One-hundred super-rich individuals left Kenya in 2022 for various reasons, and a further 100 are projected to leave this year. It attributes political instability as among the major reasons that cause the uber-wealthy to migrate from one country to another as well as higher taxes that make investing in a country less attractive.
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Million-dollar panic: Why the super-rich are dumping Kenya
Some 100 dollar millionaires fled Kenya in 2022 in search of countries with less taxation, better political stability and stronger economic growth, according to a new report that reveals fresh migration trends of the world’s super-rich.
The Henley Private Wealth Migration Report 2023 produced by Henley & Partners in partnership with New World Wealth, and which tracks wealth and investment migration trends worldwide, shows some 84,000 of the world’s high net-worth individuals (HNWIs) migrated last year.
HNWIs, people with an investable wealth of $1 million (Sh139 million) or more, are considered to have migrated if they have relocated and remained in a new country for longer than six months.
The report shows that 100 super-rich individuals left Kenya in 2022 for various reasons, and a further 100 are projected to leave this year. It attributes political instability as among the major reasons that cause the uber-wealthy to migrate from one country to another as well as higher taxes that make investing in a country less attractive.
Last year, Kenya held another of its cyclical elections, whose seasons bring political tension amid the risk of violence, causing investor jitters.
Kenya has also stepped up taxation in recent years in a bid to raise revenue to fund the country’s growing spending needs.
The Finance Act, 2022, for instance, raised the Capital Gains Tax from five per cent to 15 per cent in a bid designed to align the Kenyan CGT rate with regional rates.
The rate became effective in January this year despite stakeholders’ proposal to retain the same at five per cent, given the fact that a significant portion of capital gains on the disposal of properties is often attributable to inflation.
Some 100 dollar millionaires fled Kenya in 2022 in search of countries with less taxation, better political stability and stronger economic growth, according to a new report that reveals fresh migration trends of the world’s super-rich.
“Political stability is the key metric for those selecting where they want to live, together with low taxation regimes and personal freedom. Until the Russo–Ukrainian war [ends], both countries will continue to export HNWIs, and this will remain the single largest driver of relocation,” said Misha Glenny, Rector of the Institute for Human Sciences in Vienna.
Weak shilling
The report comes only three months after the 2023 Africa Wealth Report published by the same firm showed that some 800 individuals fell off the list of Kenya’s dollar millionaires in 2022. This was primarily owed to a weak shilling whose value dropped by about nine per cent during the year, shrinking the wealth of the tycoons in dollar terms.
The report showed that Kenya’s rich with a net worth of at least $1 million stood at 7,700 in 2022, a sharp drop from 8,500 in 2021.
The Henley Private Wealth Migration Report 2023 says the exit of dollar millionaires from a country hurts its economy while their entry increases investment and job creation.
Kenyan currency notes of different denominations.
The latest report shows there was a steady growth trajectory of the super-rich migrating to new countries until 2020 when the Covid-19 pandemic scuppered their migration as well as the tracking of millionaires on the move. Recovery picked up rapidly in 2022, and the 2023 and 2024 forecasts indicate continued growth.
Some 59,000 more HNWIs migrated in 2022 compared to 2021 when 25,000 went on the move, while some 122,000 and 128,000 super-rich individuals are tipped to migrate to new countries in 2023 and 2024 respectively, according to the report.
“In general, wealth migration trends look set to revert to pre-pandemic patterns this year, with Australia reclaiming the top spot for net inflows as it did for five years prior to the Covid-19 outbreak, and China saw the biggest net outflows as it has each year for the past decade. The notable exceptions are former top wealth magnets, the UK and the US,” said the report.
China lost the highest number of dollar millionaires in 2022 after 10,800 super-rich exited the Asian giant, while India followed suit with 7,500 HNWIs migrating from the country.
A further 13,500 and 6,500 dollar millionaires are forecasted to migrate from China and India respectively this year.
On the other hand, the United Arab Emirates (UAE) recorded the highest inflow of HNWIs after 5,200 dollar millionaires migrated into the country in 2022 followed by Australia which recorded inflows of 3,800 HNWIs.
Mauritius and Morocco are the only African countries captured in the report that recorded inflows of dollar millionaires by attracting 200 and 100 HNWIs each respectively in 2022.
The report further projects the two countries to record the same number of super-rich inflows this year.
