Kenya is spawning a new league of ‘angel’ investors, according to the Wealth Report Attitudes Survey 2020 launched today, which shows a surge of indirect investments into new and growing businesses by the country’s wealthy.
Two-thirds of the wealth managers surveyed in Kenya by Knight Frank report that their High Net Worth and Ultra High Net Worth clients increased their private equity investments in 2019, or plan to increase them in the near future.
This jump in investment to support the growth of Kenya’s innovative young businesses came as more than two-thirds of the country’s wealthy also reported an increase in their interest in philanthropic activities, and in ethical investments, according to The Wealth Report Attitudes Survey 2020.
“All the results of The Wealth Report Attitudes Survey 2020 for Kenya point to a sharp rise in social and environmental awareness by the country’s wealthy and super-wealthy, reflected almost immediately in their investment strategies and behaviours,” Ben Woodhams, Managing Director of Knight Frank Kenya.
The shift coincided with a general move in investments towards lower-risk holdings, with Kenya’s wealthy increasing their holdings of bonds, gold and cash. Managers reported the wealthy were most worried about the impact of global economic uncertainty, followed by poor governance, and Brexit, on the basis of which 91% of them reported they were actively changing their investment strategies.
As a result, two-thirds of the wealthy investors had reduced their holdings of now volatile cryptocurrencies, while holding their investments broadly static in property and collectibles, such as works of art. At the same time, the biggest increases in investments were in equity investments through the stock market and in private equity investments to drive the growth of young businesses.
As the wealthy turned to seeding these new businesses, the survey also found an exceptional rise in interest in action on climate change, with 100% of respondents reporting that their clients were now more interested in climate change as a cause. This extended to their own consumption, with wealth managers reporting that 27% of Kenya’s richest people would now prefer a hybrid or electric car over a traditional oil-fueled vehicle and that 47% are working actively to reduce their personal carbon footprint.
The managers also reported the heightened interest of the wealthy in supporting education, the arts, and the environment.
Altogether, the surge in philanthropic interest by Kenya’s wealthy marked a stronger rise than in South Africa or most other nations surveyed, but ties with a growing trend across Africa of the continent’s super-rich ‘giving back’ by driving development and improved welfare in their own nations. Of Africa’s 12 dollar billionaires, five now run their own charitable foundations, while many dollar millionaires are also now running separate philanthropic and impact investment arms.
“The rise of impact investment geared towards solving social and environmental problems and creating jobs and livelihoods for marginalized communities has marked a merging of interests across philanthropy and investment, with such businesses having been shown to additionally generate higher financial returns. The attraction of investing in ways that also stimulate the economy and communities is clearly coming into play with this leap forward in local private equity investment,” said Andrew Shirley, Editor of The Wealth Report.