How to create sustainable wealth on the African continent
The innovative spirit of African entrepreneurship has led many to wealth, but can this wealth be sustained for generations to come? To stimulate and nurture entrepreneurial endeavours in Africa, only a new generational approach to wealth management will provide for sustainable wealth legacy.
With the right knowledge and a conscious investment, real wealth can be preserved and transferred across the generations. This should be the collective aim for sustainable growth on the continent.
A legacy of wealth
More than half of the world’s GDP can be attributed to entrepreneurial family businesses. While famous families like the Rothschilds and Rockefellers have used structures and investment strategies to successfully pass down their incredible wealth, we on the African continent have not been so fortunate.
In Africa, very few family businesses survive more than three generations. Statistics show 70% of family businesses will lose their wealth by the next generation, and 90% lose everything by the third generation. These numbers stress the urgency to pass down financial planning and wealth management skills along with wealth itself.
New generations who take over family businesses usually spend more money than they create. The number of wealthy Africans (with a net worth of more than R12 million) is forecast to grow to more than 88 000 by 2025. But many believe this new generation is more likely to spend money on consumer goods than be concerned with investment strategies.
Education is key
The answer to sustained and growing wealth is simple: education. We need to equip the next generation of Africans with the skills and knowledge to develop and manage their wealth – now and in the future.
The best possible investment you can make in your future is an education. Even if you don’t pay your student loans, nobody can repossess your diploma. Parents and caregivers have a crucial role to play in education, such as building self-esteem, creating an education expectation and encouraging continuous learning.
No man is an Island
To safeguard and enhance the wellness of their community, wealthy Africans need to deploy their wealth and time for sustainable social investment as social entrepreneurs. Corporate social responsibility not only supports the community, it also helps individual Africans up the economic ladder.
What better way is there to support your own community than to provide people with the tools to support themselves? The effects of social responsibility are profound. It involves conscious investment with sustainable impact which includes meeting everyday needs by using the local grocery, butcher, baker, tailor, car dealer or home builder. Africans need to have a heightened sensitivity of doing business with their own.
Entrepreneurship on the continent can lead to higher-than-average incomes and poses great potential for wealth accumulation. Africans need to understand the value of an education, hard work and never allowing circumstances as inhibitors to success. To accumulate wealth, you have to learn how to save and spend wisely.
As Africans, we need to empower ourselves and our communities and leave a legacy to benefit the generations that follow.