Abstract
Dollarisation in emerging economies of Southern Africa like Zambia and Zimbabwe, led High-Income Earning Individuals (HIEI) to invest offshore as an investment diversification strategy. The turbulent past experiences influenced African HIEI behavior in relation to their wealth management approaches. HIEI started looking for ways to protect its financial assets against future political and economic volatilities. The purpose of this study was to equip academics and the wider commercial fraternity with practical and strategic knowledge of the emerging markets’ offshore wealth management services industry. This would assist emerging markets to regulate HIEI markets, boost capital flow, fight tax evasion to allow banks to assist, help governments protect pensions, promote transparency in investments and avoid negative effects of dollarisation. Data were collected from 81 participants including HIEIs with offshore investments, those individuals without, financial advisors, and the Securities Exchange Commission (the industry regulator). The study used a qualitative approach in its methodology using questionnaires, interviews, and a computer-aided system for data analysis. We found that HIEI feels their wealth is under attack and looks towards offshore investing as a refuge. We identified the desperate urge of African HIEIs to secure their wealth as the main influence driving the offshore investing phenomenon
Highlights
One of the countries that dollarized in the early 2000s in southern Africa was Zimbabwe
The research has identified that the wealth management process requires a relationship to exist between the client and the financial advisor to allow for a systematic structure of goal setting, implementation, monitoring, and adjustments where necessary
Findings from the literature, mostly by Butler (2012), highlight the importance of incorporating all the elements of wealth management, i.e., the financial, tax, legal, and estate planning essentials, into a holistic process that effectively allows the client to achieve their medium to long term financial objectives
Summary
One of the countries that dollarized in the early 2000s in southern Africa was Zimbabwe. Zimbabwe is one of the countries located in the Sub-Saharan. The Zimbabwean economic crisis, which first began at the start of the millennium, saw the advent of dollarisation almost a decade later in 2009. Dollarisation was a response by the Zimbabwean government to sojourn the effects of hyperinflation and economic decay that were taking place at the time. Many people lost their financial investments in the form of pensions, personal savings, life, and insurance policies. The Zimbabwean dollar (ZWD) was phased out and the multi-currency structure was introduced at the start of 2009
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