Africa is home to some of the fastest growing economies in the world and the stats show how moneyed its populations are; high-net-worth individuals, according to the World Wealth Report, grew by 8.1% in Africa last year, with overall affluence increasing by 10.7% – faster than anywhere else in the world.
“We definitely see this trend continuing far beyond 2018. There is an entrepreneurial spirit sweeping the region. As we see technology permeate all areas of the economy, individuals are using this access to start new businesses and expand beyond city centers and geographies. It’s these entrepreneurs who are creating wealth for themselves and their families,” says Duggal.
The wealth needs of Africa’s diverse, growing middle class population, estimated at 300 million people, are intricate, with most countries being emerging economies and wealth being a relatively new notion for many. The African Lions report defines the continent’s middle class as “not in poverty” and having “disposable income and discretion”. The African middle class, says the report, also has a tertiary education that has been completed or is underway; they have money to fall back on in times of emergencies and access to a computer with email and internet.
“This particular growing middle class is looking for means to save for their first home, pay for their children’s education and set money aside for retirement. In many cases, they are the first ones in their families to attain surplus wealth, so often, there is a need to care for their aging parents or other relatives,” notes Duggal.
Saving early and doing so prudentially is key, however there is a need to dispel the sentiment that a considerable amount of cash is required to start investing. Many banks cater for basic savings plans that allow for a fixed amount to be put away each month. Standard Chartered, for example, offers a vehicle where money can be invested in a diversified portfolio of globally-recognised mutual funds. In South Africa, tax-free savings plans that are comprised of unit trusts and other investment vehicles intended to bolster savings are also gaining popularity, with the likes of Allan Gray and Old Mutual offering similarly structured products.
THERE ARE CHALLENGES WHICH NEED TO BE ADDRESSED BUT I WOULD SAY THERE ARE FAR MORE OPPORTUNITIES THAN CHALLENGES.
The best place for one to start creating wealth, Duggal tells us, is to become financially literate and to understand the options available as an investor. “Of course, every investor is unique and their investing is solely dependent on their individual client risk profile and personal preferences.”
On the trends in Africa, Standard Chartered sees real estate as a favored asset class for many with developers turning to mixed-use projects as a means to boost their bottom lines. There is also a marked increase in technology start-ups with the rise of mobile devises – an IDC report shows that the African smartphone market reached an estimated 95.37 million units in 2016; although feature phones still rank number one, homegrown manufacturers such as Mint Mobile in South Africa are coming to the fore with a ‘Made in Africa’ solution to meet local smartphone and tablet demand. And while asset classes invested in Africa’s natural resources and commodities are popular, a portion of their money can also be found in offshore investments.
From the bank’s perspective, diversification across both asset classes and geographies is vital to reducing overall risk, which is unique to the individual with investment power dependent on their existing risk profile as well as personal preference. But generating wealth substantial enough to be able to invest it is not without its challenges, which includes high inflation, illiquid markets, a lack of information and credible research data however, Duggal is confident the pros outweigh the cons.
“We are optimistic that many African economies will continue to grow in the long run amidst certain shocks here and there. There are challenges which need to be addressed but I would say there are far more opportunities than challenges,” he says.
There is a growing consensus that the millennial generation currently has the greatest buying power – projections put this number at between 80-90 million in America alone and thus, millennials are at the core of the majority of industries today. Wealth management is no exception.
The millennial generation, in particular, has been exposed to significant global, social and economic change in relation to previous generations. Millennials are distinguished by their impatient nature and have different attitudes towards how to manage their assets. It is for this reason that Duggal believes that it is crucial to have a conversation with the bank’s younger private banking and investment clients to explain their investment profiling and look at how they can invest their money, saying that “a millennial investor has no issue with understanding the math behind a solution, yet, we lose them over a traditional paper and pencil explanation. Millennials want to understand how the advisor thinks and analyses through a screen and a dynamic tech solution. It is important to get them to see how the right kind of advisory platform can help them make an informed decision in terms of their investment.”
A key driving factor amongst millennials in their decision making is their need to change the world. According to EY, a millennial is twice as likely to invest their money in a company that is focused on social or environmental issues. This bodes well for sustainable investments, which currently represent 18% of assets under management in wealth and asset management classes.
“They need to know where their money is put, and they want to make sure that this it serves their purposes. This would require vast research and a restructuring of product offerings,” explains Duggal.
HOW DO THEY DO IT?
So what qualifies Standard Chartered to advise its clients on where to put their money?
