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BUSINESS MAVERICK 168

Forbes 2021 billionaires list: During the pandemic, the very rich got very much richer – even in South Africa

According to the latest Forbes rich list, the fortunes of five prominent South African businessmen reached dizzying heights during a pandemic that otherwise impoverished millions and put livelihoods at risk.

First published in the Daily Maverick 168 weekly newspaper.

The Covid-19 pandemic has been glorious for the world’s richest people, including a coterie of South African billionaires.  

The 2021 Forbes annual billionaires list includes a record-breaking 2,755 billionaires, with the plutocrats bringing a combined fortune of $13.1-trillion (about R188.7-trillion at the time of writing), up from $8-trillion on the 2020 list. About 493 people joined the rich list – roughly, one new billionaire was added every 17 hours.  

“The very, very rich got very, very richer,” Forbes’s editor, Randall Lane, told Reuters about the pandemic’s impact on wealth generation for the ultrawealthy.

Arguably, there’s something perverse about the swelling fortunes of ultrahigh-net-worth individuals considering that the pandemic threatened the lives and livelihoods of millions across the planet, and worsened already stubborn inequality levels.

Even South African billionaires (in US dollar terms) featured in the Forbes billionaire list, their fortunes having reached dizzying heights.

Among local billionaires, the highest on the list is Nicky Oppenheimer, whose family fortune was generated mostly from investments in diamond firm De Beers and mining group Anglo American. Oppenheimer is the front-runner among South Africans, with a net worth of $8-billion (R114.2-billion) in 2021, up from $7.4-billion in 2020. He is followed by Johann Rupert, the chair of Swiss luxury goods firm Richemont, who has a fortune of $7.1-billion (R101.4-billion), up from $4.6-billion.

Others on the Forbes list are the chairperson of global media group Naspers, Koos Bekker, with a net worth of $3-billion (R42.8-billion), up from $2-billion; the founder of mining and minerals company African Rainbow Minerals, Patrice Motsepe, who has a fortune of $2.9-billion (R41.3-billion), up from $1.4-billion; and Capitec Bank founder Michiel le Roux, who re-entered the rich list with a net worth of $1.1-billion (R15.6-billion).

Their combined fortune is worth R315-billion, equivalent to about 60% of Eskom’s total debt, which is nearing R500-billion. Put differently, their fortune could help alleviate debt pressures at Eskom, the struggles of which are the biggest threat to SA’s economy.

Although the rich got spectacularly richer during the pandemic, some did humanitarian good with their wealth. For example, the Oppenheimer, Rupert and Motsepe families each pledged R1-billion to help financially distressed small businesses get through the pandemic. And, through their respective companies, the billionaires are big job creators. As Paul Theron, CEO of Vestact, a company that specialises in stock market investing on behalf of private clients, put it: “The more billionaires, the better.”

The 2021 Forbes list also saw two South African billionaires tumble down in the ranking of their fortunes. For instance, Oppenheimer ranked 308th on the 2021 list (down from 196th in 2020) and Capitec’s Le Roux ranked 2,524th (he didn’t feature in the 2020 list but came in at 1,818th in 2019). Other billionaires improved in their rankings in 2021: Richemont’s Rupert moved up 17 positions to 358th, Naspers’s Bekker moved up 55 positions to 1,008th, and African Rainbow Minerals’ Motsepe moved up 449 positions to 1,064th.

Wealth in the rest of Africa

Yet South Africans don’t match up to the  dominant billionaire in Africa as a whole. The frontrunner in Africa is Nigerian businessman Aliko Dangote, Africa’s richest person. He founded and chairs Dangote Cement, the continent’s largest cement producer. Dangote topped the Forbes Africa rich list, with a fortune of $11.5-billion (R163.6-billion), ranking 191st.  

The Forbes methodology mostly uses investments by billionaires in publicly traded companies and carefully estimates their private holdings to determine their net worth.

So, when compared with rich people in the rest of Africa and the world, are South African billionaires underperformers, or does their fortune reflect markets in which most of their wealth is invested and stashed?

To answer this, Vestact’s Theron said it depended on where the rich invested their wealth and which asset classes they preferred to back. He said the big uptick in global markets – especially technology stocks – during the pandemic had probably “allowed other” billionaires from the rest of Africa and globally “to leapfrog ‘our’ billionaires”.

Markets hit new highs

Lending credence to Theron’s views is that US tech or FAMAG stocks – Facebook, Apple, Microsoft, Amazon and Google parent company Alphabet – have been on a tear since April 2020. By December 2020, these stocks were on average up more than 40% on their value at the start of the year. Jeff Bezos, the founder of Amazon, benefited handsomely from investments in his mega e-commerce company, helping him top the Forbes list once again. He has a fortune of $177-billion (R2.5-trillion).

Holding stocks exposed to global markets also helped SA’s Rupert and Bekker grow their fortunes. Rupert holds Richemont shares and Bekker holds Naspers shares – each up 20% on the JSE in 2020.

Even billionaires exposed to SA’s economy through the JSE, including Motsepe (who has investments in Sanlam and African Rainbow Minerals) and Capitec’s Le Roux, were rewarded. The JSE All Share Index’s rate of return improved by 7%  in 2020. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.

 

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