The Rise of the African Middle Class?

 

As a woman of African heritage, I have seen and heard many misconceptions of Africa. I am sure you have heard of this one-the infamous stereotype where Africans live in huts and drink dirty water. Growing up, I showed pictures to acquaintances and school friends of my holidays in Africa. It was always met with disbelief. They could not believe how beautiful Africa was.

As Africa’s economy is growing stronger, its image is slowly changing, something that should be welcomed and acknowledged. The image of huts and children drinking dirty water is changing into ‘Africa is finally on the path to becoming a consumer society’. They call it the ‘rise of the African middle class’. However has there not always been a middle class in Africa? Is it just because Africa’s GDP has become steady in recent years that there is now a middle class?  Has the middle class suddenly come into existence? There always has been a middle class in Africa. I hear family stories of my great grandmother (and many others in my family and beyond), being a educated woman who loved and could afford the finer things in life. Africans have always driven flashy cars and worn designer brands. There are factors that separate the African middle class of today to the African middle class of yesterday. The main difference between the middle class of the past and the middle class of today, is that there are simply more people in the middle class. There are more Africans after spending on necessities who now have the resources to spend discretionally on consumer goods.

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According to African Development Bank, the African middle class which was numbered 115 million in 1980 has risen to 326 million in the past three and a half decades. This is set to increase, with the number of middle class households in 11 key African economies (Angola, Ethiopia, Ghana, Kenya, Mozambique, Nigeria, South Sudan, Sudan, Tanzania, Uganda and Zambia excluding South Africa) to triple to 22 million by 2030 according to the Standard Bank figures. This includes lower middle class households to increase to 40 million in 2030 from the 15 million households of today.

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As reported by the Standard Bank, the 11 economies account for over of half of Sub-Saharan Africa’s total GDP (75% if South Africa is included), a population of over 525 million people (over half of Africa’s population) and an average growth of 6.3% in 2013 and a predicted growth of 6.5% forecast for 2014.

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The surge in African household incomes has brought more into the middle class group and therefore more are spending on healthcare, financial services, mortgages, education, vehicles and luxury items. The owner of The Wish Collection, a luxury store, Caron Koonin says, “The more money people make, the more they want the finest products. There’s always aspirational value”.  When an individual’s income increases, the more likely it is they would want to spend more on luxury items. This does not just happen in Africa as analysts have reported but also across the majority of middle class households in the world. Caron Koonin’s store, in Sandton City Mall Johannesburg, is the biggest shopping centre in Sub-Saharan Africa. The Wish Collection has a  large clientele with shoppers from oil rich Angola, Nigeria and Ghana. No longer are the middle class travelling abroad in order to spend, the money is staying within the continent.

Although the African middle class will grow to 1.1 billion in 2060 as the Deloitte Report (The Rise and The Rise of the African Middle Class) suggests, there are a number of problems that could impact the growth of Africa. These risks that are threatening to disrupt the continent’s growth include the current outbreak of Ebola in West Africa, Islamic extremism and growing fiscal imbalances in some countries. The IMF has warned that trade and tourism and investment confidence in some countries could be affected as the outbreak takes its toll in Sierra Leone, Liberia and Guinea. There is cause of concern with security issues in Northern Nigeria, Cameroon, Mali and Kenya as well as conflicts in South Sudan and Central African Republic. Ghana and Zambia have widening fiscal deficits driven by an increase in public sector wages and other expenditures. As a result, it has fuelled inflation and exchange rates.

We must not forget that though it is good news that there are many climbing out of poverty, more needs to be done. Africa is enjoying an era of promising economic growth that has lead to ‘The rise of the African middle class’ and what many call ‘Africa Rising’. The poorest countries in Africa are likely to see the fastest growth rates in the world, averaging more than 8% in Chad, Democratic Republic of Congo and Mozambique. However, corruption still remains and governments are slow to build efficient institutions for the long term. There is also a need for some African countries to diversify their economies beyond its commodities. Nigerian economists are concerned about the sustained lower global prices for oil, on which the state depends for at least 80% of its revenue. Ghana earlier this year (after a warning by the IMF) introduced measures in an attempt to diversify its economy by encouraging farmers to produce rice, sugar and poultry (which costs the country $1 billion a year to import).

The media in some African countries are under attack and some politicians are overreaching their mandate by extending their legal terms in office. Furthermore, jobs are lacking in a ever more educated generation especially for the youth. Take Nigeria for example, the continent’s biggest economy has 56% of its youth unemployed. Economic growth is high, but inequalities still exist. Though Africa has the fastest growing middle class and wealth is slowly trickling down, it is not translating into improving the livelihoods for the majority. Additionally, the lower end of the middle class is fragile and many are vulnerable to poverty.The recent US-Africa Leaders Summit demonstrated the great investment and business opportunities in Africa. Whilst leaders were praised at the summit for economic development in their individual countries, political and social issues are yet to be tackled. It is time for Africa’s leaders and politicians to understand economic growth alone would not solve Africa’s challenges. Investment in health, education, infrastructure, agriculture and most importantly good governance will tackle the continent’s challenges.

The head of the African Development Bank, Donald Kaberuka said, “you can’t eat GDP ”. Strong growth is simply not enough. Better governance is the only solution to Africa’s challenges.

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