“We have strong advisory capabilities and a specialist model, which makes us unique in the market. We also leverage on our local market knowledge. We have had a presence for over 100 years in many of the countries we operate in… We are deeply rooted in Africa and can confidently say that we are ‘Here For Good, Here For Africa’. The bank also has a global footprint. It is because of this that we are able to combine global, regional and local knowledge to best serve our customers,” says Duggal.
From within, Duggal believes in the importance of nurturing the bank’s young talent. Standard Chartered has programmes to invest in its talent across all levels of seniority – a leadership programme aimed at its senior managers and heads of business helps them grow within the business. Similar programmes are in place for junior employees with the objective of upskilling them, where they can travel on short-term assignments for up to a year to more established markets to help them to gain a better understanding of how these markets work.
As business as a whole moves into a more global space, it is more important than ever to develop programmes that aim to bring about a diverse range of skills and experience and nurture talent by encouraging mentorship at all levels – the Boyden Talent Management Trends in the Banking Industry 2017-2018 report notes that “The best talent wants to work for innovative companies that offer learning opportunities and financial institutions must win the talent war in order to succeed in their efforts to recruit and retain individuals most suited for their organisation. This flexible and focused workforce will help build an organisation that is digitally savvy and flexible enough to adapt to current and future changes. To this end, having leaders and recruiters with experience in transformational change is essential.”
With the prospects in Africa riper than ever before, we can certainly look forward to seeing Standard Chartered putting their money on the continent, along with their clients.
The fight against COVID-19 – how Africans are embodying the true meaning of Africa month
Since its establishment almost 60 years ago, the African Union has dedicated a day, and a month, to the importance of unity amongst its nations. As we approach Africa day, let us all take a moment to appreciate the legacy created by our forebears and carry their hopes into the future.
By Sello Hatang
If you have ever wondered why you feel such a strong sense of responsibility for the people in your community with the COVID-19 crisis upon us, just know that the spirit of unity was forged in our continent through centuries of struggle against colonisation and enslavement. The qualities of Ubuntu are deeply rooted in Africa and its people. The month of May should be a testament to this.
Africa Month is a celebration of a moment in time where leaders came together to create an organization on the 25th of May in 1963. It was the first-of-its-kind, aimed at uniting the hopes and goals of African leaders in over 30 countries. This organization grew into what we now know as the African Union, and it continues to uphold the charter values: to promote the unity of solidarity of African states and to coordinate effort towards a better life for the people of Africa. The AU was officially launched in July 2002, right here in South Africa, with former president Thabo Mbeki at the head as Chairperson.
18 years after Thabo Mbeki’s Chairship, another South African leader is at the helm, and we able to look back and measure how much has been achieved towards the goals promised to its nations on Africa Day. In 2020 more African children are going to school than ever before. Technological advancement on the continent has seen the growing use of renewable energies and the invention of digital wallet products to narrow the financial access gap for the most underprivileged communities. Many of our economies are growing faster than anywhere else on the planet. We have been commended by the International Monetary Fund for creating an entirely new development path, which has solidified the place of countries like Ethiopia, Rwanda, Ghana, Côte d’Ivoire, Senegal, Benin, Kenya, Uganda, and Burkina Faso in the top ten consistently performing economies worldwide.
None of this would have been achieved without the concerted efforts of togetherness shown by Africa and its leaders even in the most trying times. Today, we are faced with another history-defining moment which will test our ability to rally together. The COVID-19 pandemic is taking a toll on the lives of Africans, and placing significant pressure on health systems and economies. The World Bank estimates economic and social impacts worth tens of billions of dollars in estimated output losses this year.
In light of this and other developing impacts on the continent, the African Union inaugurated a COVID-19 Diagnostic Laboratory at its Pan African Veterinary Vaccine Centre, AU-PANVAC, office in Debre-Zeit, Ethiopia on the 8th of May. The PANVAC laboratories, which were initially designed to test the quality of vaccines, were recently mandated to commence research into developing a new vaccine to fight the deadly pandemic. This is the first African Union specialized laboratory to be given such a mandate. While our leaders quickly work on developing a vaccine, we must remember what we are fighting for.
This makes this year’s Africa Day more important than we could ever imagine. It is now that we need the strongest sense of togetherness to overcome this crisis. The values entrenched by a group of hopeful founders so many years ago, are what will define how well we are able to respond today. It is our devotion to each other as Africans, at the best and worst of times that will strengthen our resolve. As South Africans we aspire to be known for our generosity and practice of Ubuntu. This is the time for us to show these qualities. Not only must we be crisis-management leaders in the time of COVID-19, mounting the technical and logistical challenges, but we must also show leadership in meeting the needs of all who live in our country, especially our most vulnerable populations.
