More high net worth individuals in Africa driving deVere’s growth
"Africa represents truly the last sizeable investment opportunity for international investors."
International financial consultancy and investment advisory group, deVere, has identified Africa as having the most potential for their business, according to Craig Featherby, head of the deVere Group’s Africa operations. The group, which has been steadily expanding across sub-Saharan Africa since it first entered the continent five years ago, has noticed an increase in the number of high net worth individuals across Africa.
Featherby has been the group’s African head since 2008 when deVere first entered South Africa. “Competitors here in South Africa said, ‘Craig, you’re mad, the opportunities do not exist in South Africa and Africa, there are no people with money’,” Featherby told How we made it in Africa. “Well that’s very different because we found an incredible amount of people operating within oil and gas industries... just complete commodity-driven industries that are making more and more money.”
The continent's natural resources and commodities have caught the attention of large multinational players who have been trickling into various African markets over the past few years.
“And if you think about it – with the overall attraction to commodities in Africa – that brings foreign owned companies, which brings foreign employees. And these employees are paid exceptionally well because internationally there is still this idea that there are lions and tigers running around the streets of Johannesburg and therefore I have to pay you four times more to go and live in Johannesburg than to live in Dubai,” he explained. “So for the last five years that we have been here in Africa we have seen a huge demand in terms of high net worth individuals.”
Featherby said that as an offshore financial advisory firm, most of their clients have typically been expats or internationally minded individuals. However, what is interesting for deVere’s business on the continent is the growth in the number of local high net worth individuals in Africa.
“We are now seeing a dramatic shift towards the local population,” he said. “The local population are looking for more; they are looking for better opportunities; they are looking to engage in the international markets, and therefore they are looking for an international broker that can take them there.”
He added that when deVere first entered Africa, 90% of their high net worth clients were expatiates. However, while deVere’s clients are now roughly 60% expats and 40% local, Featherby reckons that in two years this will shift the other way round, in favour of local clients.
Africa's growth potential
Over the last five years, Featherby has assisted with deVere’s expansion across seven markets in Africa – South Africa, Botswana, Angola, Mozambique, Zimbabwe, Uganda and Ghana – with further plans to open 10 more offices across the continent over the next five years.
“We believe that Africa represents truly the last sizeable investment opportunity for international investors,” said Featherby. “We believe that Africa is where the Far East was 25 years ago... the next 25 years is really going to be a lot of fun.”
He added that deVere has experienced “phenomenal growth” in South Africa. “We currently manage R1.3 billion [US$136 million] worth of private client assets... which is a large number. We experience – in some years – over 100% growth and therefore the biggest surprise for me was that I came into the industry with people telling me that it can’t be done and now I’ve experienced what we have done. So South Africa to me has been a phenomenal experience and I have enjoyed it... but we have actually only really scratched the surface here in South Africa.”
Another surprise was Zimbabwe, where deVere established an office three years ago despite a chorus of cynicism being expressed by others in the industry. “Everyone said to me, ‘why would you potentially even think about opening up in Zimbabwe? There is no money in Zimbabwe. It’s been stolen,’... but last year Zimbabwe was our third most profitable office. So there are phenomenal opportunities that exist for companies that are really prepared to get out there and explore and get involved in the local demographics and environment.”
Ghana is another market that Featherby has identified huge potential in. The deVere group opened an office in Accra just over 14 months ago, and the firm has further expansion plans for the country. “I know in 2012 Ghana was rated the fastest growing economy in the world,” he added. “We were literally totally surprised about the opportunity that exists there.”
Expansion plans for the continent
The deVere Group is in the process of establishing a Lagos office and officially entering Nigeria, a market with a “monstrous” opportunity, according to Featherby.
“If you look at the oil and gas industry in Nigeria, if you look at the population, if you look at the fact that there are zero competitors doing exactly what we are doing, one can argue, why didn’t we go to Nigeria two years ago?”
Featherby said that deVere had somewhat put-off the Nigerian market until the firm had sufficient experience behind them in dealing with African economies. When the group first decided to venture into West Africa, they chose Ghana. “Just for the ease of a soft landing,” explained Featherby. “But we now feel that we have sufficient experience to really get into the environment and take advantage of what the country offers.”
Furthermore, deVere is trying to get their Kenyan operation up and running again after a joint venture was disbanded following six months of trading under a licence approved by the Capital Markets Authority. Featherby said that this can be one of the potential challenges to doing business in some African markets. “All of a sudden the Capital Markets Authority changed the goal posts and they asked us to disband the joint venture and actually operate on a single-handed basis... I would say we are about 90% there in the granting of the final licence in Kenya, under deVere’s name.”
The group is also planning on recruiting another 100 advisors to be split between their Cape Town and Johannesburg offices in South Africa. In addition, Featherby added that they are looking into opening offices in Cairo, Egypt – a market he believes holds opportunities for deVere's business growth.