THE idea that Africa has a middle class is completely wrong, as is evidenced by the growing consumption on the continent being driven primarily by low-income earners, Citi-group’s Africa economist, David Cowan, said on Tuesday.
His claim contradicts the prevailing view that there is a growing middle class, created by people moving out of poverty into formal employment, acquiring the skills needed to transform their economies.
"I don’t believe that there is an African middle class. There is an emerging wealthy elite in Africa and a strong consumer group, which is growing quite steadily," he told reporters during a briefing on Africa.
An African Development Bank (AfDB) report in 2011 estimated that Africa’s middle class reached 313-million in 2010 — a third of the continent’s population and roughly the same size as its Indian and Chinese counterparts. But the bank’s report defines middle class as people who earn between $2 and $20 a day, which means that many are just above the poverty line.
Mr Cowan said that an income of between $13 and $19 a day would be a better standard — at this level people could buy durable goods like cars and washing machines.
At present there were opportunities for business mainly at the lower and higher ends of consumer markets in Africa, he said.
Standard Chartered’s regional research head for Africa, Razia Khan, said it was wrong to conclude that the continent did not have a significant middle class.
"To say the African middle class is not growing is a sweeping generalisation and is not true," she said.
A more conventional definition would put Africa’s middle class at 120-million, she said.
Last week, research by the University of Cape Town Unilever Institute of Strategic Marketing estimated that South Africa’s black middle class had more than doubled in the past eight years, reaching 4.2-million last year. Its spending had soared to more than R400bn a year, nearly 12% the size of South Africa’s economy.
The AfDB report 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 "floating" class that could slip back into poverty, spending between $2 and $4 a day.
According to the report, about 60% of the African middle class fell into this category, which puts its assessment into context.