The poverty of WEALTH RE­PORTS

Ever more wealth-sec­tor re­ports aim to quan­tify and sur­vey the world’s high-net-worth in­di­vid­u­als

CityPress - - Business - DEWALD VAN RENS­BURG dewald.vrens­burg@city­

Wealth re­port­ing has be­come a thing. Head­lines tell us the world’s su­per­rich are mul­ti­ply­ing, es­pe­cially in the de­vel­op­ing world. The peo­ple telling us about this trend are also mul­ti­ply­ing, with ever more “wealth sec­tor” re­ports quan­ti­fy­ing and sur­vey­ing the world’s so-called high-net-worth in­di­vid­u­als. Some wealth re­ports con­sist al­most en­tirely of in­fo­graph­ics based on other wealth re­ports.

Africa’s club of high-net-worth in­di­vid­u­als, de­fined as peo­ple with at least $1 mil­lion in net as­sets other than their pri­mary res­i­dences, ap­par­ently reached 161 000 last year. That’s a 145% in­crease from 2000, which seems large un­til it’s com­pared with the equiv­a­lent rise in South Amer­ica of 270% and 205% in Aus­trala­sia.

These num­bers come from New World Wealth (NWW), a Johannesburg-based re­search com­pany that does work in the “wealth sec­tor”.

In­fla­tion cer­tainly plays a part be­cause the value of $1 mil­lion cer­tainly isn’t what it was 14 years ago.

These high-net-worth in­di­vid­u­als own about 30% of the con­ti­nent’s house­hold wealth, says NWW.

A lot of these re­ports come up with al­most iden­ti­cal num­bers. Some­times, how­ever, they paint com­pletely dif­fer­ent pic­tures of re­al­ity.

How many dol­lar mil­lion­aires were there on the planet last year? Look at Credit Suisse’s Global Wealth Data­book, the most am­bi­tious wealth re­port around, and you will get an es­ti­mate of 34 mil­lion. Look at NWW, and it was closer to 13 mil­lion.

Wealth In­sights, a widely cited wealth con­sul­tancy in the UK, says 17.8 mil­lion. Capgem­ini, another muchquoted source of wealth sta­tis­tics, says 14.6 mil­lion. How about bil­lion­aires? There are 2 325 of them, ac­cord­ing to Wealth-X and Swiss bank­ing group USB, which pro­duces a wealth re­port that doesn’t waste time with mere mil­lion­aires.

Credit Suisse has the global bil­lion­aire club at 1 611strong. Wealth In­sights says there are 1 844.

Like Gen­er­a­tion X or Black Di­a­monds, high-net­worth in­di­vid­u­als are the cre­ation of the mar­ket­ing in­dus­try. The term took off in the 1980s – un­sur­pris­ing, be­cause that’s when the dizzy­ing as­cent of a su­per­wealthy few sud­denly be­came one of the most im­por­tant po­lit­i­cal re­al­i­ties just about ev­ery­where.

Although they con­stantly make head­lines and spark de­bates, these re­ports are not meant to tell us about the world.

The client base for the NWW re­ports com­prises “mainly banks, lux­ury goods com­pa­nies and pri­vate jet com­pa­nies”, says An­drew Amoils, the com­pany’s head of re­search.

Re­ports like NWW’s are ba­si­cally mar­ket­ing man­u­als pre­dict­ing where the ac­tion for crazily ex­pen­sive Swiss watches and other lux­ury goods is go­ing to be 10 years from now. Mil­lion­aires are, af­ter all, the sole mar­ket for pri­vate jets, yachts, man­sions, su­per­cars, small is­lands, artis­tic mas­ter­pieces and, most im­por­tant of all, are the main mar­ket for “wealth man­age­ment” – pri­vate bank­ing, in­vest­ment and tax ad­vice.

The same mar­ket­ing im­pe­tus drives the rise and rise of re­ports about the rise and rise of the “mid­dle class”.

The mid­dle class is nowa­days de­fined as peo­ple who can af­ford to buy con­sumer goods with­out starv­ing, and this genre of in­come re­port­ing mostly aims to “sell” na­tional mar­kets to po­ten­tial in­vestors or sellers of goods. These po­ten­tial in­vestors and sellers of goods might then re­quire the ser­vices of the fi­nan­cial in­sti­tu­tions that usu­ally pub­lish the re­ports.

All this wealth re­port­ing stands in stark con­trast to equally per­va­sive poverty re­port­ing, which is all about gov­er­nance, not mar­ket­ing.

The rise of the wealthy pre­oc­cu­pies both the left and the right. The dif­fer­ence is, of course, that one side sees the mush­room­ing of pri­vate for­tunes as a prob­lem, maybe even the only prob­lem. The other sees it as sig­ni­fy­ing suc­cess, progress, op­por­tu­nity – Africa “ris­ing”.

How­ever hard to mea­sure, the sup­posed rise in the num­ber of ul­tra­wealthy in­di­vid­u­als is widely re­ceived as good news. The pro­duc­ers of wealth re­ports couch the rise of high-net-worth in­di­vid­u­als in com­pet­i­tive terms where coun­tries and re­gions “out­per­form” each other in gen­er­at­ing rich peo­ple.

Any es­ti­mate of the num­ber of African bil­lion­aires re­mains a sure-fire front page head­line, while, in South Africa, the ex­cite­ment mostly sur­rounds black bil­lion­aires.

A proud and jin­go­is­tic tone wins the day when it is re­ported that South Africa has led the field in cre­at­ing new high-net-worth in­di­vid­u­als on the con­ti­nent (26 900 new ones since 2000, ac­cord­ing to NWW).

Does this mean we are “beat­ing” Nige­ria, where only 11 600 ex­tra high-net-worth in­di­vid­u­als ap­peared?

Should we be proud that South Africa ac­counts for the lion’s share of the African mar­ket for lux­ury watches and clothes – $2.8 bil­lion of the con­ti­nen­tal to­tal of $8.1 bil­lion?

NWW pub­lished another re­port this week, es­ti­mat­ing that 8 000 high-net-worth in­di­vid­u­als have left South Africa since 2000, em­i­grat­ing along the well-trod­den routes to Aus­tralia, the UK, Cyprus, Mau­ri­tius, the US and Canada. South Africa is not only the main gen­er­a­tor of wealthy in­di­vid­u­als in Africa – it is also the main ex­porter.

In all of this, it’s not par­tic­u­larly ob­vi­ous why the cre­ation of in­di­vid­ual for­tunes is a good thing.

The ar­che­typal sit­u­a­tion that leads to a sud­den surge in bil­lion­dol­lar for­tunes is not a healthy, grow­ing econ­omy filled with eq­uity and sus­tain­able prac­tices. It is more typ­i­cal of fire sale pri­vati­sa­tions, oli­garchs and state col­lapse.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.