Africa's new middle class
Oct. 20th, 2012 06:55 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
nairiporterRampant poverty on one side, and a tiny wealthy elite on the other. And between them: nothing. That is the notion of Africa for many people around the world. At least this is what it used to be - until now. But today, in many African countries a middle class is being formed, and it is going to transform the continent.
There is no doubt now that the world's poorest continent is changing. A new layer of society is emerging, one that until very recently was neglected and overlooked, and irrelevant. Most Western media usually speak of two types of Africans - the poor who suffer starvation, disease and war, and the rich oligarchs and dictators who spend their spare time and their money from their Swiss bank accounts on the French Riviera. People from outside Africa have been fixated on these two extreme opposites, and the only thing they were concerned about (and rightly so), were Africa's problems: AIDS, ethnic conflicts, migration, social tensions, exploitation of natural resources, drought and the expanding deserts. "Africa is being referred to in such a way that it either evokes compassion and a call for help, or in the worst case, animosity and disdain. But neither approach corresponds to its current development", Jean-Michel Severino writes in his book Africa's Moment.
Because Africa is changing. For the last 10 years the GDP of the continent has grown fast: between 2000-2008 at a 5% average annual rate (compared to 4% in Latin America and just 2% in the industrialised countries; only Asia beats it). The number of newly registered local businesses is growing exponentially. The foreign investors, mostly Chinese but also American, are showing a growing interest in the continent. For example, IBM has invested 300 million dollars for the last 5 years. And The telecommunication giant Bharthi Airtel has now opened offices in 16 African countries.
With the economic development, these societies are changing as well. A new social group of high-ranking experts, bureaucrats and small entrepreneurs is emerging, and their living standard is beginning to approach that of their European and American counterparts.
I recently saw an amazing photo collection by a French photographer, Joan Bardeletti who met with these people across Africa. And many of their personal stories confirmed this picture: he met a Kenyan living in a township, who was working at a scientific research institute and was playing golf in his afternoons. A chief of staff at a security firm in Maputu, Mozambique, who was trying to convince his girlfriend that they should raise their kids "by the Western standard". Or an ethnology student from Abidjan in Cote d'Ivoire, who had achieved a high living standard, studying at the university while running two call centers. Most of these people were working hard, and making their own living, without needing supplementary funding from relatives living abroad, as is the case with a large part of the Filipino society for example. Many African societies are shaking off their dependency on emigrant income, which is a small revolution in itself.
(+)
So in which countries is this process the most visible? Let's take Ghana, the country that has benefited a lot from the many emigrants who are now returning from abroad, and investing in their country of origin. This stimulates the dynamic development of the local economy. This process is already well established in South Africa, Nigeria, Kenya and Cameroon.
But there are also countries where development is stalled, mostly for political reasons. Like Cote d'Ivoire, which for a long time used to be a symbol of the African "economic miracle". The middle class usually tends to support the power elites of the respective country, and does not show a proneness to criticism. But there are some exceptions. In Kenya it is exactly this segment of society that is opposed to the ethnic conflicts that were caused by the government and the opposition after the presidential election in 2008. This factor was the reason that political stability was restored more quickly than anticipated.
The evidence for the advance of the African middle class is far from undoubted and unambiguous, though. There are pessimists who are trying to underestimate and dismiss the current trend by pointing out that the increasing wealth is due to the sharp increase of the prices of natural resources such as oil. And they add that wealth in Africa will never be accessed by the broad masses, and that the old problems (like corruption) will continue to be in place. And they do have a point.
Or how about Africa's inherent disease: starvation. Even in the most prosperous countries on the continent, the growing food prices have caused unrest. After yet another increase in the price of bread in 2009, mass riots in Mozambique resulted in 10 deaths. And we are talking of a country with an annual growth of 8%, where at the same time 65% of the population lives under the poverty line. Here in South Africa, by far the most developed economy on the continent, and the industrial juggernaut of Africa, there are constantly mass protests. In 2010 the workers in the public sector demanded higher salaries, and their strike paralysed the country for weeks. And we all already know what happened in Marikana.
