Negotiating the Investment Landscape as an Expat in Africa

A large number of my clients live and work across Africa. Why Africa? For many, the earning potential in countries like Zambia, Angola, Mozambique, and Nigeria is significantly greater than what they might achieve back home.

However, while the financial rewards can be substantial, the region often lacks the corporate benefits that many expats are accustomed to, such as pension plans and savings solutions. This creates a unique challenge: with higher earnings, expats are often unsure where to invest; locally in Africa or back home?

As an independent international adviser, I work with clients to secure their wealth in stable economies, providing tax-efficient solutions that deliver benefits during both the investment phase and on withdrawal, whether in their home country or elsewhere. Here are some key considerations for expats in Africa.

Investing in Stronger Currencies

Many African currencies are highly volatile, often depreciating significantly against stronger currencies like the USD, GBP, or EUR. For example, in the past five years, the Kenyan Shilling and South African Rand have both dropped by over 18% against the USD.

This depreciation can erode your purchasing power and limit the future value of your wealth. Shifting your investments into stronger currencies provides a layer of protection and can even grow your wealth. For those retiring in South Africa or elsewhere, converting back to local currency later could offer significant advantages.

High Interest Rates Aren’t Always What They Seem

I often hear clients say they save with local banks because of high interest rates. However, these rates can be misleading when paired with depreciating currencies.

Take South Africa as an example: while you might earn 18% interest over five years, the ZAR has fallen by a similar percentage against the USD in that time. When you account for inflation, which averages over 5% annually, the real value of your savings could decrease by as much as 25%. High interest rates often reflect higher risks, which local banks pass on to their customers.

Protecting Your Wealth

One of the key advantages of investing offshore is the enhanced protection for your assets. In the UK, regulations from the Financial Conduct Authority (FCA) and schemes like the Financial Services Compensation Scheme (FSCS) safeguard deposits up to £85,000. If a bank fails, this protection can be a lifeline.

In many African countries, similar protections don’t exist or are still in development. For example, South Africa is working on a deposit insurance scheme, but it’s not yet operational. Offshore jurisdictions like the UK, Europe, and the Isle of Man offer much stronger safeguards, with some even providing up to 90% uncapped capital protection.

Tax-Efficient Investment Solutions

Offshore jurisdictions like the Isle of Man or Mauritius offer tax-free growth opportunities, known as "gross roll-up." Investments grow without being taxed along the way, which can make a significant difference over time. Depending on your residence, these solutions can also provide tax benefits at withdrawal, offering even more flexibility for expats.

Globally Portable Solutions

As an expat, moving between countries, perhaps from Zambia to Angola, or Tanzania to Rwanda, is common. Opening new savings accounts or withdrawing from multiple plans every time you relocate can be a logistical headache.

Take Action Today

At Skybound Wealth Management, our solutions are designed to be internationally portable, allowing contributions and withdrawals no matter where life takes you. This flexibility ensures your investments remain secure, aligned with global regulatory standards, and tailored to your long-term goals.

If you’re an expat in Africa seeking to grow your wealth securely, tax-efficiently, and with global portability, I’m here to help. Let’s explore how we can create a tailored solution that works for you.

Connect with Kieron Donovan

A respected financial adviser at Skybound Wealth Management, Kieron Donovan specialises in helping South African expatriates achieve their financial goals. With many years experience, including significant time based in Abu Dhabi, he possesses expertise in offshore banking, estate planning, and tax-efficient investments. Kieron serves clients globally, particularly in Africa and Asia.

If you are a South African expatriate seeking more secure, tax-efficient, and higher-performing investment solutions, Kieron Donovan is here to help. Let us work together to ensure your financial future is prosperous and secure.