By JOSHUA MASINDE
Saturday, November 23, 2013
In Summary
This trend follows
the growth of Africa’s super-rich, with statistics showing that the
region’s segment of high-net-worth individuals grew by 9.9 per cent in
2012, the second-highest in the world after North America, and above the
global average of 9.2 per cent.
According to the
latest World Wealth Report by the consulting firm Capgemini, the number
of dollar millionaires (people with a net worth over $1 million (about
Sh85 million) in Nairobi is expected to increase 62 per cent to over
8,000 from about 5,000 currently by 2020.
This trend
will be driven by prospects of economic growth following planned heavy
investment in infrastructure and discovery of oil. Such growth is set to
drive up consumption of luxury products like alcohol, apparel,
jewellery, household appliances, among others.
Johannesburg,
South Africa’s commercial capital, now has 23,400 dollar millionaires,
the highest in Africa, according to UK-based New World Wealth, an
information provider on the wealth sector in Africa. Lagos, Nigeria’s
largest city, hosts almost 10,000 such millionaires, with Cape Town
reportedly hosting around 9,000.
According to
Euromonitor International — a London-based market intelligence firm —
the wealthiest class in African countries is set to grow significantly
in the period, with Kenya’s Social Class ‘A’, the rich or high income
class category, projected to grow 28 per cent by 2020.
The
growing list of the wealthy in Kenya and other African countries is
expected to drive the consumption levels of luxury products. Kenya is,
for instance, amongst the fastest growing markets in the world for
whisky, with official exports of Scotch rising by 73 per cent between
2010 and 2011.
Leading distillery companies, like UK
brewer Diageo, have also performed particularly well, with premium
brands like Johnnie Walker recording immense growth.
UNIQUE LUXURY CULTURE
The
development of a unique luxury culture underlies much of the growth of
the wealth class in Kenya and other African countries.
The
culture of shopping overseas amongst the African wealthy class may,
however, be a disincentive for luxury retailers in respective African
countries as many travel to places like New York or European cities such
as London and Paris to shop.
Nigerians are, for
instance, the fourth largest foreign spenders in the UK, using an
average of £500 (Sh69,292) in the high-end shops they frequent.
The
main reason that could be holding back such brands from attracting the
growing class of the wealthy on the continent is the region’s
underdeveloped real estate infrastructure, due to the absence of
noticeably high-end shopping suburbs and shopping malls.
According
to a recent Mobile Life survey, increased growth in wealth has turned
Kenya into an image-conscious market, with the explosion in social media
usage enabling people to talk about brands like never before.
By
2020, three out of four people will have an average age of 20. The
survey shows Africa’s youthful demographics augur well for the future
luxury market.
Around 65 per cent of Africa’s population is under 35 years, according to the Youth Division of the African Union Commission.
The
survey indicates that four in 10 mobile users are using social media to
ask for product advice and recommendations while 25 per cent frequently
post links to items they want or plan to buy
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