It used to be that when economists used to talk at Sub-Saharan Africa, their conversations would always turn to one country, South Africa. A decade ago, it was the wealthiest, it had the strongest institutions, it had the most developed stock market. But what it really boiled down to was this: South Africa had what no other Sub-Saharan African country could claim to -- a powerful middle class.
How things have changed. A new report released by the African Development bank today estimates that more than a third of the continent's population -- 313 million people -- are now middle class. Wake up investors: "Africa’s emerging middle class comprises roughly the size of the middle class in India or China."
That matters -- a lot. As the report bluntly puts it, "The middle class is widely acknowledged to be Africa's future, the group that is crucial to the continent's economic and political development." For businesses looking to invest in the continent, the possibilities are now much great -- Africa is a consumer base, not just a rich mine for natural resources. Services are in high demand and the new middle class is quickly adopting many of the luxuries of modern life. The Bank's research goes on to examine how a middle class status correlates with lots of good things -- higher levels of education, better access to the internet, better infrastructure, and even smaller average family size. This becomes a self-driving process; the report attributes the arrival of many newcomers to the middle class to the creation of new, private companies meant to serve, you got it, the middle class.
But the benefits of a middle class don't end with economics. Having a middle class can be a massive boom to political growth as well. It may be no coincidence that two of the countries with the largest percentage of middle class citizens -- Tunisia (89.5 percent) and Egypt (79.7 percent) -- got fed up with their corrupt, incompetant regimes. The young generation of African businessmen, thinkers, and leaders won't put up with business as usual; they have too much work to get done.
What's perhaps most promising of all about these numbers, however, is what they tell us about the future growth of the middle class. The study divides people into upper middle class, lower middle class, and a new category called "floating middle class." The latter group has just risen out of poverty, and their daily consumption ranges from $2 to $4 a day. The floating middle class is also the sub-set that has grown the fastest in recent years, up from just over 10 percent of the population in 1980 to more than 20 percent today. Think of it as a measure of future potential: they are rightly called the "emerging" middle class because the extent of their consumption power and economic drive has yet to be fully released. Watch for this group to grow -- and start moving up the class ladder -- in years to come.
Given all this, perhaps the only thing about Africa that isn't changing quickly is our perceptions of it. There's an image impressed in all of our minds of a starving child, symobilizing an impoverished continent. If that was ever true, this is an excellent reminder that today, it's at most a snapshot. Yes, there's great human suffering and it's not hard to find. But Africa as a whole is becoming a middle class continent.
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