Africa is getting richer. That’s the highlight of the latest Credit Suisse Global Wealth Report, which shows that the continent saw a slight increase in wealth accumulation of 1.5% to $5.9 billion in 2022. Ironically, last year was the first since 2008’s global financial crisis that saw a decline in net global household wealth. Inflation, rising interest rates and currency depreciation were the main culprits.
But before you celebrate, there’s a catch. The wealth gain is too small to keep up with population growth. As a result, the average wealth per adult declined by 1.3%. But this decline is unsurprising because Africa’s largest economies are going through tough times. Nigeria and South Africa, the continent’s poster childs, have been sluggish for most of the last decade.
The more controversial part of Credit Suisse’s estimates is that it says wealth inequality has reduced in Africa. According to the report, the continent’s median wealth per adult has increased consistently for over two decades from below $200 in 2000 to $1242 in 2022.
Understandably, not everyone would agree with this perspective. Statistics are tricky. They can help present hard facts, but may also mislead us or hide important details. For example, the Credit Suisse report uses two measures of wealth: mean and median. The mean is the average of all the values, while the median is the middle value when sorted from lowest to highest. The mean can be distorted by outliers, such as very rich or poor people, while the median can be more representative of the typical situation. But even this metric isn’t always reliable to paint holistic pictures.
Africa’s largest economies have experienced tight compressions of their middle class in recent years. Nigeria, for instance, now has 133 million people in multidimensional poverty. More than half of South Africa’s population — 55.5% of them —live below the national upper poverty line, and 25% of them experience food poverty. By the end of 2022, the Gini coefficient for wealth — a measure of inequality in countries — was at 86.5 in Nigeria and 88.8 in South Africa, up from 72.1 and 80.4 in 2000, respectively.
However, the number of dollar millionaires rose to 361,000 by the end of 2022, per Credit Suisse. For comparison, they were 32,000 as of 2000. The report also forecasts that there will be 768,000 African millionaires on the continent by 2027. That’s a growth rate of 113%, which would be the fastest creation of millionaires anywhere in the world. Though impressive, know that China is expected to have a growth rate of 112% to reach more than 13 million millionaires in the same period. So there is still a long ladder for Africa to climb. Nonetheless, it would be great to see it happen.
