Welcome to the club of the super rich, but before you take your seat at the high table, kindly take a few moments to ask yourself a few questions.
For instance, who is a high-net-worth individual and how much money must one have to qualify as a member of this exclusive club?
How is such wealth calculated for one to qualify? Does a person’s primary residence count when one’s calculating one’s wealth?
According to the Wealth in Kenya Report, a high-net-worth individual is a person with net assets of $1 million or more. That is the equivalent of Sh86.2 million at current exchange rates. To calculate how much one is worth, the report only adds up one’s financial holdings, business interests and other tangible assets.
A person’s primary residence is excluded when calculating one’s networth; it is the last thing you are likely to sell, anyway.
If you belong to this class, please take a seat in the back row because these are not the richest men and women. A notch above them are the lower-tier millionaires. They are worth between $1 million and $5 million, which is much less compared to the wealth of the middle-tier millionaires.
Closer to the front row, but not quiet there yet, are the affluent millionaires. These are the men and women with net assets of between Sh2.6 billion ($30 million) and Sh8.6 billion ($100 million). If you own assets worth up to Sh8.6 billion, you fall in this category. You can take one of the seats in the middle rows.
The front row is exclusively for the dollar billionaires. To belong to this club, you must have a net worth of Sh86.2 billion ($1 billion) or more, excluding primary residences.
WAVE TO THE GUYS
You can wave to the guys standing at the far end as they wait to be allocated seats. They are the mass affluent. See how they smile.
Their networth is between $100,000 (Sh8.6 million) and $1 million (Sh86 million). They will get there, by the by. Give them time. This way, Sir. What will you have?
Just in case you are wondering, in 2013, Kenya had one dollar billionaire, 16 centi-millionaires and 88 multi-millionaires.
It may please you to know that in a population of over 40 million, there were only 8,200 high networth individuals last year. Never mind what JM Kariuki once talked about a country of 10 millionaires and 10 million poor.
In Africa, Kenya was an impressive number four. Only South Africa, Egypt and Nigeria have more high networth individuals.
It may also please you immensely to realise that the number of high-net-worth individuals grew faster in Kenya than in most other countries across the globe. In other words, Kenya is outrunning the rest of the world in churning out wealthy individuals.
he global average declined by 0.3 per cent. Kenya’s number grew by 24 per cent. Yes, Sir, you heard that right. You have to watch out, by 2017, the number of people like you in Kenya will be 10,600—representing a 28 per cent growth.
Oh, and the 8,200 control 62 per cent of the wealth in private hands, an equivalent of $31 billion. That means that the rest of the population controls only 38 per cent or, eh, $29 billion. What was that Mr Chris Kirubi once said about some people being spectators in the economy?
In case you are wondering, the real estate sector was the largest class of assets for high-net-worth individuals at 28 per cent. It was followed by equities at 24 per cent, business interests at 18 per cent. Cash (12 per cent), fixed incomes (11 per cent) and other alternatives (8.8 per cent) completed the list of asset classes.
So, yes, you can buy that 100 acres at Isinya at Sh2 million per acre. But going forward, according to the New World Wealth report, equities are expected to be the best performing asset class, so do not offload your stocks just yet.
One last thing, Sir. Please tell the young men and women applying for loans from the Uwezo Fund that the average age of high networth individuals in Kenya is 56. Make them understand that they still have time. Two decades to be precise.
THERE IS TIME
Actually, the majority the really wealthy, are aged between 51 and 60. There is time. But to increase their chances of being listed in future, encourage them to move from their rural counties. Of all the people in that rich list, 6,200 are in Nairobi, 900 are in Mombasa and 200 in Kisumu. Those are the cities where one can find the face of wealth.
One more thing; majority of the super-rich got their wealth from construction and real estate. That is where the money is. It was the primary source of wealth for 19 per cent of the people in the rich list, followed by financial services (18 per cent) and manufacturing (11 per cent).
Another seven per cent got their wealth from the hotel and leisure industry. The rest had diversified sources.
Going forward, watch the people who will be investing in the oil industry. Seriously. And telecomms. Tell those who are really keen to join the rich list to also put their money in healthcare, media, insurance and the transport sector.