The African Middle Class: Too much hype?

Posted on Updated on

This article first appeared in my weekly column with the Business Daily on February 15, 2015

There is a great deal of hype about Kenya’s and Africa’s emerging middle class. Indeed Kenya is considered to have one of the largest middle-class populations in Africa.

Stories abound about global companies and investors eyeing the newest middle class in the world and how they can make handsome profits through tapping into the spending power. Indeed some say that Africa’s consumer spending is set to rise from $860 billion in 2008 to $1.4 trillion in 2020.

Shopping

(source: http://www.ventures-africa.com/wp-content/uploads/2014/01/Shopping.jpg)

But let’s take a step back and look at technical definitions of the middle class: The African Development Bank states that Africans who spend $2 to $20 (Sh92=$1) a day qualify as middle class. The Standard Bank defines it as those who spend $15 to $115 a day.  A point to note is that earning above $2 dollars a day is a commonly accepted definition of the poverty line in developing countries in general because people above the $2 dollar line are above absolute poverty. One questions the prudence of equating not being in absolute poverty as synonymous with middle class.

The first problem of pinning the definition of middle class as individuals spending $2 or $15 (Sh170 or Sh1,275) a day masks the fact that there are high levels of dependency in Africa. Because the government lacks a robust social security net, those who earn income are often supporting several relatives and friends financially. Thus, even if an individual spends Sh2,000, most of this may be spending for dependents, not the individual.

1029_money-wallet_400x400 (source: http://blogs-images.forbes.com/jennagoudreau/files/2011/05/1029_money-wallet_400x400.jpg)

In addition, there are other factors that should be looked at beyond strict figures. As an analyst pointed out, looking at figures does not answer whether this ‘middle class’ has access to affordable health care and  education, and whether they can afford leisure activities.

Those questions are more important than coming up with arbitrary cut-off points. For example, given Kenya’s high mortality rate and burden of disease exacerbated by truly poor health facilities, thousands of shillings are spent on expensive healthcare and individuals are often constrained by such obligations thereby haemorrhaging their earnings on such expenses.

Further, the reality is that poverty is still pervasive. A Standard Bank survey of 11 sub-Saharan African countries, which together account for about half of Africa gross domestic product, found that 86 per cent of their households remain in the low-income band. All these households will focus on meeting basic needs with little room for discretionary spending.

people_compressed (source: http://esango.un.org/ldcportal/documents/10179/11046/people_compressed.jpg?t=1348070174727)

So the level of truly disposable income is important to determine as the reality is that although an individual may be able to afford food from a fine restaurant he or she may have too many dependents to actually go out and make that purchase.

On the other hand, prices for apartments in fashionable districts in certain African cities match those in the global north. So is the narrative truly about the ‘middle class’ or an emerging elite?

Is the trend in Kenya actually one of economic dualism with a deep divide between rich and poor with paltry sprinklings of a middle class? The questionable nature of the Kenya middle class is exemplified by the fact that fast food chains that are fraternised by low-income groups in Europe and North America are the very same found in up-market malls and posh neighbourhoods in Kenya. So does ‘rich’ in Kenya translate to ‘poor’ in the USA?

KFC-goes-to-Kenya-first-US-fast-food-chain-MIALHF4-x-large

(source: http://i.usatoday.net/money/_photos/2011/08/27/KFC-goes-to-Kenya-first-US-fast-food-chain-MIALHF4-x-large.jpg)

The appeal here is one of caution about over-hyping Kenya’s and indeed Africa’s middle class. The commentary has to be tempered with presenting accurate scenarios on the nature of this ‘middle class’ and the depth of the pockets therewith.

 Ms Were is a development economist. Email: anzetsew@gmail.com | Twitter: @anzetse

Advertisements

One thought on “The African Middle Class: Too much hype?

    kimemiamaina said:
    February 16, 2015 at 8:24 am

    Thanks for the perspective. Considering that the middle class is not nearly as large as some institutions would want us to believe, what is the purpose of pushing a narrative like that? Also there probably (not certain as I have no access to the figures) has been a significant increase in consumption in consumer good sin Africa over the past decade. Who is responsible for it and how can they afford it? is is the significant numbers who have been lifted out of absolute poverty, is it the small upper income groups concentrating a bigger proportion of the wealth?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s