Middle East and Africa private wealth to reach $12 trillion, says BCG

Private Wealth in the Middle East and Africa (MEA) region is set to expand rapidly over the next five years to reach a staggering figure of $12 trillion, according to a report from the Boston Consulting Group (BCG). The projected growth comes on the back of a substantial increase in growth rate from less than 2% in 2015 to more than 8% in 2016. 

BCG has released the 17th edition of its annual 'Global Wealth Report’, highlighting important trends in the accumulation and movement of private wealth across the globe. According to the report, private wealth in the world grew at 5.3% in 2016 to reach the monumental sum of $166.5 trillion. The growth is attributed to a replenished global economy and a strong performance by equity markets. 

The MEA region, meanwhile, grew well above the global average at 8.5% in 2016, reaching a value of 8.1 trillion. The growth rate for the region has more than quadrupled from the previous year, which leads the report to forecast substantial growth for the region over the next five years. Private wealth in the MEA region is expected to grow at an average rate of 8% annually to reach $12 trillion by 2021.

The region’s wealth is dominated by a handful of powerful countries. The consulting firm reports that UAE, Saudi Arabia, Qatar and Oman will account for 21% of the total wealth in the region. The wealth will be driven primarily by government policies of expansion that focus on heavily feeding local businesses with the aim of making them globally dominant. Both Qatar and Saudi Arabia have announced their ‘Vision 2030’ strategies for expansion.

The region is also a major contributor to the offshore wealth index. 31% of the region’s offshore wealth lies in Switzerland, and the number is projected to grow at a compounded annual growth rate of 4.7% over the next five years. UK/Channel Islands were the second most popular destination for offshore wealth, home to 23% and an expected CAGR of 5%. Dubai came in third with 18% and a CAGR of 4.5%.

Among the population, households with private wealth of less than $1 million control 44% of the private wealth. Households controlling between $1 million and $20 million accounted for 30%. Meanwhile, households with wealth between $20 million and $100 million control 18% of the wealth, while those with more than $100 million hold 8%.

Commenting on the findings of the report, Markus Massi, a Senior Partner and the Managing Director of the Financial Services Practice at BCG in the Middle East, said, “In the Middle East and Africa, wealth expansion should stem, in relatively equal portions, from existing assets and higher household savings. Looking ahead, the share of wealth allocated to each asset class is expected to remain stable, with regional wealth projected to rise at an annual rate of roughly 8 percent through 2021. In the coming years, more local players will enter the wealth management market as traditional revenue pools become more competitive.”