Saturday, November 21, 2015

The Disappearing "Middle Class'

Africa’s ‘middle class’ is closer to 18 million people than the previously estimated 300 million. To make matters worse, they are all located in a very small area of the continent. South Africa houses 4.3 million of Africa’s middle class. However, the number becomes 14.1 million if other countries such as Algeria, Egypt, Tunisia, Morocco and Nigeria are included. This means that the reminder of the middle class, which is about 4.7 million are shared between more or about 48 countries on the entire continent.

In 2011, the African Development Bank stated the middle class contained 313 million people. However, Credit Suisse’s 2015 Global Wealth Databook put the number at 18 million, which is almost seventeen times smaller. ‘Middle class’ households are typically defined as those that spend at least half of their income on goods and services beyond just food and basic necessities.

“More than 93% of adults in Africa own less than USD 10,000, and 95% of adults in in India fall in this range,” stated the authors.

A Pew Research Center report from July found that African countries declined the most from 2001 to 2011. Ethiopia’s middle class dropped 27%, while Nigeria’s went down 18%. The researchers determined their statistics by classifying those who live on $10-$20 a day. Overall, their study concluded only 6% of Africa’s population can be considered middle class.

Cadbury and Coca-Cola closed factories in Kenya, and Nestle SA cut jobs by 15% in sub-Saharan Africa earlier this year. At one time, South Africa’s ShopRite wanted 600-800 stores in Nigeria. But now they only have 12.

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