Africa’s billionaires – those with a net worth of $1bn and above – are now estimated to number about sixty. Strangely, their average age is also about the same. A large number of them are university-educated males , with high-level international exposure and relevant business networks outside the continent. Most of them have formed joint ventures and other strategic alliances with foreign nationals and corporations. Between them, their total wealth is estimated to be $146.5bn, which in itself indicates how well poised they are to reshape the face of prosperity on the continent.
What’s Behind Africa’s Billionaires?
Data from the African Wealth Report shows that fewer than a quarter of these billionaires inherited their wealth, while about half built their fortunes by leveraging connections to political power to secure favourable policy environments for building their empires, especially in key sectors like telecommunications, mining, banking and finance, petro-chemicals and, more recently, electricity, utilities and real estate.
Since the turn of the century, these billionaires have further harnessed their political ties to secure lucrative public sector enterprises, prime real estate and land, loans, export licenses and government guarantees. The rapid accumulation of wealth by well-placed individuals in these liberalised sectors over more than a decade led to their entry into the billionaires club.
Many of Africa’s billionaires have now begun the process of diversifying their investments portfolio into emerging sectors, especially agro-industrial businesses, local manufacturing of consumer products, and electricity and utilities – with an emerging trend towards the establishment of world-class private universities and higher education institutions, as well as the partial financing of broadband and fibre-optic cables across the continent in order to enhance their business networks.
The Potential for Change
What is striking in Africa is not the speed of wealth concentration but the degree to which deliberate macro-economic policies in key sectors are allowing the accumulation of private wealth and exploiting the growing demand in Arica’s huge domestic market, especially in the telecommunication and utilities sectors. Business-friendly policies have also allowed the selective export of petrochemical resources by a few local African billionaires who now control the most lucrative side of the continent’s mineral boom.
The growth of billionaires in these sectors of the economy as well as their political weight could now trigger a new wave of change unlike any that has been witnessed to date.
This new episode could be built around the combined experience and wealth of these African billionaires. Their purchasing power has the capacity to stimulate new business opportunities in retail, entertainment, creative fashion and textile, mobile technology, robotics and electronic commerce, with the potential to create more billionaires, without links to the political class.
This appeal might inspire the return of the African diaspora population, encouraged to take advantage of this newfound economic potential, with the potential to change the socio-economic narrative of the continent in the coming decades.
In the absence of such change, , the ever increasing gap between the haves and have-nots will widen. The consequences of this high degree of income and social inequality are well known: poverty and unemployment breed unrest, protest and deep-rooted resentment among large sections of the population experiencing subsistence standards of life.
The Right Conditions?
Yet the number of African billionaires is bound to increase in the coming decades, especially if the continent becomes the low-cost manufacturing hub for itself and other parts of the world, as predicted in McKinsey’s Report on Africa in 2016.
While political corruption may be one of the key factors greasing the wheels for the rise of the super-rich, other economic factors are becoming as important. The key to the growth of the billionaires is the large potential supply of low-paid labor and a growing pool of young and older workers in the labor market.
This potential will continue to be undermined by the very factors that helped to create some of Africa’s billionaires: actions on the part of Governments and less-than-ethical business practices that have helped create the abysmal gap between super-rich billionaires and the millions of impoverished workers, peasants and unemployed. Ethical business must replace the widespread corrupt practices of the past so that the majority of Africans – the disadvantaged – can begin to witness a visible change in their leadership, both in business and government.
This change, allied to the prospect of sustained and meaningful employment, could then begin to reduce the level of social unrest that is evident across the continent (which is arguably behind many endemic cases of militancy, kidnappings, civil war, etc.). Without that change this malaise may well linger for many decades yet. As the saying goes: “when the poor are left with nothing to eat, they eat the rich”.