Building Generational Wealth Beyond First-Generation Success
Across Africa, there is a rising class of first-generation wealth creators: entrepreneurs, professionals, and investors who have managed to escape poverty and build financial stability. Yet studies consistently show that most of this wealth does not survive beyond the first generation. According to the African Wealth Report (2023), over 70% of family wealth is lost by the second generation, and over 90% by the third. This cycle, often described as “shirtsleeves to shirtsleeves in three generations,” is painfully visible across the continent.
The reasons are both cultural and structural. Many African families avoid conversations about money, treating them as taboo or uncomfortable, which leaves children ill-prepared to inherit and manage assets. Estate planning tools such as wills, trusts, and insurance are underused, partly due to a lack of awareness and partly because of distrust in legal and financial systems. The result is that when the wealth creator dies, assets are fragmented, contested, or consumed quickly. In Nigeria and Ghana, legal disputes over land and inheritance are among the most common civil cases, often dragging on for decades while wealth deteriorates.
Generational wealth requires deliberate planning. Estate planning is one element: trusts and wills are legal vehicles that ensure assets pass smoothly to heirs. In South Africa, the widespread use of family trusts demonstrates how wealth can be protected from disputes and taxation. But beyond legal structures, financial literacy transfer is equally critical. Families that create a culture of openness around money, where children learn about budgeting, investing, and wealth management early, are far more likely to sustain assets across generations.
Business succession planning is another underappreciated aspect of African wealth continuity. Small and medium-sized enterprises make up the bulk of wealth creation on the continent, but most are tied directly to the founder. When the founder dies or retires, the business collapses, leaving heirs with liabilities instead of assets. Formal succession plans, professional management, and training of the next generation are the antidote.
True generational wealth is therefore not only about accumulation but about systems that ensure continuity. For African wealth builders, the real test is not how much they can generate during their lifetime, but how much of it survives and grows after they are gone.
