has not been spared the commodity plunge. Still, beyond the doom and gloom, there are still some opportunities to shield your savings from being decimated.
There are some potentially “depreciation-resistant” investments that a smart African investor can put his/ her money in:
Sari
(Photo/Sandra Cohen-Rose/Flickr).
The sari is the most recognisable traditional Indian dress for women. It’s six yards of rectangular cloth, often brightly coloured and elaborately embroidered. The sari is an important part of Indian culture, worn by grown women who have come into their own, writes Shikha Dalmia in Forbes.
Africa has a large Indian diaspora, particularly in the east and south of the continent. Increasing “westernisation” is often feared to signal the demise of traditional attire, but this is rarely the case. Instead, traditional garments actually become more elaborate and expensive, because they are now only worn on special occasions. Some saris are even embroidered with real gold thread and rough diamonds, and can retail for up to $10,000.
According to one online retailer, the margins for selling saris online can go up to 200% compared to 60% in general clothing and apparel.
“Traditional” African fabric
(Photo/Marcdubach/Flickr).
What we loosely refer to as “African fabric” goes by different names around the continent, but it is recognisable by its bright colours, bold patterns, and boxy geometrical designs.
The most successful brand in the market is Vlisco; the Dutch company was acquired by British private equity firm Actis in 2010 for $151 million, and has transitioned from a retailer of fabric to a fully-fledged fashion house, releasing 20 to 30 designs every few months to outpace the Chinese imitations that have encroached the market.
As is the case with saris, “westernisation” makes jeans, trousers, shirts and blouses everyday attire, so African fabric such as Vlisco’s increases in status and desirability – more so the “original” wax print – used to make elaborate outfits for church on Sunday, gifts for relatives, or, simply to hoard.
Vlisco has been retailing in Africa for more than 100 years, and has survived all kinds of turbulence in Africa’s political and economic history. In 2011, Africa generated 95% of Vlisco’s $250 million in net sales that year.
Single malt whisky
Whisky for sale in Edinburgh. (Photo/Petyo Ivanov/Flickr).
If you’re willing to wait a few years for your investment to mature, whiskies are known to fetch extremely high prices at auctions across the globe – particularly rare blends from renowned distilleries.
According to the Investment Grade Scotch index that is compiled by UK-based Whisky Highland, the top 100 whiskies appreciated by an average of 440% in the last six years. By contrast, the Standard & Poor’s 500 stock index increased by 31% in the same period, and the Live-ex Fine Wine 100 Index dropped by 2%.
And it’s not only “old” whiskys that are valuable. The tip for an investor is to buy a limited edition whisky – particularly those that are a run of less than 10,000 bottles. It means that there are very few bottles of that particular blend around. That’s what makes them valuable.
For example, InsidersEdge.co.uk highlights Tun 1401, which was a limited edition release from a distillery called The Balvenie in Scotland just a few years ago. It retailed for £150 per bottle, and can now be sold for anything up to £2,000 a bottle – a 1,233% profit margin.
The most expensive whisky in the world is known as “The Constantine” from Macallan distillery in Scotland, according to CNN Money. In January, Sotheby’s sold a six-litre decanter of Macallan M for $631,000. In May, a 50-year-old bottle of Japanese Yamazaki single malt sold for $33,000.
These transactions are becoming relatively frequent, if not commonplace. Indeed, Whisky Highland expects 30,000 rare, expensive bottles to be sold at auction this year, a 50% increase on the 20,211 that were sold in 2013.
Cement, lorries, earthmovers…
Construction site in Ethiopia. (Photo/Simon Davis/DFID/Flickr).
Africa is one of the world’s fastest urbanising regions. In 2000, one in three Africans lived in a city; by 2030, one in two will do so. It means that the construction sector and industries that support those activities are bound to be in high demand. Cement is one example.
Old Mutual Investment Group’s African Equities Manager Cavan Osborne says Lafarge, South Africa’s PPC and Nigeria’s Dangote are all cement companies that have a strong footprint on the continent and are investment options worth considering.
“Everyone in the world wants to have a house, and if they already have one they want a nicer or a bigger one. That’s what makes cement such an attractive prospect,” said Osborne.
Schools and training colleges
School laptops in Nigeria. (Photo/Carlos Gomez Monroy).
Africa is the only continent in the world that is still growing, while the rest are aging. More than half the world’s growth between now and 2050 will be in Africa. Six in every ten Africans are aged under 24 years—the youngest population of any region globally.
