How Nigeria's Economy is Being Reshaped by Its New HNIs

A seismic shift is occurring in the landscape of wealth creation in Nigeria. Though the country has housed some of Africa’s richest, a new crop of high-net-worth individuals (HNIs) is growing with a distinct outlook based on legacy. This is a mentality that prevails not simply in making money, but in making money for future generations, having an impact on society, and funding things that are bigger than profit.

The last few years have seen the exponential increase of young entrepreneurs and HNIs willing to change the economic front of Nigeria. For them, creating wealth is not just about survival, but about leaving sustainable legacies that have lasting outcomes and impacts beyond themselves and their families, for future generations. As a result, PwC’s 2022 wealth management report states that Nigeria has more than 2,000 HNIs, forecasting a growth rate of Nigeria’s wealth population to be 35% over the following ten years. These figures give an idea of the importance of the wealth boom in Nigeria and of the new trend of thinking in terms of legacy.

In this post, we shall examine how the new HNIs in Nigeria are causing a shift in the future of wealth creation, the generational wealth focus of these groups and how impact investing and philanthropy are becoming an increasing phenomenon in Nigeria. The role they play in destabilizing traditional wealth management and the flourishing of new wealth in Nigeria will also be addressed.

 

The Rise of Nigeria’s New High-Net-Worth Individuals (HNIs)

Historically, telecommunications, oil and gas and real estate are the industries where high net worth individuals have emerged in Nigeria. The technology startups, agriculture and fintech have also emerged as significant sources of wealth creation today, as a new group of entrepreneurs has now emphasised wealth accumulation diversification in the country.

Young Nigerian entrepreneurs are beginning to think more about long-term financial security, rather than focusing, as was traditionally the case, on short-term accumulation of wealth. Several of these people are building businesses that will survive them, creating wealth for multiple generations. Changing one’s mind in this way is integral to the broader transformation away from ideals of ‘wealth for wealth’s sake’ in Nigeria.

 

Wealth Creation in Nigeria: New Opportunities and Challenges

The terrain for wealth creation in Nigeria is changing rapidly. The increase of this digital economy has paved the way for new opportunities for entrepreneurship and for wealth generation. Companies like Flutterwave and Andela have received substantial amounts of money from international venture capitalists. These types of enterprises empower young entrepreneurs to create the tools and potential for successful businesses in future generations.

The act of wealth creation in Nigeria is also tremendously fraught. The political instability, economic turbulence and inconsistent infrastructure in the country have made it necessary to develop new and innovative ways to manage and preserve wealth. This has highlighted the risks associated with wealth in Nigeria, and a number of the new HNIs in Nigeria are focusing on tackling this by including diversification, strategic investments, and financial planning in their wealth-building strategies.

 

Generational Wealth in Nigeria: The New Priority

One of the attributes of the new high-net-worth individual in Nigeria is the SDG hierarchy that was passed down through the generations. In contrast to previous generations that focused more on short-term wealth accumulation, these entrepreneurs are participating in long-term thinking and attempting to build businesses and assets that will serve their families and communities well into the future, many generations down the road.

 

A Change to Long-term Financial Security

Generational wealth is assets, investments or businesses which are passed down, generation by generation, creating a legacy. The above long-term trend reflects a deeper shift in how the new HNIs in Nigeria treat their money. Unlike the earlier breed of rich Nigerians who were mainly focused on money, the new generation is much more focused on making a difference.

They are establishing family trusts, investing in property and real estate, and focusing on education and health care so that their children and grandchildren are not just financially stable, but empowered. Embedding these long-term goals into their business is helping young Nigerian entrepreneurs create wealth that will reach well beyond their own lives.

 

How Generational Wealth Shapes Wealth Management in Nigeria

The concept of wealth management is relatively new and developing in Nigeria; it seeks to be more focused on the long-term preservation and growth of wealth. Young HNIs are now seeking and availing customized solutions from financial advisors and wealth managers to protect their legacies. Among these solutions could be estate planning, family business succession planning, and tax planning.

An interesting advancement in this space is wealth-managing firms and private equity firms geared towards assisting young Nigerians in creating long-term wealth portfolios. These companies are guiding budding HNIs to go for global and sustainable investments, among other things.