But despite these examples, the experts are noting a clear tendency to a steady growth and development throughout the continent, and it is directly related to the emerging middle class. And history shows that this is a prerequisite for success. 18-19-century Britain turned into the top world power because it had the economic support of a clearly defined and very vital middle class. Later that same middle class played the same role in the US, and now in China.
(+)
But exactly how strong is the African middle class? Opinions vary on this question. One of the reasons is the still unreliable data. Comparing net incomes is far from being the clearest indicator. In Nigeria the official data shows that the net income is $191 a month per capita. But if we take the purchasing power in consideration and relate it to the prices of the main goods, things are not looking that good. Another problem is the grey economy that is suffocating a lot of these societies. And it is not reflected in the data. It is most prevalent in the service sector, particularly in small business - private drug stores, unlicensed workshops, etc.
In 2007 the World Bank offered a definition for the term "global middle class", based on the annual income per capita, related to the purchasing power. By that definition, anyone making between Eu 3000 and 12500 annually is part of that middle class. The forecast is that by 2025 this category will include 1.2 billion people, most of them in the emerging economies like China and India. Unfortunately, many of the Africans we are talking about, actually do not get into that category. And by the US standards, most of them would even fall under the poverty line, because they get less than $13 a day and cannot afford frequent vacation trips, a car, or sending their kids to university, or even regular visits to the dentist.
That's why a modified definition for middle class is now being offered, one that is based on the Chinese notion for "small prosperity". Generally, it is achieved by people who can meet most of their basic needs. Other criteria are owning a decent home, having an "acceptable" number of household members, economic emancipation for the wives and daughters, access to medical care, and having a monthly salary rather than daily wage. If we are to use this definition, then in the poorer African countries, it is possible to achieve "small prosperity" with a daily income of $2 or less. In that case, the middle class of Africa could number anywhere between 150 and 350 million people, which is 15-35% of its population. The American economist Vijay Mahajan is an even bigger optimist. In his works he points out that very soon, Africa's middle class would number 500 million people!
Back to Jean-Michel Severino, he writes that "By 2050, Africa will have a population of 1.8 billion. That is one and a half times today's India and three times the future Europe". The number of people living in the cities, where most of the middle class is concentrated, will be also increasing. This tendency is observed at the moment. 60 years ago south of Sahara there wasn't even one city of 1 million. Now there are 38. Africa's economy will be experiencing a stable growth, and will be giving the continent an increasing weight in world matters, he argues.
(+)
Given these perspectives, the foreign investors are naturally rubbing their hands, sniffing the great opportunities. According to Proparco, a sister firm of the French Agency for Development, by 2040 the consumers in Africa will have reached a purchasing power of 1700 billion dollars. The newly created companies will be relying on that potential, and focusing on producing and offering goods and services that are designed for the people of the middle class: from breweries in Uganda, to entertainment parks in Kenya, or medical centers in Ghana, supermarkets in Tanzania and car-wash services almost everywhere, to insurance companies, banks, fast-food chains, private schools and universities... And of course lots of new TV programs.
The sales of TV sets in Africa is experiencing a boom right now, which is interpreted as a clear sign of the improving financial capabilities of the middle class. The film industry is also prospering. Nigeria's TV and film industry is called Nollywood because of its enormous size, 2000 movies annually. That is more than both Bollywood and Hollywood! A similar situation can be seen in the cellphones sector. In 2007, 264 million people in Africa had a mobile phone, and just 4 years later another 51 million were added. This is the largest leap in the history of the industry worldwide.
But the improving life quality and the betterment of Africa's middle class has its downsides as well. Prof. Dinky Levitt of my city Cape Town has found out that in many countries throughout the continent the diabetes cases have risen by more than 30%. Three reasons: obesity, sedentary lifestyle, urbanisation. One more proof that Africa is experiencing the emergence of "bourgeois" mores. Even in terms of food habits.
Still, it is very encouraging news that people's income is growing, and with that, their social and economic confidence.
