Ethiopia sets pace for Africa in creating new wealth: Report

Ethiopia PM Hailemariam Desalegn. [Photo: Courtesy]

Ethiopia is set to be Kenya’s main economic rival in the next 10 years, a new study has revealed.

This is because Ethiopia has emerged as the third best wealth generating country in the world.

According to a new report by a South African research firm New World Wealth (NWWealth), other than Mauritius, Ethiopia is the next economy to watch in Africa due to the dramatic pace with which its people are minting private money.

For instance, while Kenya’s private wealth generation ability has been growing by about six per cent every year to 64 per cent in 2018, Ethiopia’s size of wealth held by private individuals has grown more than 10 per cent every year to stand at 102 per cent.

This places Ethiopia just behind Mauritius and China which take the second and first slots respectively - meaning that the country has also contributed significantly to private wealth held worldwide which now stands at $204 trillion.

The same is also true for Africa where, according to the 2018 “Africa Wealth Report”, total individual wealth held on the continent amounts to $2.3 trillion.

And as global private wealth is expected to grow by 43 per cent over the next decade - reaching $291 trillion by 2028 - Ethiopia will not  be left behind.

For the same reasons, Ethiopia is also expected to contribute significantly to total private wealth held in Africa which is expected to rise by 34 per cent over the next 10 years, reaching $3.1 trillion by the end of 2027.

Further, the report warns that even as Ethiopia’s private wealth is only about $60 billion compared to Kenya’s $104 billion, the country’s growth potential should not be underestimated by the top 10 countries led by South Africa at $722 billion followed by Egypt at $330 billion.

This is since, while Kenya’s 10-year growth has only been about seven per cent to reach 73 per cent in 2017, Ethiopia’s has been about 19 per cent to 190 per cent in the same year.

And while the 10-year projections for rival countries swing between rosy and grim, Ethiopia’s future is rather bright.

“We expect Mauritius, Ghana, Rwanda and Uganda to be the strongest performing wealth markets in Africa during this period at 90 to 150 per cent growth rates,” says the report.

However, its projections for South Africa, Angola, Morocco, Egypt, Ivory Coast, Tanzania and Nigeria “are less favourable but still positive” at 10 to 30 per cent growth rates.

On the other hand, projections for Ethiopia, Mozambique, Zambia, Kenya, Botswana and Namibia are “relatively solid” at 50 to 80 per cent growth rates.

Thus, in less than 10 years, Kenya and the rest of Africa are looking at a real and formidable economic rival in Ethiopia.

This now means the government has to improve service-delivery if it has to attract the calibre of persons that the wealth migration study finds are a necessary component in the growth and health of any economy.

“Wealth migration figures are an important gauge of the health of an economy. For instance, if a country is losing a large number of high net-worth individuals to migration…, it can be a bad sign of things to come...,” reads the report.