Nigeria pulled out of recession in September 2017, and a series of good fiscal and monetary policies, coupled with rising oil prices, have put the country back on the path of recovery. However, a new report says more wealthy people are leaving the country, most especially from Lagos. The Global Wealth Migration report published earlier this month shows that more and more rich people are leaving many financial hubs in countries around the world, in search of greener pastures.
The reason for this varies between the countries. More wealthy Europeans are leaving London, because Brexit happened, meaning they would be cut off from the rest of Europe. In Nigeria, the reason involves competition for land and resources because of a high population density. “During our analysis we noticed that countries with low population densities such as Canada and Australia are some of richest countries in the world on a wealth per capita (wealth per person) basis, whereas densely populated countries such as Nigeria, Ethiopia, Bangladesh, and Pakistan are some of the poorest,” the report says.
However, a general reason for the wealth migration is the changing political economy in these countries, according to Reuters. These economic changes cause rich people to move because they can. The poor and the middle class don’t have that luxury.
The Global Wealth Migration report is taken when these wealthy individuals, called High Net Worth Individuals (HNWI), have spent more than six months in their new country, and countries like Australia, Canada, and the United Arab Emirates are some of the main recipients of the migration. Montreal, Toronto, Dubai, Sydney have all seen more than 1000 HNWI. Most of these places are better bases for attracting businesses than others. For example, because of the low population density, the average Australian hold more wealth than the average American. “Over the past 10 years, total wealth held in Australia has risen by 83% compared to 20% growth in the US. As a result, the average Australian is now significantly wealthier than the average US citizen, which was not the case 10 years ago.” the report said.
The wealthy are also leaving these countries and moving to greener pastures because of difficulties in investing. Many of these countries have inheritance taxes, which means many are forced to pay a part of the money that is legally theirs to the government. Australia and Canada don’t have inheritance taxes, and it has been suggested as a reason for why more wealthy people are getting into the country.
What is most peculiar about Lagos is that, as more wealthy individuals move out, none are moving in. While there was an outflow of 1000 wealthy individuals from Nigeria, there were no inflows; meaning no wealthy individual came into Nigeria throughout 2017. All of this could change in 2018, depending on whether investors feel the Doing Business ranking is an adequate measure of the investment potential for a country.
Written by: Oreoluwa Runsewe