Dar es Salaam — Tanzania created 200 new dollar millionaires in 2016, a new report shows, sending out a picture that the government's cost cutting measures have had little impact on individuals' wealth creation endeavours.
Knight Frank's 2017 wealth report shows that the number of super rich Tanzanians jumped from 2,200 in 2015 to 2,400 in 2016.
This happened despite reports that the cost cutting measures - initiated by the President John Magufuli's administration - were throttling the growth of the private sector.
Since he assumed office in November 2015, President Magufuli has taken measures that have squeezed public spending, resulting into a knockoff effect on private sector.
The actions included a mop-up of over Sh500 billion from commercial banks, a sustained and single minded tax crackdown while public agencies have been restricted to doing business within government. There has also been a general decline in public spending as travel, workshops and meetings in hotels have been curtailed.
In January, the International Monetary Fund (IMF) warned that such economic policies threaten the economic growth forecast for fiscal year 2016/17 (July-June).
Despite such a background however, Knight Frank shows that Tanzania is only second from Kenya in East Africa in terms of creating new dollar millionaires.
Last year, while some 200 wealthy people in Tanzania joined the super rich club, Kenya created 900 new dollar millionaires while Uganda and Rwanda registered 100 each. Basing its report on responses from 900 of the world's private bankers and wealth advisors who manage over 10,000 clients with a combined wealth of around $2 trillion, Knight Frank Wealth study shows that Tanzania is one of the African countries that will drive the growth of dollar millionaires on the continent in the next ten years or so.
"In Africa, sharp rises are expected in countries such as Mauritius, Ethiopia, Tanzania, Uganda, Kenya and Rwanda," the report reads. The number of super rich individuals in Tanzania is expected to double and reach 4,800 in 2026 while Kenya, Uganda and Rwanda will have 16,900; 2,500 and 1,200 respectively.
Knight Frank classifies the super rich individuals into five sub-categories. They include dollar billionaires, Centa- millionaires, ultra-high-net-worth individuals (UHNWIS), multi-millionaires and millionaires.
Dollar billionaires are those individuals who have assets worth over $1 billion (over Sh2.2 trillion) while each of the Centa-millionaires has assets worth over $100 million (over Sh223 billion). On the other hand, a rich individual in the UHNWIS category has assets that are valued at more than $30 million (about Sh70 billion) whereas assets for multi-millionaires and millionaires are valued at more than $10 million (about Sh22 billion) and $1 million (about Sh2.2 billion) respectively.
