It is difficult to ignore the posh cars that speed by on the country’s highways. The Bentleys, Jaguars, Chryslers and Porsches are by nature, attention grabbing. Most of these vehicles have heavily tinted windows, so getting a glimpse of the person behind the wheel is rare. But when you do chance upon the driver, you will often find a young man.
These drivers are the kinds of people who can afford to burn Sh90,000 a night on drinks, food and entertainment, and not live to regret it. Kenyans have different ideas about how their fellow citizens can afford this kind of extravagance — from their being the ‘new money’ entrepreneurs, to the type born with silver spoons in their mouths and able to burn family wealth. But according to the Knight Frank Wealth Report 2016, these Kenyans that flaunt their wealth are not at the top of the wealth ranks.
The country’s super rich rarely parade their opulence. They do not live in the obviously upmarket parts of the country — not because they abhor extravagance, but because they have seen it all and have nothing to prove. Still, they will not all go fully downmarket. Most tend to live in the leafy suburbs of Karen and Muthaiga, where long driveways hide their homes from prying eyes.
They are not young. They are the men with silver hair or receding hairlines who are prudent about their spending. And they are, by a huge majority, men; they made money in the days when it was quite literally a man’s world.
Knight Frank describes them as high net worth individuals (HNWI). The value of their shares in public and private firms, property and passion investments (including cars and art) is at least Sh101 million ($1 million). There are 8,500 such individuals in the country. This means there is one such dollar millionaire in every 5,300 Kenyans.
A 2014 New World Wealth survey found that 8,300 HNWIs own 62 per cent of Kenya’s wealth. And then there is an even more unique class of Kenyan: the dollar billionaire. According to the wealth report, there is just one person in the country worth at least Sh101 billion. These super-rich Kenyans are not on the roads drawing attention on their way to a house party — they are in the skies flying to an evening business meeting.
Not all of them own private jets, though the wealth report notes that Africa’s HNWI are more likely than their counterparts in other parts of the world to own private jets.
Still, most of them cannot stomach the inefficiencies of the country’s infrastructure between different business hubs, so they fly private. At a cost of between $5,000 (Sh507,000) and $7,000 (Sh710,000), they can hire a private jet from Nairobi to Mombasa, according to Titus Mumo, the CEO of Africabs Platinum, which offers luxury travel services. Mr Mumo, whose clients include company CEOs and business owners, says the express services do not end with the flight.
“Immediately they get out of the plane, they are met by someone who assists them with immigration processes, and then someone else who provides express service to the hotel and fast tracks checking in.” Mumo says there are more than 10 private jet companies in the country.
When they do drive, the super rich move around in old versions of the Range Rover. They are not the type to drive ostentatious new-age vehicles. And while they do shop, they first seek out a bargain. The ‘new rich’ are more concerned about being seen shopping at the right places.
The wealth report projects the number of dollar millionaires will lives of Kenya’s super rich almost double in 10 years’ time. The country has about 340 multi-millionaires — those with a net worth of at least $10 million (Sh1 billion). This number is likely to more than double to 810 by 2025. Those with at least $30 million (Sh3 billion) are 105, while those with $100 million (Sh10.1 billion) and more are 16. Kenya’s dollar billionaires will rise to two in 10 years’ time.
Residential real estate accounts for a quarter of the average super-rich person’s investable wealth, according to the report, while commercial property investments make up 11 per cent.
More than half (55 per cent) of these millionaires say they buy residential property to sell it at a profit in the future. The rest say they invest in residential homes to diversify their portfolio, or because they consider real estate is a safe haven.
Private jets are also becoming a critical investment because of the long distances between African business hubs. Even for those with businesses across the country, the road network does not permit them to move with ease, so they fly.
The super rich also engage in luxury spending, but it is a lot more nuanced than that of the newly wealthy.
Luxury Network of Kenya CEO Michael Mwai attributes this to experience. “The older you are, the more have seen, the more you appreciate and you become very choosy,” he said, adding that the super rich will not buy a watch, for instance, but shop for a timepiece they can hand over to the next generation.
Such luxurious products are not easily available in Kenya, so the super rich fly out once in a while to the world’s luxury capitals, such as Milan or Paris. This means they can hold on to one quality item for years.
Interestingly, the super rich are keen not flaunt their wealth, so while they may make some extravagant purchases, such a posh car, it will likely be driven by their children. According to Knight Frank, the increased scrutiny super rich individuals face from the public and regulatory authorities has made a majority of them — almost 70 per cent of respondents — more conscious about displaying their wealth in public.
Most HNWIs are also showing concern for the poor and increasingly getting into philanthropy and setting up charities. The super rich in Kenya are building schools, hospitals and providing clean drinking water in areas where there was none. The motivation for this in many cases is more likely fear than guilt.
The wealth report notes that one of the biggest threats to wealth creation today is the ever-expanding gap between the rich and the poor.
And, as they say, the rich also cry. They may not brood over how to afford school fees or feed their families, but over how their estates will be managed when they die, and if their wealth will withstand the forces of time. Often, they do not trust their children, who tend to burn money on flashy purchases, not smart ones.