Middle Class Growing Across Africa

According to the World Bank, more than 60 percent of economic growth in sub-Saharan Africa was generated by consumer spending.

Posted: 05/10/2013 01:30 PM EDT

With growing economies and surges in foreign investment, there has been talk of Africa "rising" for some time. Now, a World Bank report suggests that African economies are not just growing, but rather, thriving and creating a middle class of consumers for the first time.

"It's probably the fastest growing consumer class in the world, as a region," Michael Lalor, director of Ernst & Young's Africa Business Center in Johannesburg told Reuters.  

According to the World Bank’s Africa Pulse report last month, consumer spending accounted for more than 60 percent of economic growth in sub-Saharan Africa. The report also predicted that over the next three years, economic growth in sub-Saharan African countries will begin to outpace the global average as it climbs to over 5 percent.

The "middle class" that the bank speaks of is a growing spending class that now has the funds to spend extra cash on items like entertainment, cellphones and other tech gadgets, cars, food and clothes. Rather than being detrimental to stamping out poverty, economists say the surge in spending is a boon to the countries as a whole, in that it has the potential to improve conditions for all.

"The poor don't drive demand in an economy, it's the middle class that drive demand in an economy," African Development Bank Chief Economist Mthuli Ncube told Reuters. "Reducing poverty means creating a middle class. Sometimes people think pushing the middle class means forgetting about poverty, but it's the other side of the coin."

Although the growth has been applauded, some say there is still very serious work to be done.

"African countries will need to bring more electricity, nutritious food, jobs and opportunity to families and communities across the continent in order to better their lives, end extreme poverty, and promote shared prosperity," said the World Bank’s Africa Vice President Makhtar Diop. "Without more electricity and higher agricultural productivity, Africa’s development future cannot prosper. The good news is that governments in Africa are intent on changing this."

In South Africa, the Unilever Institute of Strategic Marketing recently released a study showing that the country’s Black middle class has risen to 4.2 million from just 1.7 million in 2004. The gains are so large that the institute predicts that Black consumer spending has outpaced that of whites for the first time since the country became free from apartheid in 1994.

The rapid pace in growth in the country has left primarily white-owned marketers and retailers confused about how to try to capitalize on the new market.

"People think that just because you're Black middle class, your destination is to become like white people. And that's far from it. If anything, you just want the stuff that white people have. And some of that stuff; not all of it as well," marketer Thabang Ramogase told Voice of America.

 

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(Photo: Per-Anders Pettersson/Getty Images)

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