Ladi Runsewe is the Founder and Chief Executive Officer of UR Family Office (UFO). Ladi previously worked for Barclays Private Bank & Overseas Services for over seven years, advising African ultra-high-net-worth families.
High-net-worth families seek simplicity, stability, and value. The norm of private wealth has shifted, now relying on trusted family offices that can go further than traditional wealth managers and private banks. Multi-family offices such as UFO bring everything together for their clientele while offering one point of contact for all their unique needs, coordinating banking, providing investment services, managing household staff, managing properties, organizing philanthropy, coordinating family education, improving global mobility, ensuring intergenerational wealth transfer, and providing legal and tax services.
These families are experiencing freedom and transparency they have longed through their family office and can focus on their current concerns and pursue new interests.
Nigerian high-net-worth families continue to have a portion of their wealth offshore for various reasons such as security, mitigating sovereign risk, hedging against currency risk, and taking up opportunities to raise cheaper capital abroad to invest the proceeds back into Nigeria.
What was not a major topic before 2019 is the increasingly common trend of high-net-worth families seeking alternative citizenship and enhanced global mobility. Make no mistake, these families love Nigeria and would never permanently move despite all the challenges that exist. Nigeria is where they have built their wealth and grown their businesses, and where their relationships are. Where they are free, respected and have no limitations, including traveling with their Nigerian passports due to having long-term multiple visas in place.
The events of late 2019 and 2020, namely the Covid-19 pandemic and the EndSARs movement, brought a mind shift to many families, accelerating their decision to ensure greater physical mobility and pursue migration options. Nigerians felt that their safety and security were compromised, and they were limited to relying on the local healthcare system as opposed to being able to travel overseas for medical attention.
There has been a significant surge in interest in alternative citizenship because high-net-worth families are now actively seeking options that provide access to better healthcare and ensure stability and security for their families. Patriarchs and matriarchs still carry the hope that the standard of living will improve in their country but in the interim, they are securing their wealth offshore as a priority.
While Nigeria is a dynamic place for business activities and commercial growth, with high-yielding investments, investment firms and money managers for private clients locally still lack a variety of solid solutions. Their track records to prove their ability to withstand tough market conditions are weak. High-net-worth families continue to invest in their own businesses locally and backup direct investments in sectors in which they have a strong conviction but of necessity they also continue to invest in sophisticated investments offshore for growth and stability.
Nigeria is not alone in facing an unprecedented financial crisis owning to restrictions in China because of Covid-19. The level of inflation and the tightening of policy by Western central banks has led to a higher cost of borrowing to add to the existing obstacles faced by financial institutions. While local firms are doing their utmost, they need to build more trust in the longevity of the solutions they are providing for multi-generational wealth preservation.
The future will bring a shift to onshore firms once they can demonstrate that they can retain and grow wealth in the country. This is desperately needed to support Nigeria in stabilizing and strengthening its economy.