If the right policies are drawn up, this sets the continent up for a big “demographic dividend” windfall, as workers outstrip the number of dependents. But for that to happen, these young workers have to acquire the necessary skills, and this means that post-secondary education will be in high demand.
The gold standard of post-secondary education in Africa is usually a university, conferring an academic degree. But training and technical colleges – though marginalised in Africa – are likely to make a comeback as they are a quick win for African economies striving to take advantage of the estimated 85 million jobs in light manufacturing will be up for grabs in the next few years as wages and manufacturing costs rise in China.
Good old land
View of Kisumu, Kenya’s third largest city, from Riat Hills on the outskirts of the city. (Photo/Victor Ochieng).
If you don’t have enough money for diamond-encrusted saris and 50-year-old whisky, don’t despair. In Africa, you can’t go bad with good old land, particularly if you head out to smaller cities and towns where your initial investment is likely to be lower than in the main capital city.
Skin whitening products for sale at a boutique at the Marche de Marcory in Abidjan. (Pic: AFP)
At just 26, Fatou’s skin is marbled from layer on layer of whitening cream. Some even call her a “salamander” woman after the little reptile with light spots and translucent skin.
But nothing can stop the hairdresser in Côte d’Ivoire’s commercial capital Abidjan from using the skin-lightening cream in her quest for a paler complexion.
“I love light skin,” Fatou said. “I can’t stop.”
Many Ivorian women – as well as more and more men – are using creams with dangerous chemicals for depigmentation, despite government attempts to stop the practice.
In late April, Côte d’Ivoire banned whitening creams because of the negative health effects associated with them, ranging from white spots and acne to cancer.
If applied liberally, the cosmetics can also cause high blood pressure and diabetes, according to Professor Elidje Ekra, a dermatologist at Abidjan’s Treichville university hospital.
The banned products include creams containing mercury, certain steroids, vitamin A, or with hydroquinone levels above two percent.
Hydroquinone is often used in black and white photography and is banned as a skin-lightening ingredient in Europe as it is considered a potential carcinogen.
The dangers don’t seem to deter consumers, though.
Pressure from men
While no official statistics are available, “tchatchos” – or those with lightened skin, often recognisable by their darker knuckles and elbows — are omnipresent in Abidjan.
Businesses continue to sell the whitening products, because they know people will continue to buy them despite the risks.
“We know that our lightening products are dangerous,” an executive for an Ivorian cosmetic company said, adding that a ban would be counterproductive.
“It would push consumers to make their own products, which would be even worse.
“At least we know the composition.”
Some women say that it’s societal pressure – particularly from men – that forces them to lighten their skin.
“It’s men that push women to become lighter,” said Marie-Grace Amani, who has been whitening her skin for the past four years.
Côte d’Ivoire’s Health Minister Raymonde Goudou Coffie agrees.
Ivorian men “love women who shine in the night”, she told AFP. “They bring light and glow in the bedroom.”
Measure still an ’empty shell’
Three months after the new law was introduced – which could entail a fine of 50 000 to 350 000 CFA francs (US$83 to $585) for violators – salons are still advertising their lightening products.
Whitening soaps with names like “Glow and White” and “Body White” leave little doubt as to their intended use.
“After raising awareness, we will move to the next phase of removing products from the market,” Coffie said.
A national evaluation and marketing authorisation committee has been set up to ensure implementation of the measures, but one of the biggest fights could be against cultural beauty standards.
Lightened faces continue to proliferate on billboards in Abidjan, with the featured models flaunting fair skin.
Ekra says that while it’s a great initiative, the text is still an “empty shell”.
“We see women on national television who use the corrosive products,” said Ekra.
“Do those that enforce the measure even respect it?”
If people want to lighten their skin, experts say they’ll always find a way to do it.
“We tell people it’s not good for their health, but if they find something good there… we cannot forbid someone to do what they wish,” said Paul Aristide Kadia, who sells the products.
The practice is not only present in Côte d’Ivoire but widespread elsewhere in Africa, as well as in large parts of Asia.
In nearby Senegal, people mobilised against skin lightening in 2013, but failed to get a ban on products.
Traders work in Gikomba market on July 10 2014 in Nairobi. Locally known as “Mitumba”, second-hand clothes trade has developed from mainly international charitable donations to become a bustling business sector. (Pic: AFP)
When a fire razed East Africa’s biggest second-hand clothes market in Nairobi last week, the deputy president, William Ruto, rushed to the scene to assure traders that the government would do everything to help them to rebuild their destroyed stalls.
