ABIDJAN, Ivory Coast- Many economists and development experts have reported on the rise of an African middle class. Foreign investment combined with increased consumer spending, leaves some with a positive outlook on the trajectory Africa is taking.
However, there are others who see this outlook as unrepresentative of the typical African experience.
Mthuli Ncube, the chief economist for the African Development Bank, details a very positive picture of Africa’s progress on the World Bank blog. He states the rise of consumer spending as the number one driver of pulling people out of extreme poverty.
In 2008, consumer spending topped out at $680 billion, but as Ncube points out, that number is expected to grow. By 2030 he expects consumer spending to reach $2.2 trillion, resulting in Africa comprising approximately 3 percent of world consumption.
But what qualifies an individual as being “middle class” in Africa? Many development experts, including Ncube, classify the middle class as an individual earning $2-$20 per day.
By using the aforementioned definition, the number of Africans holding middle class status is 355 million and expected to grow to 1.1 billion by the year 2060.
Ncube stresses that in order to foster this growth, significant and continuous infrastructure investment is needed.
In order to reach full electricity coverage by 2019, approximately $19-$20 billion must be invested every year in support of critical electricity infrastructure. Water and Sanitation services require $16 billion and $18 billion per year respectively.
Besides consumer demand, foreign direct investment (FDI) has also contributed to rising income levels in Africa. By 2015, it is estimated that FDI directed toward Sub-Saharan Africa will reach $54 billion from the current $37.7 billion.
Although the situation described by the World Bank and the African Development bank paint a positive outlook for Africa’s economic growth, there are others who take issue with what constitutes being “middle class” in Africa, and how much progress is actually being made.
Some economists see the classification of “middle class” as those who earn $2-$20 per day as extremely broad, yielding unrealistic statistics of those who actually hold its status. Economist Simon Freemantle has put forward a more stringent range of $15-$20 per day.
This stricter definition reduces the number of middle class occupants from 355 million to 120 million (10% of the African population).
If the broad $2-$20 category is examined further, it shows that 60 percent spend only $2-$4 per day. Instead of being labeled “middle class”, it is much more accurate to apply the term “floating class” to these individuals.
The floating class constitutes individuals who exist barely above the poverty line and are extremely vulnerable of slipping back below it. Any type of economic shock, such as a sudden increase in global food prices, could send large swaths of people back into extreme poverty.
It is also important to note that while many fit into the broad middle class category of $2-$20 per day, millions cannot afford lifestyles that are thought to be typical of the middle class.
For example, in Angola, the China International Trust and Investment Company built an entire city specifically to house 500,000 middle class residents, but only several thousand Angolans are able to afford it.
While Africa is making great strides to reduce the number of people living in extreme poverty, there is still a lot of work to do with over 60 percent of Africans still living below the $2 per day poverty line.
Nevertheless, Africa is making progress. With a growing amount of people able spend their money on more than just necessary items; the chance at improving democracy across the continent becomes greater.
As more and more individuals gain access to information outlets such as the internet the result will be a greater demand for government reform as individuals become more socially conscious.
– Zachary Lindberg