 

Nigerian Philanthropy: Wealth with Purpose

Wealth creation isn’t the only focus for Nigeria’s new high-net-worth individuals; wealth redistribution via philanthropy is also a focus. Among HNIs, there is a trend where more of them are interested in creating not only financial returns but also social and environmental good.

 

Impact Investing in Nigeria: A New Paradigm

Impact investing, defined as investments made “to generate social and/or environmental impact alongside a financial return”, is growing in Nigeria. Young entrepreneurs and HNIs are using their resources to address social problems like education, health, poverty, etc.

An example of this has been the emergence of Nigerian philanthropic projects geared towards tackling concerns such as unemployment, quality of education, public health, etc. This new class of HNIs are filling the development voids in Nigeria by making investments in social enterprises that also make them money.

Impact investing isn’t simply philanthropy, it’s wealth creation done in a manner that is sustainable and has a positive impact on communities. These new HNIs in Nigeria have come to agree that wealth is not about money but about transformation and the making of positive change.

 

Nigerian Entrepreneurs Leading the Charge in Philanthropy

A few young Nigerian business owners have already entered the philanthropic space. For decades, Aliko Dangote, one of the richest men in Nigeria, has engaged in philanthropy through the creation of the Dangote Foundation and giving grants in healthcare, education and poverty alleviation. Folorunsho Alakija and Tony Elumelu, among other successful entrepreneurs, have also begun to deploy their riches toward social philanthropy and sustainable change.

Increasing attention towards philanthropy in Nigeria is beginning to define a new story on wealth generation and management in Nigeria. These new HNIs are channeling their wealth into philanthropic activism that resonates with their ideals and is allowing their wealth to be a positive influence in the world.

 

The Future of Wealth in Nigeria: A Legacy-Driven Model

A new generation of Nigerian entrepreneurs that are focused on entering, building and leaving a legacy that will impact the world for generations to come, are creating the future of wealth in Nigeria. And it’s not simply about building wealth, but how that wealth can be used for creating positive influence and impact and empowering communities to build a better and stronger and more sustainable Nigeria.

As increasing numbers of young Nigerians adopt generational wealth, impact investing and purposeful strategic economic behavior, Nigeria’s economy and economy will necessarily change. It is a transition that is also about success in a wider, more inclusive sense that should benefit all people.

 

Conclusion

This collectivist perspective that is now permeating high-net-worth Nigerians and the concern for legacy is not just a change in the financial planning of individuals, it is an indicator of a larger change in how wealth is perceived to function in Nigerian society. As these new HNIs deepen their presence and assets, how these new HNIs are making wealth in Nigeria has implications far beyond their network.

Business growth that is also tied to impactful social change is setting a new bar for what corporate responsibility and community engagement in Nigeria should look like by this new generation of Nigerian entrepreneurs. Also, their focus on building multi-generational wealth in Nigeria is creating a culture of long-term thinking that values sustainable development over extractive ones. Most importantly, their view of philanthropy and impact investing in Nigeria is that it offers systematic answers to Nigeria’s social problems that have proved difficult for the government and conventional charity to tackle effectively.

This shift is especially important for Nigeria’s economy going forward. The new breed of HNIs, in how they think about and deploy entrepreneurial energies and capital, provides an insight into a way forward for the economy as its diversification away from oil continues. The fact that they were able to create new wealth in Nigeria, through innovation and value creation, shows that Nigeria does have the human capital and indeed the market potential to be prosperous.

The wealth management sector is changing to be able to cater to these complex methods of creating and preserving wealth and is creating various products and services to accommodate this wealthy, globalized elite who are also socially responsible. It has the effect of attracting foreign capital and talent to the region, while developing local capacity to manage complex financial structures.

Most importantly, perhaps, is that the latent legacy work of these new HNIs is serving as inspiration for a more pervasive cultural shift in the way Nigerians view success, responsibility and contributions to communities. Their model proves that the creation of wealth and contribution to society are not at odds; they are a dual strategy for a broad-based approach to building real prosperity and impact.

As this generation of wealth creators continues to grow in age and influence, the legacy-centric mindset they carry will continue to be the blueprint for creating and managing wealth in Nigeria, as this mentality plants a new image for the role of wealth and business in society and how the two can exist symbiotically to create lasting legacies for individuals, families, and communities.