The reasons for why wealth managers should take Africa more seriously as a potential source of business are mounting up.

For far too long Africa has suffered from a troubled image and probably won’t have been the first place to come up
in conversation among wealth managers prospecting for business. But in recent
months, the volume of positive noise about the continent has risen.

I hear from recruiters that there is considerable interest
in bankers and relationship managers with knowledge of markets in places such
as Nigeria and Kenya, for
example. More than once I have been asked something on the lines of “do you
know any decent Africa wealth managers?”  

The economic backdrop has been encouraging. The MSCI EFM
Africa ex-ZA [excluding South
Africa] Index of equities shows total
returns (reinvested dividends plus capital gains) of 15.75 per cent; on a
five-year annualised basis, that index has chalked up a very respectable 8.7
per cent. In this year’s annual World
Wealth Report survey by RBC Wealth Management and Capgemini, Africa had a total high net worth ($1 million-plus
investable assets) of 140,000 with total wealth of $1.3 trillion. Perhaps more
significantly, its growth rate in the number of such millionaires – 9.9 per
cent – was faster than the global growth pace of 9.2 per cent. The actual total
amount of wealth rose by 11.5 per cent, faster than the global average of 10
per cent.

South Africa,
Egypt and Nigeria have tens of thousands of millionaires,
while other countries like Ethiopia
and Ghana
are climbing the wealth statistics. According to an analysis of the African
high net worth community by New World Wealth, an Oxford-based wealth
consultancy, Ethiopia has
been the fastest growing African market for millionaires over the past six
years followed by Angola, Tanzania, Zambia
and then Ghana.

Adding to the noise around Africa
recently was the story that Bob Diamond, the former chief executive of Barclays
who resigned in dramatic fashion last year as his bank was engulfed in the
LIBOR-rigging scandal, is back in a new guise. This time he is leading
investment into the African financial sector. According to the Financial Times, Diamond’s Atlas Mara
fund, a London-listed cash shell, is raising $325 million, aiming to start
trading from 20 December. According to the FT,
the company will “focus on acquiring a company or business in the financial
services sector with all or a substantial portion of its operations in Africa”.

Earlier in 2013, Alvaro Sobrinh, chairman of Banco Valor,
the Angola-based firm, took to the pages of this news service to point out the investment
promise – and some challenges – in Africa.
Significantly, not all of the wealth being generated in the continent is based
on the extractive industries such as minerals – although this remains a vital
sector.

In October this year, France's Societe Generale Maroc, the subsidiary of Societe Generale group in Morocco, announced it was launching a private banking offering for top-tier wealth management clients in the country. Rival BNP Paribas has also opened offices in countries such as Nigeria and has a presence in other parts of the continent. (This is perhaps unsurprising given the traditional French ties to north and west Africa, for example.)

UBS is going after wealthy clients in Nigeria and Angola, for example. Switzerland's largest bank recently told Bloomberg of the "tons of opportunities still relatively untapped". The bank said it sees potential in nations such as Kenya, Ghana, Uganda and Botswana. 

What excites bankers is that although sub-Saharan Africa, for example, is relatively “under-banked” – only about
a quarter of its population have a bank account at all – the upside potential
if growth can produce a large, and expanding middle class is considerable. There
are, of course, considerable challenges. Africa
suffers still from a reputation (it varies a lot between countries) for
corruption and poor governance, and unevenly enforced property rights. The global
drive against money laundering and push for more due diligence about client suitability
has a long way to go there, to put it mildly.

For all such concerns, some banks with strong roots in the
continent are expanding their coverage. South Africa-headquartered Standard Bank (not to be confused with Standard Chartered, another strong player in
Africa) has made a number of recent appointments, naming a
business development head for Africa. Barclays'
South African unit, Barclays Africa Group
(formerly Absa Group), is combining its wealth, asset management, stock broking
and investment administration businesses; earlier in 2013, Barclays raised its
stake in Absa, explaining that it sees business prospects in the continent are
strong.