Opinion
Africa: Explaining the rapidly expanding middle class
African middle class family in Lusaka, Zambia. PHOTO/Georgina Smith/The Guardian
By Fred Ojambo
Africa’s middle class is growing at a faster rate than that of its population.
Experts have attributed the growth of the middle class to increased investments in the service sector, the unlocking of the continent’s vast natural resources and sound economic policies countries have been pursuing in the past two decades.
“The liberalization of African economies has resulted in improved efficiencies and led to a rapid growth in the service sector, which has spurred the growth of the middle class,” said Lawrence Bategeka, a principal researcher at the Uganda based Economic Policy Research Center.
According to an African Development Bank report titled The Middle of the Pyramid, by 2010, the continent’s middle class, had risen to an estimated 34 percent of its population or nearly 350 million people — up from about 126 million or 27 percent in 1980.
“This represents a growth rate of 3.1 percent, compared with 2.6 percent in the continent’s overall population over the same period,” the report states.
Africa’s middle class, characterised by a per capita daily consumption of US$2-US$20, is widely acknowledged to be the continent’s future in terms of economic and political development.
But it is difficult to determine exactly who falls into this key group and even harder still to accurately establish how many middle-class people there are in Africa, according to African Development Bank.
By ditching state controls and embracing private sector-led policies, African economies stimulated the growth of the middle class, and there is room for further expansion with more public sector investments in infrastructure projects, Bategeka said.
In the 1990s African economies embraced the World Bank and the International Monetary Fund (IMF)’s structural adjustment programs, which advocated free market policies.
“The onset of liberalization, which focused on private sector-led growth, is key to the growing middle class on the continent,” added Bategeka. “Countries introduced sound economic policies which controlled inflation, benefiting investments in their economies.”
North African countries have a higher concentration of middle class society, with Tunisia having the highest proportion at 89.5 percent, followed by Morocco with 84.6 percent.
Liberia has the lowest concentration of middle class among the countries surveyed, with only 4.8 percent of the population falling into this category, followed by Burundi at 5.3 percent.
“Africa’s middle class is a key source for private sector growth on the continent, accounting for much of the effective demand for goods and services supplied by the private sector,” according to the African Development Bank.
Sub-Saharan Africa remains insulated from the negative factors affecting growth in developed countries and the economic activity in the region is generally robust with growth in 2012-2013 expected to remain the same as it was a year earlier, the IMF said in its October 2012 regional outlook for sub-Saharan Africa.
This article first appeared in The East African