In January, east African head of states suggested that Kenya, Uganda and Tanzania should stop importing used clothes in an effort to revive the local textile industry.
Kenya alone imports around 100 000 tonnes of second-hand clothes, shoes and accessories a year – many of which were originally donated to charity shops in the west. According to Oxfam, more than 70% of the clothes donated globally end up in Africa.
“The items [charity] shops fail to sell or which they reject are considered for resale elsewhere,” says Ian Falkingham, who manages an Oxfam-owned outlet in Senegal, Frip Ethique. “Items which are in good condition and suitable for warmer climates are exported to Africa.”
This second-hand clothes chain sees, for example, a Forever 21 dress once worn by a young woman in London find its way into the wardrobe of a university student in Kenya. University of Oxford sweatshirts, I love London T-shirts, hoodies emblazoned with the star spangled banner or the Union Jack – and even the Confederate flag – are common wear for people who have never set foot in the UK or the United States.
But if the ban goes through, Kenyans will be compelled to buy locally produced clothes, giving textile manufacturers a chance to reclaim the market they lost to cheap imports from abroad.
Death of an industry
The decline of Kenya’s textile industry dates back to the early 1980s, when market liberalisation policies spearheaded by the World Bank opened up the local economy to second-hand clothes. Previously, they had been distributed for free among the poor.
But the superior quality and originality of the clothes soon caught the eye of the young urban population, creating a demand that led to the collapse of many of Kenya’s once robust textile companies, among them Rift Valley Textiles (Rivertex) and Kisumu Cotton Mills (Kicomi).
According to local media reports, 500 000 people were employed in the textile industry in the 1980s. Today, that number has fallen by more than 96% to around 20 000.
Banning the importation of used clothes is the government’s latest effort to save an industry that is all but extinguished – and is intended to try to recover some of those lost jobs.
But, paradoxically, a ban could devastate another group of Kenyans who depend on the second-hand clothes trade to make a living.
William Ng’ong’a, who sells used clothes at Gikomba, is aware of the possible ruling that could destroy the business his family has spent the past two decades building. “I am in this business with my parents, I joined them 10 years ago just after finishing university. It’s the only work I know,” he says.
Ng’ong’a says the business imports an average of two containers of clothes a month, for which they pay £16,700 in tax. The containers are offloaded from ships at the port town of Mombasa from where they are transported by road to Gikomba market.
A glorious, chaotic ecosystem
Gikomba is the ground zero of second-hand clothes in Kenya, and it’s from here that merchandise is redistributed to retailers all over the country.
Unapologetic for its mess of noise, dust and a confusing maze of timber, iron sheets and cardboard stalls, clothes hang from the stalls in a wild cacophony of colour and design.
If the clothes are not on hangers, they are bundled into giant heaps which the sellers invite buyers to burrow into to find what they are looking for. Often, the best dresses or blouses are buried at the bottom of the pile.
Buyers and sellers jostle for space in the cramped, often muddy, lanes, where the set price of goods is usually so low that it is ridiculous to bargain for anything cheaper. Even so, the more industrious sellers can be heard shouting themselves hoarse, advertising bargains designed to lure even the most reluctant of buyers.
Gikomba pulses with a spirit borne of genuine camaraderie: conversation and laughter punctuate the exchanges between the buyers and sellers.
It is a glorious, chaotic ecosystem that has survived catastrophe after catastrophe, including a terror attack in May last year that killed 12 people and more fires than the traders can count.
Ng’ong’a says he directly employs 15 people, most of whom are casual labourers, and is afraid that they might all be left without a source of income if the East Africa Community goes ahead with the ban.
“I have a degree in commerce which I have never used, but I might be forced to fall back on it if the ban goes through. I am not particularly excited to have to join the overcrowded job market and become a paper pusher because I really love this job,” he says.
And paid employment of another kind is unlikely to match his current earnings: Ng’ong’a reveals that each container imported at £38 574 brings in a profit of over 90%.
Charles Kuria’s store is one floor above Ng’ong’a’s. It is bigger, and filled floor to ceiling with bales of clothes.
Kuria has had this store for almost two years, but he has been in the businessmuch longer, starting from the bottom as a hawker selling a few pieces on the streets to a big time wholesaler who now only sells in bales to retailers.
He imports his stock directly from the UK, the US, Canada and Belgium.
Although Kuria is reluctant to discuss his profit margins, he admits to living a comfortable life where money has ceased to be a worry. His is a business that has a sizeable staff, with four people employed permanently and up to 20 casuals each time new stock comes in.
