The 2020s have heralded an era of instability across the globe. Since the decade began, two Cs have consistently driven interest in residence and citizenship by investment: Covid and climate change. In Africa, a third C — conflict — has also been a push factor for some time.
Yet in 2022, conflict took center-stage as a global driver. The shockwaves that followed Russia’s invasion of Ukraine have reverberated across the world, creating even greater levels of uncertainty and volatility for individuals, families, businesses, investors and gov’ts alike.
What is the next global crisis to affect the continent?
While the pandemic appears to be in retreat, it remains an unpredictable adversary. The Intergovernmental Panel on Climate Change is very clear in its severe warnings on impending climate breakdown, recently confirming that the world will warm by 3.2° C this century.
Our own research in the Henley Global Mobility Report 2022 Q2 revealed that many sub-Saharan countries are doubly disadvantaged, being among the most vulnerable to climate change as well as having poor global mobility, with their passports ranking consistently low on the Henley Passport Index. Regional conflict, meanwhile, is ever present.
Political instability has seen the continent plagued by multiple coups in the past year alone. These events and circumstances impact the lives of people in multiple ways, including their mobility and economic activity. In Africa, we see this impact reflected in the decline in total wealth on the continent over the past decade, as this report reveals.
But there is optimism for the future, as New World Wealth predicts that the total private wealth held in Africa will rise by 38% over the next 10 years, to reach US$3 trillion by 2031.
One thing is very clear in our new Age of Uncertainty — gov’ts and investors alike must focus on building resilience. Preparing for the next shock is imperative, and one proven means of doing so is via investment migration, whereby investors can secure an alternative residence or second citizenship in a different jurisdiction in return for investing in a host country.
Is citizenship by investment a growing trend in Africa?
Last year was a record-breaking year all around for Henley & Partners, in which we assisted clients representing 79 different nationalities, including citizens of 15 African countries ranging from Algeria to South Africa, and from Liberia to Ethiopia. The investment migration industry has been growing steadily for over 25 years. This positive trend continues in 2022.
Henley & Partners has seen a spike in interest in residence and citizenship by investment programs, with a healthy 55% increase in enquiries in Q1 2022 compared to Q4 2021. Africa is no exception and continues its trajectory as a growth market for investment migration.
We saw an overall increase of 18% in enquiries from Africans seeking alternative citizenship last year, and by the end of Q1 2022, we had received over 29% of total 2021 enquiries.
We predict that this trend will continue throughout the year as investors concentrate on diversifying their domiciles at the same time as their investment portfolios to secure greater global access and optionality as a hedge against unrelenting market and political volatility.
South Africa, Nigeria and Egypt were among the top 15 nationalities in terms of the enquiries Henley & Partners received last year. South Africa was in 5th place globally, with growth of 38%, Nigeria in 7th place with growth of 15% and Egypt in 14th place with growth of 25%.
How did African countries rate on the global scene?
Looking at the New World Wealth country wealth rankings in this report, it is no coincidence that the top four of the ‘Big 5’ wealth markets in Africa were also the top four investment migration markets in terms of the applications Henley & Partners received last year.
The African countries that occupied the top three places were South Africa, Nigeria, and Egypt. Algeria and Morocco were joint-4th, and Ghana took 5th place in terms of the number of applications we received for investment migration programs. Residence and citizenship by investment programs are widely accepted wealth management and legacy planning tools.
The range of programs is steadily increasing as governments tap into their capital- and talent-boosting potential. Nineteen of the G20 nations offer some form of mechanism to encourage inward investment in exchange for residence rights. The 20th G20 member is the EU, and 60% of EU member states offer investment migration options.
The appeal of investment migration for affluent families is truly universal due to its many benefits, ranging from domicile diversification to global mobility enhancement, to accessing world-class education and healthcare, to having a plan B in times of turmoil.
No matter where you were born, or where you reside, wealthy investors can future proof themselves and their families for whatever might lie ahead through investment migration.
This article was first published in the 2022 Africa Wealth Report.
Dominic Volek is the Group Head of Private Clients at Henley & Partners.