Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


Africa's new middle class driving growth

10 May 2013, 18:08 Reuters

Nairobi - After years of headlines about Africa's poverty, its emerging middle class is now grabbing attention as a driver of growth and democracy and an expanding pool of consumers for market-hungry retailers.

Consumer demand is a motor of Africa's economic and investment surge, and analysts see middle class buyers with swelling disposable income as fuelling this boom from South Africa to Nigeria and Kenya.

In its Africa Pulse report last month, the World Bank said consumer spending accounted for more than 60% of Sub-Saharan Africa's buoyant economic growth, which it forecast would accelerate to more than 5% over the next three years, far outpacing the global average.

"It's probably the fastest growing consumer class in the world, as a region," said Michael Lalor, director of Ernst & Young's Africa Business Centre in Johannesburg.

From mobile phones, cars, food, and clothes to financial services and entertainment, multinational companies are homing in on lucrative new markets as millions of Africans aspire to claw their way out of still widespread poverty.

"The poor don't drive demand in an economy, it's the middle class that drive demand in an economy," African Development Bank Chief Economist Mthuli Ncube said.

"Reducing poverty means creating a middle class. Sometimes people think pushing the middle class means forgetting about poverty, but it's the other side of the coin," he added.

Global demand for African commodities, driven by China, has also boosted economic growth along with strong investment in productive industries and infrastructure. The World Bank forecast foreign direct investment in Sub-Saharan Africa will reach $54bn by 2015, up from $37.7bn in 2012.

At the same time, a greater number of African countries are achieving relative stability in politics and economic policy, allowing the middle class to emerge.

Accurately quantifying this African middle class has become an obsession for institutions such as the African Development Bank (AfDB) and World Bank, as well as consultancies advising corporate clients seeking an edge in this booming continent.

But this is a challenging task in a very diverse region - still the least developed on the planet - where reliable data is patchy and whose more than 50 economies range from regional powerhouses South Africa and Nigeria to UN Development Index laggards such as Niger and Mozambique.

A consuming class

"There are elastic definitions ... The middle class is very different in Kenya, for example, where you need far less disposable income than you might need in the United States," said Ernst & Young's Lalor.

One of the most frequently quoted - and debated - studies is a 2011 report by the African Development Bank. This said that, based on a daily per capita consumption definition of $2-20, Africa's middle class had risen by 2010 to 34% of its population - or nearly 350 million people - from about 126 million or 27% in 1980.

Given that $2 a day or below is widely accepted globally as a poverty indicator, many economists see the AfDB's middle class range, as cited in its 2011 report, as too broad and optimistic.

Standard Bank economist Simon Freemantle says other studies indicate a more "African-appropriate" measure of middle class level income of between $15 and $20 a day. "There, Africa's middle class would be closer to 120 million, out of a population of just over a billion, so roughly 10%" he said.

Citigroup's Africa Economist David Cowan preferred not to use the term "middle class" at all in relation to Africa. "I don't believe there's an African middle class," he said, when compared with Europe or Asia.

Cowan would rather speak of a rapidly expanding "huge consuming class", with ideally $5 000-7 000 of disposable income a year ($14-19 a day).

"That's a level at which people can really make consumer purchases ... middle class in my mind should able to afford a washing machine and go out and buy a motorbike," he said.

"Drivers of democracy"

Few doubted that the emerging middle class was an important group for defining Africa's economic and political course.

As keen users of mobile phones and the Internet, including social media networks, they were plugged into the digital world and international news and therefore had a role as opinion makers and agents of reform and change.

"The mobile phone in Africa is creating a politically conscious class," said Cowan, citing Kenya's election in March.

Many analysts believe digital media played a part there in keeping tribal tensions in check during the vote and allowing a generally peaceful poll which averted a repeat of post-election violence that killed more than 1 200 people in 2007/2008.

Middle class voters are seen more likely to vote according to policies and issues rather than automatic or traditional allegiances to any party or ethnic group.

AfDB's Ncube believes the better-educated are supporting a perceived and widening trend towards more democratic maturity and better governance on the continent.

"They are your enlightened voters, they will support policies, and not just an affiliation emotionally," he said. "They are drivers of democracy."

But even if one accepts the AfDB's broadly inclusive figure of around 300 million in the African middle class, chief economist Ncube says at least half these people do not enjoy real economic security.

"That 150 million between $2-4 a day, it's very vulnerable, it could slip back any time into poverty," he said.

Political and economic shocks, such as conflict, unrest or upheaval, could also have a heavy impact on the livelihoods of lower-earning middle class members, Ncube added.

"Naturally, the closer you are to $4 (a day) ... even just a small lift in food prices, and that group immediately becomes vulnerable," said Freemantle.


Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Submitted by
Shakila Alivitsa
Submitted by
Shakila Alivitsa
What do men mean when they say th...

As much as men think they are the ones confused by relationships, they have a better idea of it than most women actually do. Read more...

Submitted by
Victor Tinto
Rift Valley leaders to hold meeti...

Rift Valley leaders will hold a meeting to decide DP William Ruto's place in the Jubilee Party following emergence of Peter Kenneth as a main challenger to his place within the current structure. Read more...

Submitted by
William Korir
DP Ruto, not Kenneth the main man...

DP William Ruto will be the main man for the Jubilee Party in 2022, Kiraitu Murungi insists. Read more...

Submitted by
William Korir
Jittery times for DP Ruto as Kenn...

Peter Kenneth is a genuine threat to DP William Ruto's 2022 State House bid... and the DP's allies know it. Read more...

Submitted by
William Korir
I will name those sabotaging DP R...

A Jubilee Party Governor says that he will name and shame those within Jubilee he says are undermining DP William Ruto's 2022 State House plans. Read more...