Lagos, a major commercial hub in Nigeria has lost a total of 100 dollar millionaires in one year, a new report shows.
According to the latest Africa Wealth Report by Henley and Partners, a London investment migration consultancy, although Lagos retained its previous position as Africa’s fourth wealthiest city, its number of resident millionaires dropped to 5,400 in 2022 from 5,500 in 2021. For Nigeria, it lost a total of 200 millionaires to 9,800 from 10,000.
“Most wealthy Nigerians have their business in the country, which means their wealth is in naira,” Temitope Omosuyi, investment strategy manager at Afrinvest Limited, said. “So, as a result of the depreciation of the currency due to complexities in the foreign exchange and the policy around it, their wealth is worse off.”
He said the recent global economic challenges have also affected companies that are not globally competitive, particularly the ones that are not in the technological space.
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“Most wealthy people play in the primitive sector or less innovative sectors, which are not so resilient to the global shocks.”
Two economic recessions in the last seven years have weakened Nigeria’s foreign inflows, resulting in a liquidity challenge in the country’s FX market. Last year, the naira depreciated against the dollar, dropping to as low as 448/$1 from 157/$1 in 2012 at the official market. It depreciated to 740/$1 from N159/$1 at the parallel market.
The FX liquidity challenge is also a major contributing factor to the country’s inflation rate, which hit 21.34 percent in December 2022, the highest in 17 years, from 12 percent in the same period of 2012, according to the National Bureau of Statistics.
The Africa Wealth report provides a comprehensive review of private wealth in Africa, including high-net-worth-individual, luxury, and wealth management trends, as well as expert insights on investment, the investment migration sector, and economic mobility on the continent.
The wealth categories are split into millionaires — individuals with a net worth above one million dollars; centimillionaires — individuals with a net worth above $100 million, and billionaires — individuals with a net worth above one billion dollars.
Apart from Lagos, other top wealthy cities in Africa recorded a decline in their millionaires’ growth within the review period. For Johannesburg (South Africa), it reduced to 14,600 from 16,000, Cairo (Egypt) fell to 6,900 from 7,400 and the number of millionaires in Nairobi, (Kenya) reduced to 4,700 from 5,400.
For Accra (Ghana), it reduced to 2,000 from 2,400 and Luanda (Angola) reduced to 1,800 from 2,000.
“The ‘Big 5’ wealth markets in Africa — South Africa, Egypt, Nigeria, Kenya, and Morocco — together account for 56 percent of Africa’s high-net-worth individuals and over 90 percent of the continent’s billionaires,” the report said.
It, however, said their continued dominance was far from assured, and they could soon be challenged by the likes of Mauritius and Rwanda, which are fast gaining ground. “Namibia’s new residence by investment offering positions it as a future potential rival as well.”
