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Monthly Archives: February 2012

Unpacking Africa’s Middle Class Consumer Behaviour

This is the first infographic I have ever created, so not very creative at this stage but packed (I hope) with useful and surprising stats! For more details on any of the above figures please consult the following sources:

Afrique Avenir. 2010. ‘New consumption patterns in Africa’ http://bit.ly/AbSnTe

Imara Africa Securities Team. 2011. ‘Financial groups eye Africa’s growing middle class’ http://bit.ly/yuR8dA

Ncube et al. 2011. ‘The Middle of the Pyramid: Dynamics of the middle class in Africa’ African Development Bank Publication

Maina, W. 2011. ‘Kenyans quench new thirst for fine liquor’ http://bit.ly/xIIMXk

Kunateh, M. 2011. ‘Africas middle class triples to 313 million’ http://bit.ly/xnnb3W

Sikiti, L. 2012. ‘Look out for the African Middle Class’ http://bit.ly/Ash0K6

Youth Xchange. 2004. ‘More and More Cars: Africa’ http://bit.ly/yLsGVx

 

The real value of Africa’s emerging middle class

Africa’s quickly expanding middle class is an often extolled virtue of the continent and even more often mentioned reason for investing in the world’s (current) greatest investment opportunity. Average economic growth for Africa since 2000 has been around 5% a year, while the average inflation rate fell to 8% from an earlier high of 22%. This growth in combination with all sorts of other changes (social, political and in some cases even geographic) has meant that income levels on the continent have improved. The African Development Bank in 2010 estimated the size of the middle class to be 313 million people (34% of the total population), an impressive increase from the 1980s figure of 111 million (26% of the total population). By 2060 it is estimated that Africa will be home to a middle class of 1.1 billion (42% of the total population). The continent’s combined consumer spending is forecast to reach $1,4 trillion by 2020, up from $860 billion in 2008, and this means that currently 1 in every 10 Africans is a ‘solvent consumer’, one who can afford the latest smartphones, newest computers and dinners at the trendiest restaurants. The growth of the middle class has been so rapid in South Africa, Tunisia, Egypt and Morocco that domestic consumption became the largest contributor to growth in recent years.

All very impressive figures on the surface, however when you break this figure of 313 million it does lose its lustre a little…

‘Middle class’ is defined by the World Bank as those who spend between US$2 – 20 a day, and this range is based on the cost of living on the continent again based on calculations by the World Bank. I’m not sure about you but I’m certainly not happy with living off US$2 a day as an acceptable standard for our people. When you break down this rather large range we end up with 3 classes: a floating class earning US$2 – 4 a day and in danger of falling back into the ‘poor’ classification, a lower middle class earning US$4 – 10 a day and upper middle class earning US$10 – 20 a day.

Most of our middle class citizens sit in the floating class and while could afford a TV, fridge, cellphone or washing machine, could not afford all of these. So where am I going with this – this is supposed to be a blog about ‘Believing in Africa’ not doom and glooming it. Well the good news is that despite the size and nature of our middle class being oversold and under analysed in much media globally there is a (growing) proportion of the population with access to a disposable income.  And yes, these people are buying fridges and TV’s and even dishwashers! They are attracting retailers from all over the world to meet our ever growing demand for the newest and most advanced products available. This is good news, not only for the retailers, but for local economies as a whole, who do still benefit even when the retailer base is out of country, never mind the quickly growing local industry also getting in on this action. If nothing else it is a pretty good measure of the number who are simply (or barely) surviving vs. those that earn above a mere subsistence level.

The really good news for me though is what else this means, because with an increasing middle class also comes increasing social changes. Middle class citizens globally are seen to make changes in their social, work, health, education decisions and investments as they move from poor to middle class. Middle class citizens have access to better and more education, health care, telecommunications and infrastructural resources such as electricity. Middle class citizens have access to banking services and loans which can help them to increase their economic standing. They are more informed and concerned about political happenings, human rights and quality of public services. Middle class citizens are much more likely to send their children to tertiary education institutions.  All this comes with or perhaps as a result of having well-paid and most importantly steady jobs or even success in running their own business.

Even better news is that these are self-perpetuating changes that spread at an exponential rate. This means the greatest advantage of this growing middle class is its potential to increase its own size and positive influence on the rest of the economy simply by existing. When citizens can move beyond focusing simply on surviving our continent’s true potential can be released, and this I believe is the key to true and sustained development for our continent.

Africa Brains. 2011. ‘Africa’s new Engine: Middle-class consumers to drive prosperity’ http://bit.ly/wiM9eP

Essoungou, A. 2011. ‘Foreign investors eye African consumers’ http://bit.ly.yC6GNH

Hendrik, C. 2011. ‘Africa’s burgeoning middle class: The rise of the plebeians’ http://bit.ly/zhehkV

Provorst, C. 2011. ‘Africa’s burgeoning middle class brings hope to a continent’ http://bit.ly/y8G4RC

Ncube et al. 2011. ‘The Middle of the Pyramid: Dynamics of the middle class in Africa’ African Development Bank Publication

The China Post. 2012. ‘Africa’s middle class is growing but still vulnerable’ http://bit.ly/AtNx2s

The Economist. 2011. ‘Pleased to be bourgeois’ http://econ.st/x2ih6o

 
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Posted by on February 15, 2012 in General, Middle Class

 

The Tea Stop that taught me to listen

This particular story is one I’ve wanted to share since 2009, and was a motivator for this blog, which I’ve been mulling over in my mind for a few years now. And as such, even though it is not a shiny and new story, it is one that still helps me today and so I decided to share it anyway.

