Devaluation woes sweep 1,600 Nigerians off dollar millionaire list

The number of dollar millionaires in Nigeria dropped by 16.3 percent last year, a new report has shown, with analysts attributing the decline in private wealth to naira devaluation and other economic headwinds.

The 2024 Africa Wealth Report published by Henley and Partners, a London investment migration consultancy, revealed that the number of millionaires in Africa’s most populous economy declined to 8,200 from 9,800 in 2022.

Read also: We now buy dollars at N980, sell at N1020 – BDCs president

Out of the top 10 wealthiest countries in the continent, Nigeria saw the largest decline in millionaires, followed by Kenya and Egypt with 500 each, and South Africa, 400.

The countries that recorded an increase in private wealth are Morocco, which had 1,000 millionaires in 2023; Mauritius, 200; Ghana, 100; and Namibia, 200. The number of millionaires was unchanged in Algeria and Ethiopia.

Further analysis shows that within a decade, Africa’s biggest economy experienced a decline in millionaire growth of 45 percent (6,800 individuals) from 15,000 in 2013 to 8,200 in 2023.

“Approximately 2,800 left Nigeria with most of them moving to the United Arab Emirates, United Kingdom, USA and Europe. So, the remaining 4,000 would have dropped out of high-net-worth individuals’ status due to several possible reasons including depreciating currency, business closures, etc.,” Andrew Amoils, head of research at New World Wealth, said in an email to BusinessDay.

He added that there has been a big decline in Nigerian currency versus the US dollar and that the exchange rate went from around N160/$ at the end of 2013 to N890/$ at the end of 2023.

“Currency depreciation and underperforming stock markets have chipped away at Africa’s wealth compared to global benchmarks,” Dominic Volek, group head of private clients at Henley & Partners, said in a statement.

He said the South African rand fell 43 percent against the US dollar from 2013–2023, and even though the JSE All Share Index, which makes up well over half of Africa’s listed company holdings, rose in local currency terms, “it was down five percent in US dollar terms over that period.”

“Currencies in most other African countries also performed poorly compared to the dollar over the past 10 years, with dramatic depreciations of over 75 percent recorded in Nigeria, Egypt, Angola, and Zambia,” he added.

The liberalisation of the foreign exchange regime in Nigeria as part of measures to revive the economy led to a large devaluation of the naira.

The Central Bank of Nigeria in June merged all segments of the FX market into the Investors and Exporters window, and reintroduced the willing buyer, willing seller model.

The official exchange rate fell from N463.38/$ to N 1,136.0/$ as of April 15, 2024. At the parallel market, the naira is being traded at around 1,120/$ as against 762/$ before the FX reform.

Read also: 6,800 Nigerians lost dollar millionaire status in a decade

The high cost of sourcing foreign exchange is also a major contributing factor to the country’s inflation rate, which hit 33.20 percent in March, the highest on record, from 22.04 percent in the same period of last year, according to the National Bureau of Statistics.

Nigeria’s economy also grew at the slowest pace in three years as its Gross Domestic Product growth fell to 2.74 percent last year from 3.10 percent in 2022.

“Slow growth, exchange rate problem and increase in wealth migration have affected people’s wealth in the country,” Damilare Asimiyu, macroeconomic strategist and head of investment research at Afrinvest West Africa Limited, said.

The Henley and Partners report in its ninth edition 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.

“There are currently 135,200 high-net-worth individuals with liquid investable wealth of $1 million or more living in Africa, along with 342 centi-millionaires worth $100 million or more-, and 21-dollar billionaires,” authors of the report said.

They added that Africa’s ‘Big 5’ wealth markets — South Africa, Egypt, Nigeria, Kenya, and Morocco — together account for 56 percent of the continent’s millionaires and over 90 percent of its billionaires.

According to Amoils of New World Wealth, African nations are also losing large numbers of high-net-worth individuals to migration which is eroding the continent’s wealth.

“Our latest figures show that approximately 18,700 high-net-worth individuals have left Africa over the past decade. There are currently 54 African-born billionaires in the world, including one of the world’s richest, Elon Musk, but only 21 of them still live on the continent. Most of these individuals have relocated to the United Kingdom, the US, Australia, and the United Arab Emirates,” he said.

Amoils added that significant numbers have also moved to France, Switzerland, Monaco, Portugal, Canada, New Zealand, and Israel.

The wealth report also highlighted that despite a tough past decade which saw a 20 percent decline in its millionaire population, South Africa remains home to over twice as many high-net-worth individuals as any other African country, with 37,400 millionaires, 102 centi-millionaires, and five billionaires, followed by Egypt with 15,600 millionaires, 52 centi-millionaires, and seven billionaires.

Read also: Naira sustains gains at official market despite drop in dollar supply

Nigeria sits in third place with 8,200 millionaires, 23 centi-millionaires, and three billionaires. Kenya had 7,200 millionaires; Morocco, 6,800; Mauritius, 5,100; Algeria, 2,800; Ethiopia, 2,700; Ghana, 2,700; and Namibia, 2,300, all making it into the top 10 wealthiest countries in Africa.

The report projects that over the next decade, Mauritius, Namibia, Morocco, Zambia, Kenya, Uganda, and Rwanda are all expected to experience more than 80 percent millionaire growth.

It said Mauritius, with its stable governance and favorable tax regime, is projected to experience a remarkable 95 percent growth rate, positioning it as one of the world’s fastest-growing wealth markets.

“Namibia, too, is poised for impressive high-net-worth growth, which is forecast to exceed 85 percent by 2033. Both Mauritius and Namibia offer investment migration pathways to attract global investors.”