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Kenya’s wealth management industry is underdeveloped as a majority of the super-rich prefer using foreign private firms and holding their money outside the country.
A newly released report by New World Wealth says the high-net worth individuals in Kenya bank their money in the foreign banks.
“The majority of wealthy Kenyans use foreign private banks which hold their money abroad. As a result the local private banking industry is totally under developed,” the report says.
About 50 per cent of these high net worth individuals are elite with political connections, and are estimated to have $10 billion (Sh860 billion) banked abroad, constituting 30 per cent of national wealth, mostly in foreign private banks in UK, Switzerland, Cyprus and Channel Islands.
According to the London based New World Wealth, a large proportion of the local wealth was in 2013 held offshore accounts.
The wealth management systems is, however, set to benefit from strong growth of their wealth in other East Africa countries which have less developed banking systems as they are likely to opt for Kenyan banks.
“Kenya’s wealth management industry is likely to expand over the forecast period as more high net worth individuals are created and as banks begin to set up in the country,” says the report.
The report adds that the current crackdown on the offshore centres might force these individuals to repatriate their wealth into the country further boosting the local wealth management system.
“The current crackdown on offshore centres may also result in inflow of private banking funds back into the country,” the report says.
Many countries have intensified vigilance over movement of funds across borders with the aim of stopping funding of terrorism activities.
– Business Daily