How Can Africans Build Wealth?

Culture Eats Strategy For Breakfast. - Peter Drucker

In a recent conversation sparked by Adedayo Ademuwagun’s post about the challenges of wealth-building in inflation-stricken economies, particularly Nigeria, a question arose: How can an African build wealth?

This question taps into a broader conversation about financial independence and wealth-building in Africa, where many citizens grapple with high inflation rates, unstable economic policies, and energy and infrastructure deficits. 

So, how can Africans build wealth in this sort of environment? While there are no simple answers, I believe that despite their challenges, stock markets and entrepreneurship remain two of Africa's best long-term wealth builders. However, it’s crucial to recognize that the driving force behind these strategies isn’t just economic tools—it’s a cultural shift in attitude.

Culture and Attitude 

The key factor that ties stock market investing and entrepreneurship together, as cliché as it sounds, is mindset. Both strategies are viable wealth builders but require a cultural shift in how Africans approach business, risk, and financial independence.

I am not suggesting Africans do not have business acumen; rather, I have been a big proponent of leaning more into African history and tradition, where precolonial African societies engaged in sophisticated trade networks, communal wealth-building practices, and entrepreneurial ventures. Historically, Africans built wealth through community-based initiatives, as seen in the cooperative structures and traditional education systems emphasizing vocational skills.  However, the colonial legacy has shaped a mindset where success is often equated with academic education and jobs in formal sectors, particularly those that align with Western ideals

Many African societies, especially those in former French colonies, have inherited a system that equates formal education and white-collar jobs with success, sidelining practical skills and entrepreneurship. This school-to-job pipeline narrative creates an overreliance on academic qualifications, leading many to pursue degrees that do not necessarily translate to the practical needs of African economies. As a result, there is a mismatch between the supply and demand of skills in the labour market, with youth unemployment among those with an advanced or intermediate level of education higher than among those with basic education.

Historical examples

Moreover, post-colonial education systems often prioritize knowledge-based education at the expense of skill-based learning. While knowledge-based education fosters innovation, Africa's challenges and opportunities require balancing knowledge and practical skills. The experiences of the United States and Japan provide valuable lessons on how such a balance can drive economic growth:

Japan rebuilt its economy post-WWII by investing in its people and entrepreneurial spirit. A cultural shift toward skill-based education and innovation drove the success. Likewise, in the United States, the transition from an industrial to a knowledge-based economy was supported by a skilled workforce, ensuring a segment of the population possessed practical competencies to sustain society while also driving innovation through formal education. This balance between skill-based and knowledge-based education was crucial for sustaining populations, fostering enterprise, and inspiring innovation.

Like Japan post-World War II, many African nations are in a building phase, and investment in technical education (especially on our abundant natural resources) should be a cornerstone for economic revival and technological advancement. For instance, Ghana’s University of Mines and Technology (UMaT) in Tarkwa has been pivotal in training engineers and technicians specifically for the mining sector. This institution tailors its programs to the country’s rich mineral resources, ensuring the workforce is equipped to manage and develop these assets. This approach exemplifies how technical education, designed by and for the country, can drive economic growth and sustainability. As African economies shift toward digital and knowledge-based industries, a diverse educational system balancing industrial skills and knowledge-based competencies will be vital for long-term growth.

The Caveat

Africans must move away from the idea that wealth-building is exclusively tied to formal employment or academic achievements. Instead, the focus should be on creating value through business ventures, innovation, and participation in the financial markets in a more structured manner. It’s not enough to rely on the government or external aid; the entrepreneurial spirit must surpass entrenched societal attitudes prioritizing immediate stability (through jobs) over long-term wealth creation (through risk-taking and investments). This shift is challenging, especially for many Africans who live in abject poverty, where long-term planning and taking substantial risks seem almost unthinkable.

Thus, the responsibility lies with the few who can—the ones who dare. Mass media/culture theory posits that the masses follow what the elite do- see fashion, food, technology etc. This is how standards are set. Right now, it is not common for even the middle- to upper-class African society to endeavour in passive or active business activities. Most of us, within Africa and all over the diaspora, thrive on our well paid employment with benefits. Things would change if we started shifting the narrative- with our children, our media, our traditions.

