Emerging Markets: Joining the Global Ranks of Wealth Creators

EMERGING MARKETS: JOINING THE GLOBAL RANKS OF WEALTH CREATORS AFRICA , CENTRAL & EASTERN EUROPE, MIDDLE EAST IN ASSOCIATION WITH: EMERGING MARKETS: JOINING THE GLOBAL RANKS OF WEALTH CREATORS CONTENTSCONTENTS ■ Executive Summary.......................................................................................................2 ■ Key Findings....................................................................................................................3 ■ Introduction.....................................................................................................................4 ■ Openness and Social Attitudes ............................................................................5 ■ Openness and Social Attitudes: Central and Eastern Europe .................6 ■ Openness and Social Attitudes: Africa .............................................................9 ■ Openness and Social Attitudes: The Middle East ......................................12 ■ Global Citizens ..........................................................................................................14 ■ Building a Global Company .................................................................................16 ■ Display of Wealth .....................................................................................................20 ■ Spending: Investments and Pursuits ...............................................................24 ■ Methodology ..............................................................................................................27 ■ Appendix: Statistical Information on Ultra High Net Worth Individuals in Central and Eastern Europe, Africa and the Middle East ............................28 Emerging Markets: Forbes Insights and Joining the Global Ranks of Societe Generale Wealth Creators—Africa, Central Private Banking & Eastern Europe, Middle East would like to extend analyzes 250 fortunes in these their thanks to the billionaire and up-and-coming regions. The multimillionaire SUMMARY report is also based on inter- businesspeople who views with billionaires from shared their time and these emerging markets, as well expertise with us: as editors of Forbes local lan- guage editions, and Forbes and ■ Sudhir Ruparelia, Forbes.com wealth analysts. Doctor of Business Administration, Chairman, Ruparelia Emerging-market fortunes Group, UGANDA differ from those in mature mar- EXECUTIVE EXECUTIVE kets in terms of the openness of ■ Jan Kulczyk, Ph.D., ultra high net worth individuals Founder and Chairman, (UHNWIs) about their holdings Kulczyk Investments, and fortunes, as well as their POLAND countrymen’s attitudes toward gathering wealth. Although entrepreneurs from emerging ■ Victor Pinchuk, markets have made impres- Founder of international sive strides in building global investment advisory companies, they are still at a dis- company EastOne Group advantage in terms of creating Ltd., UKRAINE global brands. Because their fortunes are mostly first generation, ■ Stephen Saad, the personal money manage- Co-founder and Chief ment practices in the emerging Executive Officer, Aspen markets are also at an earlier Group, SOUTH AFRICA stage than in mature markets. 2 | EMERGING MARKETS ◆ Businesspeople in the emerg- participation in global business as a way to ing markets of Africa, Central circle back to their homelands and communi- and Eastern Europe and the ties, with which they strongly identify. Middle East have joined the ranks of global billionaires. Some ◆ Building a top global business of the individual fortunes that have been cre- is tougher than joining the ranks ated there, in some cases in just over two of global billionaires. While a major- decades, can be breathtaking. However, they ity of businesses studied for this report are FINDINGS are not yet up to the levels of mature markets, international, just 6% of the world’s 2,000 such as the United States and Western Europe. largest public companies are owned or co- owned by billionaires from Central and The openness of the wealthy ◆ Eastern Europe, Africa or the Middle East. KEY about their fortunes correlates However, billionaires from these regions directly with the attitudes of account for 14% of the world’s billionaires. their countrymen toward them, and both of these are lower for emerg- ◆ The wealthy from emerging ing markets studied for this report than in markets are slightly more under- mature markets. The more open the wealthy stated than those from mature are about their fortunes, the more their coun- markets. However, there are vast dif- trymen accept them. ferences among emerging countries and regions with regard to wealth display, with ◆ Attitudes toward wealth and the Middle East and Russia having the high- wealth creation vary