• Sunday, February 25, 2024
businessday logo

BusinessDay

Demand for investment migration will remain high in Africa – Henley & Partners boss

Stuart Wakeling

Stuart Wakeling, managing partner at Henley & Partners and head of the firm’s London and Nigeria offices, talks about the growing interest in investment migration in Africa and globally as well as the link between passport strength and economic power.

What are the key services that Henley & Partners offer to its clients, especially wealthy individuals and families?

Henley & Partners offers specialist private client advisory services to wealthy families, guiding them on their journeys to acquiring alternative residence and citizenship solutions through investment migration programs. These programmes are an invaluable asset class in an international investor’s portfolio and provide affluent families with global mobility as well as expanded business, education, healthcare, and lifestyle opportunities.

We also run the world’s leading government advisory practice for investment migration, which assists sovereign states in developing and implementing residence and citizenship by investment programmes to attract talent, entrepreneurs, and foreign direct investment to their shores and has raised more than $12 billion in foreign direct investment.

Henley & Partners Real Estate is the world’s leading agency offering premium properties in countries that host residence and citizenship by investment programs, providing an end-to-end service from advising clients on appropriate residence and citizenship by investment programme options to ensuring that they secure the very best property that meets their individual needs.

Furthermore, Henley & Partners Education is a bespoke service that offers expert, impartial advice and support to parents globally who are looking to secure the best education for their children. Part of this unique offering is the Henley Academic Profiling Assessment, which has been created to provide a comprehensive aptitude evaluation of academic skills for children aged between six and sixteen. It is the result of collaboration between experts in assessment, former heads of schools, and educationalists, using the highest quality teacher-written test questions and adaptive technology (Atom Learning). It gives parents a better understanding of their child’s academic profile and can be used to demonstrate their performance to future schools. Our other exclusive services include concierge services.

How does Henley & Partners choose which countries to partner with for residence and citizenship programs?

Henley & Partners is a strategic advisor to sovereign states in the area of investment migration, with a track record of over 25 years and over 15 government mandates. We also conduct feasibility studies into the viability of hosting residence and citizenship by investment programmes, and — as the sector leader — consult with government working groups to consider topics relating to current or future programs on which they require expert advice.

The number of programmes is increasing steadily as governments tap into their potential to boost capital and talent inflows. All 19 sovereign countries in the G20 offer a mechanism to encourage inward investment in exchange for residence rights, and all 27 European Union member states provide non-nationals the right to reside in return for making an investment.

The demand for investment migration products has risen even higher in recent years as more sovereign states are exploring their unique ability to endow themselves with a source of sustainable revenue without increasing debt, which can burden future generations. Investment migration is now an established and fast-growing feature of the global economic landscape, endorsed by large players such as the UK and the USA.

There are many more countries for which it makes sense to start new programmes, and the sector continues to thrive as global demand for alternative residence and citizenship solutions increases as more investors see the advantages of domicile diversification and location optionality.

Focusing on Nigerians and other African family businesses, how does Henley & Partners protect their investments from harsh economic trends, both globally and in their country of residence?

In times of volatility, investment migration is a way to mitigate regional and global risk through domicile diversification, no matter where the client originates from. The investment is in the luxury of optionality, so they and their families will never be limited to one country alone. Alternative residence and citizenship by investment programmes provide a gateway to financial opportunity and a buffer against economic and geopolitical uncertainty.

Supplementary passports and residence permits grant improved travel mobility, but at the same time, they can also unlock access to a larger proportion of the world’s economy, which provides significant financial freedoms in terms of international investment and business opportunities.

With the Africa Wealth Report published by Henley & Partners predicting a 42 percent growth in high-net-worth individuals over the next 10 years, how can African family businesses benefit from residence and citizenship by investment programmes?

Investment migration allows the investor, their family, and their business to be mobile. By investing in additional passports and residence permits, tailored to their specific requirements, African entrepreneurs can open the doors to more of the world’s leading wealth hubs and unlock lucrative business opportunities in other jurisdictions. One of the inherent advantages of this is that it enables them to expand global footprints by promoting their goods and services in new markets that potentially have a stronger consumer buying power than those they can reach with just their own passport in hand.

In a similar vein, they are guaranteed easy access to jurisdictions where they can grow business and personal networks and connect with influential industry leaders, partner with more companies, dip into larger pools of talented experts, and as a result, enhance the viability of their own operations.

Our revelatory Henley Passport Power research and index indicates the percentage of global GDP each passport provides to its holders visa-free. What emerges is an unequivocal link between passport strength and economic power.

