Category Archives: Wealth declarations

Deloitte on African Art and Finance

The value of African art can grow tremendously over the next decade with investment and support from buyers both within Africa, and others who live beyond the continent, as well as from African art schools, governments, museums, galleries, art professionals and banks to stimulate and support more interest in African art.

These are some of the findings from the Art & Finance Report 2017 that was unveiled at Deloitte’s 10th Art and Finance conference at the Italian Stock Exchange in Milan this week and which estimated that the value of art owned by Africans collectors was $12.7 billion in 2016 and that it  could grow to $20 billion by 2026. This still accounts for less than 1% of the global art market currently estimated at $1.6 trillion with an annual turnover of $50 billion.

Some key findings of the report which looked at the global art markets include:

  • The art market should be self-regulated and there is great support for art to be part of wealth management offerings to customers at more private banks.
  • Banks need more specialists to properly value and manage art markets.
  • Art can be used as collateral, enabling art collectors and galleries to realize liquidity without having to make unfavorable sales to meet short-term cash-flow needs. See this on how to borrow against art.
  • Art as an investment class poses risks that are no different from others that banks manage and have to guard against, including vices like price manipulation, insider trading, money laundering and terror financing.
  • The top categories in the global art market are  “post-war & contemporary art”, followed by “modern & impressionist art”, “Chinese & Asian art” and ” jewels & watches”.

Some excerpts from the report on the African art market include:

  • International dealers and auction houses like Bonhams and Sotheby’s are seeing a gradual shift in the African contemporary art buyer base from mainly African art collectors to a more international and diverse group of art collectors.
  • London experienced a 12.5%  rise in African art auction sales between 2015 and 2016, with Bonhams controlling a 65% market share.
  • Sotheby’s London joined the African art auction trend in 2017 with its first auction focused purely on African contemporary art. It achieved total sales of over $3.6 million and 79 of the 116 lots were sold.
  • In 2017, record-breaking hammer prices recorded at auction for contemporary art were achieved by Nigerian artist Njideka Akunyili Crosby, whose work sold for less than $100,000 at auction in 2016. However, less than a year later, the artist’s piece “Drown” sold for a record-breaking US$1.1 million at a Sotheby’s auction and a few months after that, her 2012 painting “The Beautiful Ones” sold for US$3.1 million at a Christie’s London auction.

There is currently an inter-section of art, wealth, and technology with the possibility that bitcoin / block-chain can be used to assist banks and financiers with tools to help with transparency authentication, copyrights and ownership of art objects and there are already platforms such as Blockai, Ascribe.io, Chainmark, and smArtchain etc. in use.

The greatest demand for African art is currently from high net worth individuals in Nigeria and South Africa, which are the two largest economies in Africa. The report also notes that there is increasing demand from corporations such as the Nigeria Stock Exchange

Elsewhere In Kenya, Stanbic was working on investor management portfolio offerings that include wine and African art, while Nigeria has Access Bank in Nigeria. There are also other innovations coming up in African art and finance from leading banks and galleries in Kenya, South Africa and Europe.

The Luxury Network in Africa

Last week saw the launch of The Luxury Network in Nairobi, Kenya. This came after a B2B luxury seminar that featured brands that are targeting affluent Kenyans and Africans who will pay extra for quality and exclusivity.

Recent research by IPSOS estimates that there are between 5,000 and 8,000 dollar millionaires living in Kenya. These are defined as people who have made money though business, and entrepreneurship, sometimes through land and government tenders and have liquid cash that is not tied up in land or in current accounts. The country has gone from 5 malls to 51 malls (some under development) in the last decade as more shoppers turn out and the shoppers that the luxury network targets are ready to spend for the right things.

