According to a recent update by the Africa Wealth Report, the continent’s wealth creation has declined by 7% over the last decade. This decline follows weak returns in the largest markets in Africa namely, South Africa, Egypt and Nigeria. The resultant effect is that the collection economy of Africa is impacted. Despite the vast amount of natural resources in most African countries in addition to the massive population of working adults, the rate of wealth creation and development has not grown proportionately. Nevertheless, the Africa Wealth Report expresses optimism in the next decade, projecting a rise in private wealth by as much as 38% to $3 trillion come 2031, led mostly by the island nation of Mauritius. On the midweek edition of Business Edge, Lekan Onabanjo speaks with Dr XN Iraki of the University of Nairobi about the decline witnessed in Africa’s wealth creation and opportunities for growth.
Professor Iraki believes that the pressure on Africa’s economy started even before the outbreak of COVID19 which created a global lockdown and business disruptions. “Before COVID, there has been a wave of political instabilities,” he said. “The political instabilities, in my opinion, have chased away would-be investors and a lot of wealth is going away instead of coming in.”
Unsurprisingly, the weak returns in the three largest markets in Africa have contributed directly to the loss of wealth in the continent. Activities in the three countries contribute 50% of Africa’s total wealth. However, Mauritius’ growth in wealth over the last ten years stands at 80%, mainly because of its “resident by investment” programme which brings in investors from all over the world. The only other country that has a similar scheme is Egypt.
Watch Business Edge in full above.