Is Nairobi Africa’s sixth wealthiest city? No way to verify new claim
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Driving Porsches, wearing US$25,000 Patek Philippe watches, quaffing $500 bottles of cognac and sporting brands such as Louis Vuitton, Prada and Gucci. This is the high-flying lifestyle of high net-worth individuals in Africa - those with net assets of at least $1 million - a new report has it.
The AfrAsia Bank Africa Wealth Report 2018 ranked Africa’s wealthiest countries according to the private wealth of individuals. It also ranked the continent’s wealthiest cities. The richest were Johannesburg and Cape Town in South Africa, followed by Cairo (Egypt), Lagos (Nigeria), Durban (South Africa) and Nairobi (Kenya).
Kenyan media widely reported Nairobi’s sixth place, saying that Kenyans “adulate” and “adore” expensive items.
But is the wealth ranking reliable?
The Mauritius-based AfrAsia Bank told Africa Check that New World Wealth, a private consultancy based in Johannesburg, had researched the report.
The report looked at 17 countries, not the more than 50 on the continent, Andrew Amoils, the head of research at New World Wealth, told Africa Check. He said these were the big economies, though some were left out because they didn’t have reliable source data.
To start off, the consultancy estimated a country’s wealth with a statistical model that used indicators such as income, gross domestic product, and property and stock market numbers.
“These metrics are combined together in our model to calculate the total wealth held in each country,” Amoils said.
The firm then looked at its database of 150,000 high net-worth individuals across the world to work out the “demographic splits within each country” by city, industry and age. These were compared to statistics on expensive properties for better accuracy.
“So for instance if 30% of the high net-worth individuals in our UK database are living in London, then that would mean that London should account for around 30% of the UK’s wealth,” Amoils said.
“Our high net-worth individual sample for Kenya is around 250 people and around 70% of them live in Nairobi.”
The report put the total individual wealth in Nairobi and its surrounding metro areas at $54 billion. This is more than the total $50 billion of individual wealth in Kenya as a whole that New World Wealth estimated three months ago.
At that time, we rated New World Wealth’s claim that 8,300 super-rich Kenyans own more than all other Kenyans put together as unproven. This was because we were not able to examine the research methods used for the claim.
As with the new claim, New World Wealth’s research model and database are privately owned and not available to the public.
“Since the actual methodology is hidden, it’s difficult to vet the claim. That would never fly in the scientific community,” Prof Daniel Hruschka of the School of Human Evolution and Social Change at Arizona State University told Africa Check previously. Hruschka has researched household wealth for the World Health Organization.
In fact, information about private wealth in Kenya was difficult to find, economists told Africa Check.
The research methods used to make the claim are not available for the public to examine. We therefore rate the claim that Nairobi is the sixth wealthiest city in Africa as unproven. - Alphonce Shiundu (02/10/2018)
Further reading:
https://africacheck.org/reports/do-8300-super-rich-kenyans-own-more-than-the-rest/
https://africacheck.org/factsheets/factsheet-wealth-south-africa/
The AfrAsia Bank Africa Wealth Report 2018 ranked Africa’s wealthiest countries according to the private wealth of individuals. It also ranked the continent’s wealthiest cities. The richest were Johannesburg and Cape Town in South Africa, followed by Cairo (Egypt), Lagos (Nigeria), Durban (South Africa) and Nairobi (Kenya).
Kenyan media widely reported Nairobi’s sixth place, saying that Kenyans “adulate” and “adore” expensive items.
But is the wealth ranking reliable?
Only 17 African countries made the cut
The Mauritius-based AfrAsia Bank told Africa Check that New World Wealth, a private consultancy based in Johannesburg, had researched the report.
The report looked at 17 countries, not the more than 50 on the continent, Andrew Amoils, the head of research at New World Wealth, told Africa Check. He said these were the big economies, though some were left out because they didn’t have reliable source data.
To start off, the consultancy estimated a country’s wealth with a statistical model that used indicators such as income, gross domestic product, and property and stock market numbers.
“These metrics are combined together in our model to calculate the total wealth held in each country,” Amoils said.
The firm then looked at its database of 150,000 high net-worth individuals across the world to work out the “demographic splits within each country” by city, industry and age. These were compared to statistics on expensive properties for better accuracy.
“So for instance if 30% of the high net-worth individuals in our UK database are living in London, then that would mean that London should account for around 30% of the UK’s wealth,” Amoils said.
“Our high net-worth individual sample for Kenya is around 250 people and around 70% of them live in Nairobi.”
Research methods still not available to the public
The report put the total individual wealth in Nairobi and its surrounding metro areas at $54 billion. This is more than the total $50 billion of individual wealth in Kenya as a whole that New World Wealth estimated three months ago.
At that time, we rated New World Wealth’s claim that 8,300 super-rich Kenyans own more than all other Kenyans put together as unproven. This was because we were not able to examine the research methods used for the claim.
As with the new claim, New World Wealth’s research model and database are privately owned and not available to the public.
“Since the actual methodology is hidden, it’s difficult to vet the claim. That would never fly in the scientific community,” Prof Daniel Hruschka of the School of Human Evolution and Social Change at Arizona State University told Africa Check previously. Hruschka has researched household wealth for the World Health Organization.
In fact, information about private wealth in Kenya was difficult to find, economists told Africa Check.
The research methods used to make the claim are not available for the public to examine. We therefore rate the claim that Nairobi is the sixth wealthiest city in Africa as unproven. - Alphonce Shiundu (02/10/2018)
Further reading:
https://africacheck.org/reports/do-8300-super-rich-kenyans-own-more-than-the-rest/
https://africacheck.org/factsheets/factsheet-wealth-south-africa/
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