There is no doubt now that the world's poorest continent is changing. A new layer of society is emerging, one that until very recently was neglected and overlooked, and irrelevant. Most Western media usually speak of two types of Africans - the poor who suffer starvation, disease and war, and the rich oligarchs and dictators who spend their spare time and their money from their Swiss bank accounts on the French Riviera. People from outside Africa have been fixated on these two extreme opposites, and the only thing they were concerned about (and rightly so), were Africa's problems: AIDS, ethnic conflicts, migration, social tensions, exploitation of natural resources, drought and the expanding deserts. "Africa is being referred to in such a way that it either evokes compassion and a call for help, or in the worst case, animosity and disdain. But neither approach corresponds to its current development", Jean-Michel Severino writes in his book Africa's Moment.
Because Africa is changing. For the last 10 years the GDP of the continent has grown fast: between 2000-2008 at a 5% average annual rate (compared to 4% in Latin America and just 2% in the industrialised countries; only Asia beats it). The number of newly registered local businesses is growing exponentially. The foreign investors, mostly Chinese but also American, are showing a growing interest in the continent. For example, IBM has invested 300 million dollars for the last 5 years. And The telecommunication giant Bharthi Airtel has now opened offices in 16 African countries.
With the economic development, these societies are changing as well. A new social group of high-ranking experts, bureaucrats and small entrepreneurs is emerging, and their living standard is beginning to approach that of their European and American counterparts.
I recently saw an amazing photo collection by a French photographer, Joan Bardeletti who met with these people across Africa. And many of their personal stories confirmed this picture: he met a Kenyan living in a township, who was working at a scientific research institute and was playing golf in his afternoons. A chief of staff at a security firm in Maputu, Mozambique, who was trying to convince his girlfriend that they should raise their kids "by the Western standard". Or an ethnology student from Abidjan in Cote d'Ivoire, who had achieved a high living standard, studying at the university while running two call centers. Most of these people were working hard, and making their own living, without needing supplementary funding from relatives living abroad, as is the case with a large part of the Filipino society for example. Many African societies are shaking off their dependency on emigrant income, which is a small revolution in itself.
(+)So in which countries is this process the most visible? Let's take Ghana, the country that has benefited a lot from the many emigrants who are now returning from abroad, and investing in their country of origin. This stimulates the dynamic development of the local economy. This process is already well established in South Africa, Nigeria, Kenya and Cameroon.
But there are also countries where development is stalled, mostly for political reasons. Like Cote d'Ivoire, which for a long time used to be a symbol of the African "economic miracle". The middle class usually tends to support the power elites of the respective country, and does not show a proneness to criticism. But there are some exceptions. In Kenya it is exactly this segment of society that is opposed to the ethnic conflicts that were caused by the government and the opposition after the presidential election in 2008. This factor was the reason that political stability was restored more quickly than anticipated.
The evidence for the advance of the African middle class is far from undoubted and unambiguous, though. There are pessimists who are trying to underestimate and dismiss the current trend by pointing out that the increasing wealth is due to the sharp increase of the prices of natural resources such as oil. And they add that wealth in Africa will never be accessed by the broad masses, and that the old problems (like corruption) will continue to be in place. And they do have a point.
Or how about Africa's inherent disease: starvation. Even in the most prosperous countries on the continent, the growing food prices have caused unrest. After yet another increase in the price of bread in 2009, mass riots in Mozambique resulted in 10 deaths. And we are talking of a country with an annual growth of 8%, where at the same time 65% of the population lives under the poverty line. Here in South Africa, by far the most developed economy on the continent, and the industrial juggernaut of Africa, there are constantly mass protests. In 2010 the workers in the public sector demanded higher salaries, and their strike paralysed the country for weeks. And we all already know what happened in Marikana.
But despite these examples, the experts are noting a clear tendency to a steady growth and development throughout the continent, and it is directly related to the emerging middle class. And history shows that this is a prerequisite for success. 18-19-century Britain turned into the top world power because it had the economic support of a clearly defined and very vital middle class. Later that same middle class played the same role in the US, and now in China.
