A recent report, Understanding Africa’s Middle Class, released by Standard Bank has found that there are 15 million middle-class households in 11 of sub-Saharan Africa’s top economies this year, up from 4.6 million in 2000 and 2.4 million in 1990 – an increase of 230% over 14 years.
However, the report said 86% of them remain within the broadly ‘low income’ band, emphasising the nascent maturation of many of the continent’s markets.
The report also found that the combined GDPs of the 11 measured economies had grown tenfold since 2000.
The report, based on the Living Standards Measure (LSM), gives investors to Africa data on which to base their investment decisions.
This strong growth of the middle class has also put tremendous pressure on cities and its infrastructures, creating a major urban housing crisis that has left both governments and real estate developers hapless and breathless.
United Nations and Organisation for Economic Cooperation and Development (OECD) experts, who are said to be overwhelmed by the Third World’s middle class growth, believe that a person who earns or spends US$10 to US$100 per day belong to the middle class.
Furthermore, the Standard Bank report suggests that while the middle class may be smaller than previously thought, two factors should give investors greater comfort: Africa’s middle class is growing strongly, and its income accumulation is far more broad-based than previously thought.
Standard Bank senior political economist Simon Freemantle, author of the report, says the new report is cause for optimism among investors as it suggests even greater scope for future growth, and indeed the report forecasts acceleration in the accumulation of middle-class households in Africa.
Photo: Africa Mentor