Aka Ekene, PBA Journalism MenteeHome to some of the world’s fastest-growing markets like Rwanda, Mauritius and Seychelles which have seen wealth grow to some 72%, 69% and 54% respectively over the last decade, Africa still has many of its dollar millionaires leaving for greener pastures, according to a new report.
Long known for its vast natural resources, diverse cultures, and untapped economic potential, the continent has over 138,000 dollar millionaires. But the latest New World Wealth report by Henley & Partners on March 28, 2023, indicates that the numbers have been unsteady owing largely to some factors chief of which is migration.
The Report notes that the number of tycoons in African countries varies from year to year with about 18,500 high net worth individuals (HNWIs) leaving Africa over the last 10 years in search of greener pastures.
Of this number, 1,200 have moved between African countries in the same period, most of them relocating mainly to Mauritius and South Africa.
The report however noted that “Billionaires rarely move for tax reasons. They usually relocate to expand their businesses or due to safety concerns.”
Mauritius, for instance, is projected to experience the highest private sector growth rate at 75% over the next 10 years and will, by that stretch, become the fastest-growing country globally in millionaire growth percentage terms after Vietnam, India, and New Zealand.
Outside Africa, the HNWIs are leaving mainly to the UK, the USA and the UAE, just a significant number of them have also moved to Australia, Canada, France, Israel, Monaco, New Zealand, Portugal and Switzerland.
Reasons Behind The Exodus Of African Billionaires
Data from the new report also underlined the movement of Africa’s dollar millionaires by showing that, of the 50 billionaires born in Africa, only 23 still live on the continent – an indication that African business tycoons are actually exporting businesses outside their home countries.
Regulatory Environment and Investment Opportunities
One of the significant factors behind the exodus of African billionaires is the lack of investment opportunities and the unstable regulatory environment in some African countries. Policies and regulations in some countries are not conducive to business growth, making it difficult for businesses to thrive. Many African billionaires have found it easier to do business in developed countries with stable regulatory environments and more investment opportunities. In such countries, they can access capital markets, research and development facilities, and other resources that enable them to expand their businesses.
Inadequate Infrastructure
Another critical factor that has contributed to the exodus of African billionaires is the lack of adequate infrastructure, including transportation, energy, and communication. The inadequate infrastructure makes it challenging to grow businesses in Africa. The poor transportation infrastructure, for instance, makes it difficult to transport goods and raw materials, leading to higher costs of production. The unreliable energy supply also makes it difficult to run businesses efficiently, as they have to rely on expensive and unreliable generators. Additionally, the poor communication infrastructure makes it difficult for businesses to connect with their customers and suppliers.
High Tax Rates
High tax rates in some African countries have also been cited as a reason for the exodus of African dollar millionaires. The high tax rates make it difficult for businesses to operate profitably, leading to lower investment levels. In contrast, developed countries have lower tax rates, making them attractive to investors.
Conclusion
Lack of investment opportunities, unstable regulatory environment, inadequate infrastructure, and high tax rates are major factors pushing African dollar millionaires out of the continent; and addressing these issues requires a concerted effort from policymakers, investors, and other stakeholders to create a conducive environment for business growth and economic development.
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