The Role of Stock Markets in Wealth Building

Building wealth in the stock market is fundamentally about long-term commitment. When you purchase stocks, you become a part-owner of a company, entitled to a portion of its profits. Over time, as the company grows and reinvests its earnings, the value of your shares increases—this is known as capital appreciation. In addition, many companies pay dividends—a portion of profits distributed to shareholders—providing investors with a steady income stream. Historical data shows that equities consistently outperform other asset classes, like bonds or real estate, when held for the long term. African stock exchanges such as the Nairobi Securities Exchange (Kenya), Johannesburg Stock Exchange (South Africa), and the BRVM (West Africa) have shown that long-term growth can outpace inflation, allowing investors to build sustainable wealth even in challenging economic environments.

There are currently 29 stock exchanges across the African continent, with the JSE standing out as the 16th largest stock market in the world. It boasts historical returns that have outperformed many developed markets. 

Inflation 

For many Africans, stock markets might seem like an unattainable or unreliable path to wealth, especially in countries like Nigeria, where high inflation has consistently undermined returns. Adedayo rightly pointed out that persistent inflation discourages investment in stock markets, given how difficult it is for assets to grow meaningfully in real terms. Millennials worldwide are skeptical about investments their parents once made, which have now turned sour. Yet, the solution to wealth-building cannot be to avoid investment altogether. It’s important to consider that some African stock exchanges have consistently outpaced inflation over the long term.

Take Kenya, South Africa, Egypt, and the BRVM (Bourse Régionale des Valeurs Mobilières)—they’ve shown significant long-term growth, as data from TradingEconomics indicates. These markets have exceeded inflation rates and offered investors real returns. This shows that investing in African equities can yield meaningful wealth, even in inflationary contexts, when approached with a long-term mindset.

That said, policymakers in African nations need to take a stronger stance on inflation control. As Adedayo said, how can wealth be built when people are “jogging on the spot or walking backward”? Governments must recognize that inflation is not just an economic issue—it’s a societal one. When people see their savings evaporate and their investments lose value, trust in the system diminishes and discourages future financial planning.

Active Investing vs. Passive Investing

It’s crucial to see stock market investing and entrepreneurship as two sides of the same coin. Both involve taking calculated risks in the pursuit of wealth, but they do so in different ways. Stock market investing is passive, allowing individuals to build wealth by owning shares in companies and letting others manage the day-to-day operations. Entrepreneurship, on the other hand, is active investing—requiring hands-on involvement and creativity.

The active investment approach has long been a part of African culture. Take the Igba Boy initiative in southeastern Nigeria, where young boys enter business apprenticeships under established entrepreneurs. Over several years, they learn trade skills, save money, and eventually start their own businesses with the support of their mentors. This system has created billionaires and generations of self-reliant entrepreneurs, showing that the entrepreneurial spirit is deeply rooted in African traditions. It emphasizes mentorship, skill-building, and community investment, all of which can drive long-term economic growth. To truly build wealth in Africa, there must be a cultural revival of entrepreneurial thinking, where risk-taking and wealth-building are celebrated and supported by society.

Looking Ahead: A Sustainable Wealth-Building Strategy

So, how can an African build wealth in the face of inflation and economic uncertainty? Here are a few key takeaways:

1. Cultural Shift is Necessary: Success in wealth-building isn’t just about having access to the right tools—it’s about embracing a mindset that values long-term growth, risk-taking, and innovation over immediate stability.

2. Stock Markets Still Matter: Despite inflation, some African stock markets have consistently outpaced inflation and remain strong long-term wealth builders. Investing in stock markets needs to become mainstream.

3. Accessible Financial Tools: Read personal finance books and newsletters *cough cough*. Consume more personal finance content. Destigmatize money conversations.

4. Entrepreneurship as a Wealth Engine: Starting a business, particularly in high-growth sectors like tech and agriculture, offers another viable path to building wealth, particularly in economies with limited stock market access.

5. Policymaker Accountability: Finally, and perhaps most importantly, African policymakers must be held accountable to create a sustainable business environment. Without controlling inflation, even the best investment strategies will fall short.

Wealth-building in Africa is not much different than wealth building elsewhere - it involves more than just financial strategies; it requires a transformation of mindsets and cultures. By embracing entrepreneurship, making wise investments in the stock market, and advocating for supportive policies, Africans can overcome economic challenges and establish lasting prosperity. The path to wealth is not easy, but it is achievable through persistence, education, and calculated risk-taking. As more Africans adopt these principles, they will not only build personal wealth but also drive the economic renaissance of the continent. The future of African wealth depends on those bold enough to seize it, one investment, one business, and one innovation at a time.