In the cafés of Accra’s financial district American-accented
entrepreneurs order lattes and ponder spreadsheets. “You couldn’t have imagined
this even five years ago,” Joseph Baffour, a local financier, says of his surroundings.
“There’s been an astronomical change.”
Just a few miles down the road from Accra’s
coffee-connoisseurs are the columns of smoke that billow above Agbogbloshie, a
digital dumping ground. Here hundreds of men risk their health burning old
electronics for useful parts. Leave the capital altogether and the celebrated
middle class grows harder still to spot: high-rises give way to huts, suits to
shoelessness.
The Pew Research Centre reckons that just 6% of Africans
qualify as middle class, which it defines as those earning $10-$20 a day. On
this measure the number of middle-income earners in Africa barely changed in
the decade to 2011.
Data from EIU Canback, a consultancy (and sister-company of
The Economist), show some growth in the decade to 2014 but it is painfully
slow: 90% of Africans still fall below the threshold of $10 a day and the
proportion in the $10-$20 middle class (excluding very atypical South Africa),
rose from 4.4% to only 6.2% between 2004 and 2014; over the same decade, the
proportion defined as “upper middle” ($20-$50 a day) went from another 1.4% to
2.3%. Other surveys are also disappointing.
Standard Bank, a South African lender, thinks that though
the number has increased, there are still only 15m middle class households in
11 of sub-Saharan Africa’s bigger economies (excluding South Africa and using a
range of $15-$115 a day).
Why is the middle class so small after a decade in which
economic growth has averaged more than 5% a year, about twice as fast as
population growth. One reason is that the proceeds of economic growth are
shared very unequally. In recent years inequality has increased alongside
growth in most parts of Africa.
Another reason is that poverty in many parts of Africa is so
deep that even though incomes may have doubled for millions of people, they are
now merely poor rather than extremely poor. Laurence Chandy at the Brookings
Institution, an American think tank, points out that the average person in
extreme poverty in Africa lived on just 74 cents a day in 2011, compared with
98 cents in other parts of the developing world. Ethiopia, which is both one of
Africa’s most populous nations and best developmental performers, is a good
example. Its share of people living on more than $10 a day has increased more
than 10 times in the decade to 2014 to 2% of the population: but that still
left close to 98% of Ethiopians living below this threshold.
A low wage is better than none at all, but those living on
$10-$20 a day are hardly living lives of luxury. For most of them, life is
still tough. Africa has failed to develop industries that generate lots of
employment and pay good wages. Only a few countries manufacture very much,
largely because national markets are small and barriers to trading within
Africa are huge. Most people who leave the countryside move into
labour-intensive but not very productive jobs such as trading in markets. John
Page, also of Brookings, reckons that such jobs are on average only about twice
as productive as the ones that many left behind.
For investors who piled in on the promise of a new African affluent
middle class has proved false. The commodities boom has ended and all but the
richest tend to stop spending at the first sign of economic trouble, as they
have done in Nigeria and South Africa, the continent’s two largest economies.
Having overestimated the number of upwardly mobile people, many big firms are
expanding far more slowly than they expected. A few years ago, Shoprite
Holdings, South Africa’s largest retailer, envisaged opening 600-800 stores in
Nigeria. It currently has 12. Across the continent in Kenya, Cadbury and
Coca-Cola have closed factories. “We thought this would be the next Asia”,
Nestlé’s chief executive for equatorial Africa said earlier this year. “But we
have realised the middle class…is extremely small and it is not really
growing.”
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