(+)But exactly how strong is the African middle class? Opinions vary on this question. One of the reasons is the still unreliable data. Comparing net incomes is far from being the clearest indicator. In Nigeria the official data shows that the net income is $191 a month per capita. But if we take the purchasing power in consideration and relate it to the prices of the main goods, things are not looking that good. Another problem is the grey economy that is suffocating a lot of these societies. And it is not reflected in the data. It is most prevalent in the service sector, particularly in small business - private drug stores, unlicensed workshops, etc.
In 2007 the World Bank offered a definition for the term "global middle class", based on the annual income per capita, related to the purchasing power. By that definition, anyone making between Eu 3000 and 12500 annually is part of that middle class. The forecast is that by 2025 this category will include 1.2 billion people, most of them in the emerging economies like China and India. Unfortunately, many of the Africans we are talking about, actually do not get into that category. And by the US standards, most of them would even fall under the poverty line, because they get less than $13 a day and cannot afford frequent vacation trips, a car, or sending their kids to university, or even regular visits to the dentist.
That's why a modified definition for middle class is now being offered, one that is based on the Chinese notion for "small prosperity". Generally, it is achieved by people who can meet most of their basic needs. Other criteria are owning a decent home, having an "acceptable" number of household members, economic emancipation for the wives and daughters, access to medical care, and having a monthly salary rather than daily wage. If we are to use this definition, then in the poorer African countries, it is possible to achieve "small prosperity" with a daily income of $2 or less. In that case, the middle class of Africa could number anywhere between 150 and 350 million people, which is 15-35% of its population. The American economist Vijay Mahajan is an even bigger optimist. In his works he points out that very soon, Africa's middle class would number 500 million people!
Back to Jean-Michel Severino, he writes that "By 2050, Africa will have a population of 1.8 billion. That is one and a half times today's India and three times the future Europe". The number of people living in the cities, where most of the middle class is concentrated, will be also increasing. This tendency is observed at the moment. 60 years ago south of Sahara there wasn't even one city of 1 million. Now there are 38. Africa's economy will be experiencing a stable growth, and will be giving the continent an increasing weight in world matters, he argues.
(+)Given these perspectives, the foreign investors are naturally rubbing their hands, sniffing the great opportunities. According to Proparco, a sister firm of the French Agency for Development, by 2040 the consumers in Africa will have reached a purchasing power of 1700 billion dollars. The newly created companies will be relying on that potential, and focusing on producing and offering goods and services that are designed for the people of the middle class: from breweries in Uganda, to entertainment parks in Kenya, or medical centers in Ghana, supermarkets in Tanzania and car-wash services almost everywhere, to insurance companies, banks, fast-food chains, private schools and universities... And of course lots of new TV programs.
The sales of TV sets in Africa is experiencing a boom right now, which is interpreted as a clear sign of the improving financial capabilities of the middle class. The film industry is also prospering. Nigeria's TV and film industry is called Nollywood because of its enormous size, 2000 movies annually. That is more than both Bollywood and Hollywood! A similar situation can be seen in the cellphones sector. In 2007, 264 million people in Africa had a mobile phone, and just 4 years later another 51 million were added. This is the largest leap in the history of the industry worldwide.
But the improving life quality and the betterment of Africa's middle class has its downsides as well. Prof. Dinky Levitt of my city Cape Town has found out that in many countries throughout the continent the diabetes cases have risen by more than 30%. Three reasons: obesity, sedentary lifestyle, urbanisation. One more proof that Africa is experiencing the emergence of "bourgeois" mores. Even in terms of food habits.
Still, it is very encouraging news that people's income is growing, and with that, their social and economic confidence.
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
(no subject)
Date: 2012-10-21 02:22 pm (UTC)It's really not something I know much about (I feel woefully underinformed regarding African history - although to be fair, considering how many countries there are, it's a difficult thing to be well informed about). I may have to check out the recommended book, as it's an interesting topic. (And I'll admit that I'm curious as to how Africa's rise will be similar to - and different from - that of the East Asian tigers.)