greatly est levels of display, and Central Europe and among individual nations. For Africa the lowest. instance, although the system change in Central and Eastern Europe happened ◆ Sports, philanthropy and poli- roughly at the same time, the diff erences tics are among the top pursuits in speed with which particular countries of billionaires from emerging embraced free markets, as well as their own markets studied for this report. national histories, resulted in varied attitudes. While some of these pursuits are investments, In some countries it is still an uphill battle for and some are philanthropic, the billionaires entrepreneurs to convince their countrymen are often trailblazers in how they approach that wealth creation is a positive phenomenon. these areas. ◆ The majority (78%) of emerging-market fortunes studied for ◆ Technology is seen as the this report are ﬁ rst-generation, industry that will vault emerg- with Russia being 100% ﬁ rst- ing markets ahead, transforming them generation. The emerging markets’ into high-value-added producers who do not billionaires speak a common, global lan- need to rely on inexpensive labor or natural guage of business, but they often see their resources for growth. COPYRIGHT © 2013 FORBES INSIGHTS | 3 he world is currently going and Western Europe, but they are catching through twin gilded ages, up fast considering the short timespan since points out Chrystia Freeland their inception. in her book Plutocrats, The Apart from the size of the fortunes, there Rise of the New Global Super- are ways in which going through a burst of RichT and the Fall of Everyone Else. wealth creation for the fi rst time can be a For the Western, mature markets, this is disadvantage, as emerging markets are still the second time a gilded age is taking place. building regulatory institutions, business The fi rst gilded age happened during the late practices and political systems, which mature Industrial Revolution, in the 19th century. It markets have been strengthening over the last is known as the Gilded Age due to the huge century. fortunes amassed at the time. Today many of the countries in emerging markets are industrializing or have replaced their planned communist or socialist econo- AVERAGE SIZE OF FORTUNE OF mies with free, or freer, markets, making the INTRODUCTION current twin gilded ages a political phenom- THE 20 RICHEST INDIVIDUALS enon in regions such as Central and Eastern Europe as well as Africa. In mature markets much of the engine of the current gilded ● United States: $24.3 billion age comes from the burst in technological advancement, which serves as a global eco- ● Western Europe: $20.1 billion nomic accelerant for all markets. In his book The Next Convergence: The ● Russia: $10.1 billion Future of Economic Growth in a Multispeed World, Michael Spence, winner of the Nobel ● Middle East: $7.6 billion Prize in economic sciences, points to the historic proportions of this convergence in ● Central & Eastern Europe: $3.2 billion wealth creation. Back in 1950, 750 mil- lion people lived in industrializing countries ● Africa: $2.3 billion and the remaining 4 billion-plus were left behind, Spence writes. ● Turkey: $2.0 billion “Today we are at a midpoint in the pro- cess of two parallel interacting revolutions: the continuation of the Industrial Revolution in SOURCE: FORBES the advanced countries, and the sudden and dramatic spreading pattern of growth in the developing world,” writes Spence. “The end point is likely to be a world in which perhaps The wealth creators in emerging markets 75 percent or more of the world’s people live are working at gaining acceptance by their in advanced countries with all that it entails.” countrymen. They are competing around This report analyzes this fi rst wave of the world to build global brands, investing wealth creation in several of the world’s to enrich not just themselves but also their emerging markets—Central and Eastern countries, and following pursuits such as Europe, Africa and the Middle East. sports and philanthropy. This report looks at Businesspeople in these regions have the challenges they face in joining the global joined the ranks of global billionaires. In fact, ranks of wealth creators and how they over- some of the individual fortunes that have come them, as well as the advantages they been created there, in some cases in just over have as entrepreneurs from regions where two decades, are breathtaking. They are not they have had to be more resourceful in cre- yet up to the levels of the largest fortunes in ating their businesses mostly from scratch, mature markets, such as the United States and with fewer models to follow. 4 | EMERGING MARKETS “In our continent, a balance between commercial success and an investment back into

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