The Nelson Mandela, Kolisi and Imbumba Foundations have had the privilege of experiencing the spirit of Ubuntu as we have been travelling in South Africa providing much needed relief to families across the country. One such example was when we visited a community in Mpumalanga. The community got its resources together to build a house for an old woman whose house was damaged by a storm. This simple act restored her dignity. This bears testimony to what we are as a people.
Our country has become a global example for the fight against COVID-19. We have managed to keep our numbers down, with active social distancing and an aggressive testing response in a way that our European and American counterparts have not. Emergency relief work has seen the best of South Africa, with generosity and resilience to the fore. All that the African Union has called for on Africa Day is what we have seen exemplified every day during the crisis thus far. Of course, all has not been rosy. We have seen the deep divides of inequality play out in disturbing ways. Mistakes have been made. The challenge is huge.
But we have much to celebrate in Africa Month. We have experienced in recent months a quality of national leadership which is reassuring. We see robust inter-sectoral endeavour in face of national disaster. And we have seen demonstrated both the importance and the capacity of government to play a critical transformative role.
I wish all who live in South Africa a happy Africa day. May we regard ourselves as citizens of a continent of over a billion people and understand that our national interests are interwoven with those of the continent as a whole. May we do more than talk the talk about Ubuntu. And may we keep striving for excellence as we confront multiple challenges.
Sello Hatang is the CEO of the Nelson Mandela Foundation, a Brand South Africa partner and long-term stakeholder. Brand South Africa, the official marketing agency mandated with managing the image and reputation of South Africa for global competitiveness.
FOCUS ON Madagascar: Emerging Into The Investment Landscape
The world is looking at us with a different perception. Madagascar has regained its notoriety on the international stage because we have a company project, we have a vision, we have dynamic and determined leadersH.E. Andry Rajoelina, President of Madagascar
Madagascar is the fourth largest island in the world, making it larger than Spain, Thailand, Sweden and Germany, with a population of 26.2 million–more than Australia, the Netherlands and Greece. Thanks to its largely undisturbed ecosystems, Madagascar is also one of only 17 countries that is considered “megadiverse” by Conservation International. Overwhelming with natural beauty, flora and fauna, as well as natural resources, Madagascar is quickly coming onto the scene as an investment paradise.
Madagascar is poised to penetrate the investment landscape even further with the implementation of the Initiative for the Emergence of Madagascar (IEM). His Excellency President Andry Rajoelina has ignited a nationwide plan to improve 13 crucial sectors that will usher Madagascar into even more economic prosperity. Among the plan’s specifics are specialised attention to the island’s main industries, mining, tourism and agriculture, as well as measures to aid in the facilitation of foreign investment and job creation.
With all the unique biodiversity that the island has to offer, it is no surprise that tourism is a major industry in Madagascar. Not only does the country rank number one in Africa with 90% in biodiversity but Madagascar also boasts over 5,000 kilometres of maritime coasts and healthy oceans and registers about 280,000 annual tourists. As this number is steadily increasing, President Rajoelina and his administration have focused more attention to the tourism industry to spur the economy and create jobs. The annual tourism growth is 20% and offers over 640,000 jobs, about 11% of total employment and 13% of overall GDP. Madagascar’s natural beauty is an alluring asset to the economy.
The abundant natural resources in Madagascar make it a haven for many industries, especially the mining sector, offering great investment opportunities. Mining is an important economic sector, where small-scale and artisanal mining alone generates 1.5 million full-time and seasonal jobs for locals in the country, proving that the communities are one of the mining industry’s greatest assets. Conservation of Madagascar’s unique biodiversity is a top priority in the mining sector, as well. As a diversity hotspot, the sector works with local communities to define sustainable ways to make a living and harvest natural resources.
The Initiative for the Emergence of Madagascar also closely focuses on the energy sector as it moves forward. The IEM places new energy policies at the forefront of the administration as they seek an electricity access rate of 70% and further implement renewable energy resources through hydro, solar and wind power. The potential of Madagascar in terms of renewable energy has been detailed: it is immense. The future is headed toward an energy transition through a hybridisation strategy based on the locally and naturally available potential and a financially viable “pay as you go” system to overcome the difficulties in the short and medium-term.
The technology sectors of Madagascar are also expanding at an incredible rate. Madagascar now boasts the second-fastest internet service in Africa, which is a great asset for telecommunications companies such as NextHope. Tsilavo Ranarison, CEO of the company, speaks of Africa’s success and potential in the telecom sector: “The growth of Africa on the technological level is unavoidable. We will not stop innovating, just like any other company, so that we can be the best. We think that in the future we want to be a skill centre for the whole continent. We want to be a skill centre for IT expertise.”