LuxuriousKenya launchSome of the members of the network include Africab Tours (luxury meet & greet service), CJW (bespoke legal services), English Point Marina (a piece of Monaco in Mombasa), Elite Digital (who have been selling Apple products in Kenya for 30 years), Kartell,  Little Red (who sell Italian brands), Majestic Events, SHK Consulting (bespoke PR), RMA Motors (Jaguar, Land Rover franchise in Kenya), Goshen Acquisitions  (strategic land investors)  and Bombardier Aero who plan to open an office in Kenya in 2017.

The luxury network has 25 offices around  the world. In Africa, they are in South Africa, and after the launched in Kenya, they will next go to Nigeria  – which has the highest number of private jets in Africa.

By being members of the luxury network, entrepreneurs enjoy benefits such as alignment and a connection with other global luxury brands, access to pre qualified high net worth private clients, and access to seminars, event and privilege loyalty programs.

Bob Collymore Declares His Wealth

 A few days after President Kenyatta announced his latest salvo in the war on corruption, Safaricom CEO, Bob Collymore said that he, and other leaders, would soon declare their wealth in support of this, as show a way of embracing the lifestyle audit aspect of fighting corruption

This has now been released on World Anti-Corruption Day. The statement shows assets of $2.7 million (~ Kshs 275 million) comprising mainly property, cash, and shares in Vodafone and Safaricom which he leads, and from which he earned $1.06 million last year as salary, and probably with bonuses included.

ION, a few years ago, some members of parliament, made wealth declarations as well.

$1 = Kshs 102

Forget the tip jar

This past week I discovered two jobs where one is forced to receive extra money just for doing their job (and it’s not a bribe)

First is for workers at the harbour/ports. Even honest people walk away with (a minimum) Kshs. 2,000 at the end of the day in lunch money from grateful transporters just for doing their job. These guys (transporters) pay so many bribes that when someone does their job without asking for a bribe, they still can’t get over that and press some cash into the reluctant hands of the officers.

Then, passing through the airport yesterday, I overhead several travelers, too bothered to reprice the cost of a cup of coffee in Kenya shillings, pay 1 or 2 dollars or pounds and dash off to their gate. How that money is shared is another matter – but when an 80 shillings soda is paid for with a £1 note (equivalent) to about 130 shillings, there’s a healthy cut for someone – and probably more than any tip jar would bring in. This is probably a common occurrence in in the tourism industry (see how tour van drivers usually have plenty of dollars to sell)

Wealth Declarations & Diva Cards

Wealth Declarations

It’s wealth declaration time again for the third year. The process was spearheaded by the intent to curb corruption by having leaders, mainly politicians, publicly declare their wealth. But we are yet to see feedback from anyone/authority who has seen our previous declarations.

According to the latest Adili (No. 82) from Transparency International, a miscellaneous bill in parliament will modify the act so that wealth declarations will be filed every two year, and not annually as is the current case. So far only a few politicians have made public their wealth which was the original intent of the act. Adili also argues, that by requiring only a few key individuals to file returns, Uganda (16,000) and Tanzania (5,400) may be able to handle the huge volume of wealth declaration data than Kenya (with over 650,000 annual returns).

Diva Cards
Standard Chartered has introduced a diva card for women. The card, which has been rolled out in other countries, is a variation of their flat fee account now re-modeled for women to include discounts on auto assurance, health checks, and at some restaurants, salons and health clubs as well as an unsecured loan or overdraft at 15% p.a.

biz tip One great thing about flat fee accounts is for parents (or anyone)sending money abroad to use the free local/foreign transfer (one a month) contained in most of these accounts to send fees or other funds abroad at no extra charge. This can save about 3,000 shillings each time.

Other
– The Nairobi-Mombasa air route is getting more crowded/competitive with Air Kenya (with a new Dash-8) joining East African Safari Air, and soon Fly 540 to take on Kenya Airways who have dominated the increasingly busy route for years.
– The Kenya Power & Lighting Company (KPLC), who currently achieve 95% collections, have advertised to outsource their debt collections.
– The Kenya Wildlife Service (KWS) has advertised to upgrade their smart card system for park entry.