The top-ranking Singapore passport gives visa-free access to 193 destinations (85 percent of the world) that collectively account for 93 percent of the global economy (with Singapore’s own GDP contribution being around 0.4 percent). By contrast, at the bottom of the ranking, the Afghanistan passport provides visa-free access to only 12 percent of the world and less than 1 percent of global economic output. Nigerian passport holders have visa-fee access to just 19 percent of the world and about 1.5 percent of global GDP. While we don’t usually associate our passports with financial affairs, the research reveals that a powerful passport is a conduit to economic opportunity and well-being. Far more than a travel document that defines our freedom of movement, a strong passport also provides significant financial freedoms in terms of international investment and business opportunities.

What metrics or criteria do you use to select attractive residence programmes in different countries?

Our cutting-edge industry know-how has enabled us to establish a global presence that is unprecedented in our sector and to formulate highly successful marketing strategies and campaigns for countries, as well as to explore new markets for existing programmes.

For clients who wish to compare programmes, we offer two interactive indexes. The Henley Residence Program Index provides a comprehensive benchmarking of the world’s most important residence programs. Indispensable for all those considering residence by investment, this interactive tool enables investors to select the factors that matter most to them and their families. The Henley Citizenship Program Index 2023 to compare citizenship by investment programmes.

Our Henley Ultimate Portfolio enables clients to explore the ultimate combination of alternative residences and citizenships to unlock global access, mitigate risk, and create opportunity.

In the face of volatile economies and political instability, how do investments made through Henley & Partners remain secure?

The global banking ecosystem is intrinsically tied to politics and economics and hence it is imperative that affluent investors also mitigate their risk exposure to potential banking crises. Business owners born in countries that have limited visa-free access and economic mobility can use citizenship by investment programs as tactical tools to run their transactions through top-tier international banks and ease their business operations. They can trade across borders and invest in ventures in jurisdictions that are more stable and secure, and where their capital can flourish safely. This particular motivation has driven a growing demand for European investment migration offerings in Malta and Portugal among many others, and further afield in respected international financial hubs such as Singapore and the UAE.

Africa has the highest rate of women starting businesses. How can investment migration help women entrepreneurs in Africa expand their businesses and secure their wealth?

As noted by renowned South African businesswomen Louisa Mojela and Nontobeko Ndhlazi, group chairperson and group CFO, respectively, of the Women Investment Portfolio Holdings in their essay in our Africa Wealth Report 2023, “women are more likely than men to be entrepreneurs… Women in Africa also contribute significantly in multiple ways to general wealth creation on the continent, for example, through consumer spending, workforce participation, and business ownership, and women entrepreneurs drive innovation and economic growth.”

Investment migration provides successful African businesswomen with greater financial freedoms, enabling them to conduct their business with greater ease across a range of jurisdictions, mitigating country or regional specific risks and protecting their capital from volatility at home.

For example, South Africans sit somewhere in the middle of the global mobility spectrum with access to 106 destinations visa-free, which seems relatively high at almost 50 percent of the globe, but their passports give them access to only 15 percent of global GDP. Entrepreneurial Nigerians have a passport with access to just 46 destinations visa-free and a far lower Henley Passport Power score of a mere 1.5 percent. Through strategically selected investment migration options, African women investors can effectively clear a pathway to greater security and prosperity by increasing their visa-free access to a greater proportion of the world’s economy. Take Portugal, for instance, through the Portugal Golden Residence Permit Program, clients are eligible to apply for citizenship after five years as a legal resident while keeping other citizenship(s). A Portuguese passport provides access to around 84 percent of the world visa-free as well as over 74 percent of global GDP.

Henley & Partners has seen a significant increase in interest in residence and citizenship by investment. Can you explain why investment migration is becoming increasingly popular in Africa?

Savvy African entrepreneurs and investors recognise that having a diversified portfolio of residences and/or citizenships can add impetus to their wider wealth planning and legacy management strategies to protect against further downside and to create new value and enhance well-being and optionality for the entire family. Visa rules can and do change, as do governments, but citizenship, when legitimately acquired through an established investment migration programme, is for life and can usually be passed down to future generations. African investors who access greater global reach through residence and citizenship programs can build strong transnational networks and relationships with key figures in stable, high-income economies.

How does holding an alternative passport benefit high-net-worth investors in Africa in terms of expanded travel mobility and economic opportunities?

