Friday, March 28, 2014

Middle class?

Defining the African “middle class” is a challenge. For the World Bank, it comprises everyone who earns between $2 and $20 per day. It’s a range that is far too broad and while the African Development Bank uses the same income range, it emphasises the need to subdivide the middle class into two. The upper middle class, by this definition, earns between $10 and $20 a day, and a vulnerable lower class is one that earns between $2 and $4 dollars a day. The latter are just marginally above the poverty line of $1.50 a day and can easily slip back into it.

According to the Moscow-based Institute for Emerging Market Studies, the African middle class will rise three times from 32 million in 2009 to 107 million by 2030 — the largest increase in the world.

Professor Marcel Benie Kouadio, economist and dean at the  Cote d’Ivoire’s Abidjan Private University Faculty tells IPS “The middle class has shrunk. Twenty years ago, teachers and doctors were middle class. Now, they can’t afford a new car. The Ivorian middle class lost its purchase power.”

Purchase power is a key word. Accountants differ with economists in their understanding of the middle class; rather than analysing income, they look at disposable revenue. Being middle class is about hitting a “sweet spot”, where people are able to spend money for things other than survival, says a report from accounting firm Ernst & Young.

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