Saturday, October 31, 2015

Africa's Mythical Middle Class

According to a recent report by Credit Suisse that considers broad measures of wealth, rather than just income alone, only 3.3% of Africans should be considered middle class, or about 19 million people. That’s a far cry from previous estimates from the African Development Bank, based on income that put the figure closer to 300 million in 2011. Pew Research Center also found that the global middle class is likely smaller and poorer than previously believed, with many families on the cusp of slipping back into poverty. Pew estimates that just 6% of Africans earn between $10-$20 a day, thus qualifying as middle class.

Credit Suisse’s researchers set the equivalent of $50,000 in the US as the threshold for a person’s wealth to classify them as middle class. That translates to about $22,000 in South Africa, where almost a quarter of the continent’s middle class live. Nigeria, the continent’s largest economy, is home to 922,000 middle-class adults.

It is not puzzling why Africa’s middle class remains small when wealth on the continent has grown quickly, more than doubling over the past 15 years to some $1.63 trillion. The reason is that Africa’s growth has not been distributed evenly—the continent’s richest, 0.2% of the population, control over 30% of the region’s wealth.

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