While philanthropy is still an immature market in Africa, growing wealth on the continent is changing this paradigm significantly, with ultra-high-net-worth individuals (UHNWIs) seeking positive societal outcomes through their investments.
Global Head: Wealth Advisory at Standard Bank Group, Philip Faure, says wealth management is a far broader concept today than ever, with philanthropy set to grow in popularity in Africa as the number of ultra-wealthy increases and the gap between the haves and have-nots widens, simply due to the free-market system. He contends that the African wealthy want to make a difference to their communities - usually out of a sense of duty - through investment and after they are gone, as general resources often fall short.
Knight Frank has found that over the next decade, Africa’s number of UHNWIs will grow by 33%, with the growth in ultra-wealthy populations outpacing that of Europe and North America during this time. The Knight Frank Wealth Report 2017 Attitudes survey points out that private aviation, education and, notably, philanthropy are all high on the agenda for these individuals. According to Mr Faure, there are a number of reasons for this, such as leaving a family legacy or seeing it as an obligation, because the system is so imperfect.
However, while there is enough money out there that can make a difference on continent-wide inequality, wealthy people want to ensure they achieve an impact. This is why education and advice is so important; families need to understand the full range of these activities, from establishing and managing foundations, to managing capital and grant making, among others. They need to work with trusted partners and advisers to meet their objectives within an over-arching wealth management strategy. Furthermore, the art of giving must form part of an overall, long-term wealth management plan that includes building wealth, preserving wealth, and maintaining lifestyle and legacy wealth.
Standard Bank – Africa’s largest bank by assets with a footprint in 20 countries in sub-Saharan African, as well as in Jersey, the Isle of Man and London – continues to provide such services to families on the continent seeking to broaden their philanthropic activities while maintaining their overall wealth objectives.
“Despite philanthropy being an immature market in Africa at the moment, we will see this trend growing in the future. Education on the benefits and how it works will become more important as there are enormous complexities involved. Trusted experts with a deep understanding of Africa need to assist by setting up the most appropriate structures to maximise outcomes and optimally formalise the giving process,” concludes Faure.