As Dr. Areef Suleman, director of economic research and statistics at the Islamic Development Bank Institute, explained in our Africa Wealth Report 2023, “When it comes to visa-free access to global economic output, the citizens of African countries and other developing nations with sizable and growing private wealth are at a distinct disadvantage. More than just a travel document, our passports can define our financial freedoms regarding access to international investment and business opportunities.” Investment migration is attractive to investors who intend to maximise and stabilize their profits by diversifying their activities across more reliable economies, making this kind of investment a form of insurance against global volatility. Securing greater access to the world’s economic output is vital to investors because it expands the basket of available products.

With Africa’s millionaire population expected to rise significantly, how do you see the investment migration sector continuing to grow in the continent, both on the demand and supply side?

There are already three investment migration programmes in Africa: Egypt, Mauritius, and Namibia, which proves the allure of the continent for foreign direct investment, both from overseas and intracontinental investors who wish to maintain their domiciles in Africa. Of the 52 African-born billionaires globally, 23 still live on African soil.

Mauritius is predicted to be the standout growth market, with 75 percent growth forecast for the next decade. On the other hand, Namibia, with $26 billion in total investable wealth, is expected to be one of Africa’s fastest growing markets going forward, with high-net-worth growth of 60%+ forecast for the next decade (to 2032). Egypt is the second-largest wealth market in Africa. And from a global perspective, South Africa, Nigeria, Egypt, and Algeria were among the top 20 nationalities in terms of enquiries Henley & Partners received last year, which shows that more and more affluent African investors are choosing to invest in alternative residences and citizenships. With this rise in wealth and the benefits they bring, no doubt demand for investment migration solutions will remain at high levels.

Could you provide some insights into the due diligence process that Henley & Partners use when selecting countries for citizenship programmes, and how this process ensures the safety of investments?

Our four-tier, best-in-class due diligence process is regarded as the benchmark for best practice in residence and citizenship by investment programs around the world. Designed by Henley & Partners, it is a stage-gate, iterative, and thorough process, combining standard know your client, enhanced due diligence, and risk assessment tools, and is widely sought by governments to be applied in their investment migration programs. In addition to assisting governments in introducing this state-of-the-art due diligence process, we advise governments seeking to improve their programs’ existing due diligence processes, thereby prioritising the safety of our clients’ investments.

With the African continent experiencing economic challenges, including inflation and political instability, how does Henley & Partners assist wealthy African investors in diversifying their domiciles and portfolios for greater stability?

In an increasingly precarious and unpredictable world, securing the freedom to choose where you and your family want to live, study, conduct business, and even retire is a prime concern. Political uncertainty is driving wealthy African families to explore alternative ways of safeguarding their families and their wealth. Investment migration programmes offer an invaluable source of stability by allowing investors to mitigate risks that threaten their wealth, lifestyles, and legacies, and to create new opportunities for themselves and their families across a range of destinations worldwide.

By acquiring a second citizenship or an alternative residence, or both, global investors can overcome the limitations of being restricted to a single jurisdiction with a single passport by reducing their exposure to risks such as crime, political instability, poor governance, or unexpected policy changes.

Can you elaborate on how the Henley Passport Index, as the most authoritative passport ranking, empowers investors and governments in the context of residence and citizenship by investment programs, and how this ranking can influence investment choices?

The general trend over the history of the 18-year-old Henley Passport Index ranking has been towards greater travel freedom, with the average number of destinations travelers are able to access visa-free nearly doubling from 58 in 2006 to 109 in 2023. The visa-policy space is very dynamic — one that is changing on an almost weekly basis. History has shown that countries such as those in the upper echelons of the Henley Passport Index, with more open economies that encourage foreign investment and international trade, tend to grow faster, are more innovative and productive, and provide higher income and more opportunities to their citizens. Conversely, the reverse holds true. There are developing nations with significant and growing private wealth that have not yet built the geopolitical, diplomatic, and trade relationships that enable their governments to sign visa waivers with other countries, placing their citizens at a disadvantage.

For sovereign states, improving its passport’s power not only benefits its citizens in terms of increased travel and financial freedom, but it also makes the country more attractive to foreign investors seeking residence or citizenship by investment opportunities. International entrepreneurs, businesspeople and affluent families are more likely to invest in countries that can assist in advancing their economic mobility through visa-free access to more stable economies and key markets that represent a higher proportion of the world’s GDP. By appropriately applying the framework of investment migration programmes, nations can build their sovereign equity, attract foreign direct investment, reduce their public debts, and allocate investors’ funds to national or regional social, infrastructure, and development projects that benefit their citizens.