The poverty of WEALTH REPORTS
Ever more wealth-sector reports aim to quantify and survey the world’s high-net-worth individuals
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.