In other sectors such as agriculture, Madagascar is the world leader and largest exporter of vanilla, and the sector holds immense opportunity for the potential investor. The agriculture sector represents 40% of GDP and 80% of jobs in the active population. The country is also leading in cocoa production, where Malagasy cocoa is considered to be of exceptional quality. The fertile landscape contains over 36,000,000 hectares of arable land and the favourable climate creates various agricultural and farming opportunities. In an effort to create jobs, nurture the agriculture industry and guarantee food security, the administration is focusing on a modernisation of the sector that uses innovative techniques while respecting the environment. This transformation of agriculture will only be possible with the professionalisation of the sector.
Not to mention, Madagascar exhibits incredible opportunity in the oil sector, as well, with the development of the Tsimiroro field. Madagascar Oil is dedicated to an expansion project which will contribute 100,000 barrels per day of oil production, increasing revenues by roughly US$2 billion per year. Russell Kelly, CEO of Madagascar Oil, says, “This will have a huge impact on the economy. Tsimiroro is one of the world’s largest oil developments at the current time. Future is looking very good. The resources are there. It’s only about getting them out of the ground and into the market. I see this emerging East Africa economy developing, and it makes sense for us to develop it and get our oil into East Africa, which is a huge market.”
Madagascar is a haven of investment opportunities with ample resources, strong sectors and a predominantly young population where 70% of the population is under the age of 25. Matthieu Mace, CEO of MVola, says, “Madagascar is a young country. Our human resources are good; Malagasy people are very resilient. We speak very good French, and people are very well educated. Under the guidance of President H.E Andry Rajoelina and the Initiative for the Emergence of Madagascar, the country is creating an attractive business environment. Various regulatory reforms and public investments in infrastructure, as well as significant public and private investments in infrastructure, such as roads, ports, airports, telecommunication and energy, have reduced the costs of doing business. Access to many markets and strategically located to facilitate trade agreements and the exportation of goods and services through international business. With the current extension of the port of Toamasina in the East and the construction of Port d’Ehoala in the South, Madagascar provides world-class facilities for transportation of goods. As a peaceful and stable country, Madagascar is welcoming to investors to energise an inclusive and sustainable economic transformation.
VIVO CEO IS A DYNAMIC LEADER FOR THIS INNOVATIVE GLOBAL BRAND
May 2020 — Six months ago the vision for vivo in South Africa was just beginning to roll out. Launched in December 2019, the innovative mobile technology brand entered the market with two easy to handle, high spec, well priced phones, the Y11 and Y91C.
The decision to enter, however, has been a long time coming. It made sense for vivo, the world’s fourth largest cell phone brand with over 300million users globally, to enter the local market, where currently it’s already estimated half the population use smartphones.
“vivo plans to provide South African consumers with a user experience beyond expectations through technology and innovative, trendsetting products,” says Jeff Cao, vivo SA CEO. “Within three years, the company plans to sit in the top tier segment of cell phone brands in SA.”
Cao, a young, dynamic businessman is deeply invested in the vivo brand, having joined the company as an intern when it launched in 2011.
“My career started with vivo,” he says. “I witnessed the changes in the industry and the growth of vivo as a brand.”
Launching in South Africa brings a whole new set of challenges and Cao is motivated by this, saying: “The biggest challenge for me is to learn the culture and the consumer demand of the South African market from scratch. I believe that as long as we adhere to the concept of “More Local and More Global”, all challenges are only a matter of time.
“I believe in changingwhat is changeable, accepting what is mutable, and using wisdom to tell the difference”.
In his time at vivo Cao managed the Thailand launch and ran that office for more than five years, ensuring he has an innate knowledge to ensure the vivo brand becomes more localized and in line with the prefereces of the South African consumer, while maintaining the core values of technology and innovation.
Globally vivo has nine R&D centers around the world, five production bases and a total 80% of staff engaged in R&D work. “This level of commitment to innovation ensures the vivo experience keeps evolving,” explains Cao.
Cao believes in immersing the brand into South African society by fulfilling corporate social responsibilities through the #VIVOCARES initiative, proving that vivo is not just a smartphone brand but also a brand that invests in its community: “vivo came with the dream of building an international first-class brand for South Africans- and we will pursue that dream.
An insatiable demand for 5G on a global scale has seen vivo emerge as the leader in this area, being one of the only companies with a mid-range 5G smartphone on offer. This product is set to launch in South Africa in the second half of 2020.
“We envisage that by 2023 when young people in South Africa think of mobile phones they think of vivo.”
For more information and interview requests please contact [email protected]
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