Africa’s growing middle class

There is debate about the number of middle classes there are on the continent but the reality is that the aspirational, smartphone generation has grown and it is here to stay

Sat, Jan 4, 2014, 01:00

Simon Kaheru takes out his smartphone to photograph his breakfast and send the image to his wife. On his plate is a reworking of the Ugandan street snack known as “the Rolex”, a chapatti rolled with egg and vegetables. This Rolex, stuffed with avocado and served up at a trendy cafe popular with young Ugandans, costs much more than the standard type sold at roadside kiosks. “It’s an aspirational Rolex,” quips Simon, a sharp-suited journalist turned social-media entrepreneur. “A Rolex for the new middle class.”

Across Kampala, in a more ramshackle quarter of the city, Faisal is also beginning his working day. Faisal was a teenager when he left his village to look for opportunity in the capital. Now in his early 30s, he is proud of how far he has come. He has a relatively stable job as a driver, with an income that means his family can afford a fridge, a TV and other electronic goods in their modest home. All of his dreams are invested in his children; their education is a priority. “If they have a good education their lives will be much easier than mine,” he says. “That’s what I always tell them.”

Two years ago the African Development Bank estimated that Africa’s middle class reached nearly 350 million in 2010, amounting to a third of the continent’s population, or about the same size as its Chinese and Indian counterparts. That figure compares with about 126 million, or 27 per cent, of the population in 1980. But the much-debated study defined the middle class as people whose daily spending ranges from $2 to $20 (€1.40 to €14), a band so broad it includes both Simon and Faisal, though the realities of their daily lives are very different.

The bank divided its definition of middle class into three categories: those spending between $10 and $20 a day; those spending between $4 and $10 a day; and a more vulnerable “floating” class that could tumble back into poverty, spending between $2 and $4 a day. The bank says about 60 per cent of Africa’s middle class falls into the last category.

Earlier this year Citi’s Africa economist, David Cowan, challenged the buzz surrounding the idea that Africa has a growing middle class created by a swell of people moving out of poverty into formal employment while developing the skills needed to transform their economies. “I don’t believe that there is an African middle class,” he said. “There is an emerging wealthy elite in Africa and a strong consumer group, which is growing quite steadily,” with, ideally, $5,000-$7,000 of disposable income a year, which is $14-$19 a day.

That expanding pool of consumers, a diverse range that includes traders, cattle-ranchers, tech developers, accountants, teachers, hairdressers and taxi drivers, is helping to power Africa’s economic boom. In April the World Bank said consumer spending accounted for more than 60 per cent of sub-Saharan Africa’s buoyant growth.

Multinational companies are now looking to Africa, seeing a lucrative new market for mobile phones, cars, electronics, clothing and food, among other products, in addition to financial services and entertainment, as millions across the continent aspire not just to escape poverty but also to become prosperous.

This is happening as global demand for African commodities, fuelled by China in particular, has boosted growth and investment in badly needed infrastructure. The World Bank forecasts that foreign direct investment in sub-Saharan Africa will reach $54 billion by 2015, up from $37.7 billion in 2012.

Some of that interest is coming from Ireland. At the recent Africa-Ireland Economic Forum at UCD Michael Smurfit Graduate Business School, Minister for Foreign Affairs and Trade Eamon Gilmore spoke about the opportunities presented by Africa’s economic rise and its burgeoning middle class. Ireland, he argued, must move away from a donor-recipient relationship with Africa towards one of partnership and collaboration.

According to the Irish Exporters Association, exports of Irish goods and services to Africa reached €2.7 billion last year, an increase of 200 per cent since 2009. The association expects that figure to rise to €24 billion by 2020.


Urbanised and informed
Although analysts may quibble over the definition of middle class in today’s Africa, no one denies the emergence of an urbanised and increasingly informed social group that not only spends more disposable income but also plans for the future and demands a greater say in the way their countries are run. They rail against ineffective government, poor healthcare and tolerance of cronyism and corruption.

“A middle class with a different flavour has emerged,” says Jeremiah Mutonga, an African Development Bank official who has worked in Kenya, Tunisia and Ivory Coast, and is now the bank’s representative in South Sudan, the continent’s youngest state. “They worry about the future of their children, stress the importance of education and health, and are demanding more and better for themselves. They are more likely to hold politicians to account.”

When it comes to shaping this new demographic, the mobile phone has been revolutionary. According to the World Bank, sub-Saharan Africa is now home to about 650 million mobile-phone subscribers – more than in the European Union or the US. From the smartphones used by Simon, the social-media entrepreneur, to the basic model used by Faisal, the driver, to contact customers, the mobile phone is changing not only the way Africans communicate with each other but also how they do business and demand greater accountability from their leaders.


