from African Endeavors..
July 8, 2013
“Africa now has the fastest growing middle class in the world.”
Africa. The word conjures up images of crippling poverty and starving children, but the reality of life on this vast continent is very different. Many parts of Africa are developing rapidly – a process that is creating a new socio-economic order: the middle class. Indeed, Africa’s middle class has tripled over the last three decades, with one in three people now considered to be living above the poverty line. In 2010, over 313 million Africans were spending between US$2 and US$20 a day. As African economies are growing (six of the 10 fastest developing economies in the world are African), the wealth is trickling down and the continent now has the most rapidly growing middle class in the world.
“Africa is the new Asia”
Within this broad African middle class category, there are further sub-classes: the upper middle class equates to those spending between US$10 and US$20 a day; the lower middle class refers to those spending between US$4 and US$10 a day; and the floating class is those who are the most vulnerable in society, spending between US$2 and US$4 (only slightly above the developing world’s poverty line of US$2 person per day). At over 313 million, the African middle class is roughly the same size as its Indian and Chinese counterparts, and this is the very basis of media reports such as “Africa is the new Asia” (Newsweek cover in 2010) and “The Hopeful Continent: Africa Rising” (with the subtitle: “After decades of slow growth, Africa has a real chance to follow in the footsteps of Asia”; The Economist, 2011)
The division between the rural and urban populations is a key dividing characteristic in the middle class population. In general, the middle class does not derive its income from farming or other rural economic activities. Consequently, these people live in urban centres in somewhat larger dwellings equipped with modern amenities. It is an aspirational group that strives for Western standards of living, including appliances and technology, convenience, recreational time, political assertiveness and cultural self-confidence. They have received a tertiary education and have fixed salary jobs or are small business owners. The middle class is generally young and has fewer children than previous generations, allowing them to take better care of their offspring with private healthcare and education.
Africa is a large continent, the growth and development of which are fuelled by different forces. Accordingly, the rise of the middle class is not universal. The map below shows the countries in which the middle class population is concentrated.
So, how is rise of the new middle class manifest in the economy? Well, there are mini-supermarkets set up throughout Africa, facilitating convenience and the centralised purchase of Fast Moving Consumer Goods (FMCG). The ICT sector is rapidly developing, fuelled by the phenomenal growth of mobile telephony. While the continent was home to just 49 million mobile phones in 2002, in 2011 that number had increased ten fold, and in 2015 it is predicted that there will be 850 million, of which 127 million will be smartphones. What’s more, applications for these phones are popping up for all sorts of consumers: farmers check crop prices and the weather, while the urban middle class check restaurant menus and read the news on tablets. It has been found that a 10% increase in mobile phone penetration is linked to an increase in a middle/low income country GDP of 1.2% due to the ensuing economic activity as a result of being ‘plugged in’. Internet access is both an indicator of socio-economic well-being, as well as a predictor of participation in the mainstream economy. ICT access is increasingly being seen not as a luxury, but as a very necessary tool for development.