He says the real casualties of a ban would be the casual workers who depend on odd jobs to earn a living.
“If these people are deprived of an opportunity to make honest wages, they might turn to crime and contribute to making Nairobi an unsafe city,” says Kuria.
Striking a balance
Former Kenya Association of Manufacturers boss Betty Maina is cognisant of the risk that comes with cutting off the second-hand clothes business without a fall back plan for the hundreds of thousands it employs.
In an article for a local media company, Maina says that it is possible to grow the local textile industry without taking jobs from the people who need them the most.
“Granted, the ‘mitumba’ sector is a source of employment and many people earn their livelihood from the business. Measures that would shut down the flourishing trade at a go would not be very welcome.
“But why not streamline activities in the sector in such a way that the local textile industry is able to reap the benefits of providing quality products at an affordable price and at the same time providing thousands of jobs directly and millions more in downstream activities?” she asks.
The thousands involved in the second hand clothes trade will know their fate once the East Africa leaders meet for the November summit, during which the issue is expected to come up.
In the meantime, it remains to be seen how the government will walk the tightrope of reviving the local textile industry without annihilating Gikomba – and the people that thrive on it.
The interior of the Alara retail store on Victoria Island, Lagos. (Pic: AFP)
Take a sought-after architect, add the king of “new Africa cuisine” and a smattering of famous designers, and you get a concept-store in Lagos that seeks to bring modern African luxury to Nigeria’s ultra-rich.
The chaotic, cosmopolitan metropolis has largely failed to cater for its mega-rich minority despite a big appetite for high-end shopping and eating in a country that houses 11 of Africa’s 50 biggest fortunes, according to Forbes magazine.
So, Reni Folawiyo, a businesswoman married to one of the 11 – multi-millionaire Tunde Folawiyo – decided to create Alara, a four-storey building housing a mix of African fashion, design and art and a selection of work by Western designers, complete with a gourmet restaurant.
Nestled in the heart of Lagos, the store does not attract droves of shoppers in a country where the vast majority still lives on less than $2 a day, but it already has its share of discreet regulars who rarely leave the building empty-handed.
David Adjaye building
The price tags are in dollars and often count several zeroes, aimed at customers who are used to travelling far and wide and shopping abroad.
But while they can afford items in New York and Paris luxury stores, these don’t necessarily always cater for the tastes of African women or their body shape.
“We like colour, we’re dramatic, adornment is our way of expression,” says Folawiyo.
Enter Alara, which she says is geared towards “the flamboyance of the Africans”, from the retro, multi-coloured dresses by Italian-Haitian designer Stella Jean, futuristic glasses by Kenya’s Cyrus Kabiru to the python bags made by Nigeria’s Zashadu.
The store also has a personal shopping service on offer to cater for customers’ varying needs.
“We are specific in terms of our bodies. We don’t necessarily fit into a sort of international mould, in terms of the size and shape,” says Folawiyo.
The building itself – an imposing black and orange-ochre bloc whose square, openwork patterns bring to mind Nigeria’s traditional Adire textile – was designed by David Adjaye.
The store is the first major work on African soil by the British architect of Ghanaian origin, who is also behind Washington’s National Museum of African American History and Culture, among others.
‘A cultural re-awakening’
It’s a first for Nigerian designer Duro Olowu too, who grew up in Lagos but now spends his time between London and New York.
The man who counts US First Lady Michelle Obama among his customers had initially refused to have his creations sold in Lagos, but was so taken by Alara that he allowed the store to showcase them.
“Lagos was seen as a mishmash of badly presented things,” Olowu says of the 20-million-strong heaving city better known for its giant traffic jams and poor infrastructure.
“I wanted my clothes to be stocked somewhere that represented everything I believed in. And Alara is stylish but also cultural.
“This store is also a place where young people can walk in and be inspired,” he added.
Fashion aside, a gourmet restaurant is also due to open soon on the ground floor.
The menu will be drawn up by Senegalese chef Pierre Thiam, one of the biggest names in contemporary African cuisine who owns several restaurants in New York.
Like Olowu, this is his first collaboration in Africa, which he left in 1989 but still remains his main source of inspiration.
On the menu, dishes that blend African street food with Western classics such as millet and peanut lamb risotto, quail grilled with suya spices typical of northern Nigeria, hibiscus tart served with palm leaf, coconut and lime flavoured ice cream.
“I wanted this place to be a cultural reawakening, bringing what we’ve known as Africans into the new world,” says Folawiyo.