New world
Mo Ibrahim, the Sudanese-born entrepreneur turned philanthropist who created Celtel, the first pan-African mobile-phone network, in the late 1990s, says this is particularly true of the continent’s upwardly mobile youth. “This generation is a game-changer, because they are better educated than the previous generations and better connected. They know what is going on,” he says. “Everyone is walking around with their phones. They are able to express their feelings and views in the public domain and interact with each other. This is a new world. You have a population that is more sophisticated now and will not accept things that were accepted in the past.”

Ibrahim sees the growing middle class as crucial in ways that go beyond purchasing power. “The middle class can always be a great force for stability, for law and order. In this sense they can play an important role in Africa’s trajectory,” he says. “I am concerned, however, about development that leaves people behind. Of the gains of the past 10 years – and there have been a lot of gains in Africa – very little has trickled down, and that is dangerous: it creates a volatile situation. We have to pay attention to this disparity and inequality.”

When it comes to Africa’s wealth gap, the figures are stark. According to the World Bank, more than 60 per cent of the population of sub-Saharan Africa still lives below the $2-a-day poverty line, which puts the “Africa rising” narrative into context.

About 100,000 of the wealthiest Africans have a collective net worth amounting to 60 per cent of the continent’s gross domestic product, according to the African Development Bank, citing 2008 figures.

“Ultimately, the emergence of the African middle class can only be sustained if the continent puts in place strategies that expand prosperity for all,” Dr Mthuli Ncube, the bank’s chief economist and vice-president, wrote recently. “Without such measures, which include expanding opportunities for technical training and job creation, the growth of the middle class is likely to be undermined by social friction.”

In order to spur the growth of the continent’s middle class Ncube advocates policies that foster “sustained and shared” growth, private-sector participation, improved accountability and governance, and better infrastructure – Africa needs about $60 billion a year in investment to address its water, electricity and sanitation needs.

The bank’s research indicates that middle-class households are likely to spend more on private education and health, as well as on consumer durables such as televisions and fridges. “In addition to being better off in material terms, the middle class are in general both more satisfied and more optimistic about the future than their poorer compatriots,” says Ncube.

As he drives around Kampala, whose cityscape includes new office blocks along with slums, Faisal talks of how his life has turned out. “I am in a better situation than my parents were when I was growing up, and my children will be in an even better situation in the future,” he says. “When I go back to my village I see people who are still thinking and doing things in the old ways. They have not realised that our world has changed.”

This series was supported with a grant from the Simon Cumbers Media Fund


New future: ‘Africa is rising and I am doing my bit’
Andrew Mungai, cinematographer, 35

I grew up in a Nairobi suburb not far from the Kibera slums. My dad was a businessman and my mum worked at the Central Bank of Kenya. In our three-bedroom house we had a TV, a fridge and an electric cooker. I did not consider us rich, and neither were we poor: we were middle class. Most of our neighbours were in the same situation.

Anyone who lives in Nairobi and other cities can see that something has been going on for the last decade. There is investment in infrastructure, free primary education, and improvements in health facilities.

We are becoming more confident in ourselves. We are communicating with each other like never before and transferring money faster than before thanks to the life-changing introduction of mobile phones.

Lots of people are buying TVs and fridges from malls constructed in the cities. Those TVs and fridges are not only heading to middle-class apartments; they are also heading to the slums and rural areas. Some houses in those areas are just as comfortable as any house in the city: there is electricity, a sofa set, carpet, electronic appliances – signs those who live there have joined the middle class.

The only thing missing is piped water to the house, a working sewage system and a proper road network. Traffic is getting worse every day, because people are buying cars and the government is trying to catch up building new roads.

I left Kenya over four years ago to do a master’s in cinematography in California. There wasn’t much happening in film and TV in Kenya at that time, but when I returned in February the industry was exploding. I have been shooting TV series and pilots all year. The economy is booming and there is much more money in African television.

The stories have also changed. Before I left Kenya I used to do a lot of news and documentaries sponsored by international NGOs. Now I primarily shoot drama, comedy and commercials that speak to the new, growing middle class about the new, growing middle class. And the best part is that Africans are beginning to see what other Africans are doing. Kenyans are watching Nigerian and Ghanaian films, and vice versa. We are beginning to speak to ourselves. Africa is rising, and I am doing my bit as an artist to tell these stories.

There are still a lot of problems in Kenya and Africa more generally, but I believe they are not insurmountable.

There is still a huge divide between rich and poor. The middle class is not big enough: it needs to grow much more. I think the middle class needs to get more involved in political discussions in our country and continent. They should not let politicians control the agenda by buying votes from lower-income people. I think the new middle class in Kenya and Africa may be too focused on getting as much money as they can, and we could run the risk of making the same mistakes as the western world, which led to the 2008 economic crisis and global warming.

Despite this, I am convinced the opportunities are now inside Africa, not outside.

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