Nairobi – Kenya is spawning a new league of ‘angel’ investors, according to Knight Frank’s Wealth Report Attitudes Survey 2020, launched today, which shows a surge in direct 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.
Ben Woodhams, Managing Director Knight Frank Kenya said: “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.”
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.
Andrew Shirley, Editor of The Wealth Report, said: “The rise of impact investment geared towards solving social and environmental problems and creating jobs and livelihoods for marginalised 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.”The rise of philanthropy (taken from The Wealth Report Attitudes Survey 2020)
Are your clients’ philanthropic activities increasing?
Kenya 67% 33%
UK 64% 36%
China 60% 40%
South Africa 52% 48%
Specifically, are they becoming more interested in the following causes?
% who chose each option, Kenya
Climate Change 100%
The Arts 86%