Let’s start with a little scene setting: my hubby and I are living in the Ngong Township just outside of Nairobi, Kenya. We have a HUGE house, admittedly not as big as our neighbors 18 bedroom house, but certainly bigger than our other neighbor’s tin shack and any other we have ever lived in – and shockingly the smallest we could find in Ngong. Shack or mansion, those were our options.

We were active members of our community and so when a friend from South Africa, Fiona Goldrick, visited us in Kenya looking for a project to support, we looked to our immediate community. Fi and I were each contributing R500 towards the ‘project’ and this was the sum total of money we had to spend on creating something worthwhile and sustainable in the 3 weeks she had in Kenya. Our first step was to set up a meeting with the two women, Anastasia and Esther, we wanted to work with and see what ideas they had to create an income for themselves. The researcher in me turned this meeting into a bit of a focus group, but before we knew it we had 12 ideas from the women.

The universal favourite was some sort of tea stand. You see Kenyans LOVE their tea and drink more tea than even the British do – in fact this is the Kenyan cultural idiosyncracy more commented on than any I have heard. However the only place that tea is available outside of the home was premium coffee and tea houses, and at prices way out of reach of the average Kenyan.  A massive gap in the market had been identified, by these innovative women, and The Tea Stop was born.

A week later the 4 of us had sourced some flasks, trays, plastics cups, spoons etc, created some branding and were ready to start sales. Two shifts were done a day – thus ensuring neither of the women was away from her children too long (both were full time carers) and that they could continue running their fruit stalls outside of their homes. Esther did the morning shift and Anastasia the afternoon shift. These shifts were done at the taxi ranks and bus stops of Ngong and Karen where a captive, bored and thirsty market just couldn’t get enough tea. Three months later Anastasia and Esther were earning an income of R1200 each a month for working 2 hours a day. This income was more than what their husbands and them combined were earning before and all this from a tiny investment and listening to the people involved. They continued running The Tea Stop for a further 3 years, with an average income increasing by R70 a month per person, until both women and their families moved back to their respective rural areas to take over the family lands upon the deaths of elders. The women have both used the money they made running this simple business to start new businesses more appropriate to their new surroundings. Esther bought a sewing machine and now runs a tailoring business from her home near Lake Victoria while Anastasia used it to buy a water pump to enable growth of extra crops that she sells also from her home in the Aberdares region. They are inspirational women who work tirelessly and are still constantly thinking of how to do better. Their success is solely because of their skills and determination.

Too often in Kenya particularly I heard members of the UN talk of how carefully they had to balance the success and failures of their projects – as after all if one was too successful and actually solved the problem they would be out of a job, they frequently pointed out before jumping into their new and completely unnecessary 4×4’s and speeding off. This seemed to pre-occupy them much more than getting to know the people they were supposed to be partnering with. The number of ideas and innovations overflowing from the people could be changing lives daily if only more would listen.

And so yes I’m preaching. It’s time to listen – Africa does have the answers, you just need to ask the questions. And I’m preaching not because I knew any better or haven’t made the same mistakes but because I learnt and believe in the amazing power and ability of our people. Help release it to continue the transformation of our continent.

 
 

WJS’s Infographic on Africa, ‘The New Gold Rush’

 
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Posted by on February 5, 2012 in General, Infographics

 

Development across Africa: Highlights

Just because we’re human and so need hard facts and figures to convince us of things, I figured after my previous post the most logical next post would be some of these to convince you of Africa’s* incredible progress and potential. This is not the general format of how I envision my blog, which would usually be more personal and not in point form, but I felt I needed to justify it and hopefully give you enough reason to keep reading in the future. I also won’t be posting everyday usually – quality is better than quantity – but I’ve got to get you hooked to start with, don’t I? So here goes…

  • From 2002 to 2010 GNI per capita in Sub Saharan Africa increased from $470 to $1176. More than double in less than 10 years!
  • 6 of the 10 fastest growing economies in the world are African! In fact between 2000 and 2010 the world’s fastest growing economy was Angola – not China!
  • In 2011 Africa was the region that gave the highest returns on investments in the world.
  • Exports rose from $319.0 billion in 2007 to $413.7 billion in 2008, a 29.7% increase in just one year! Conversely, imports rose less than exports, from $305.3 billion in 2007 to $372.1 billion in 2008, a 21.8% increase. All greats signs of the continent’s development and growing self-sufficiency
  • New FDI projects into Africa are forecast (Ernst & Young) to reach $150 by 2015, creating 350000 jobs per annum
  • Total investments in renewable energy in Africa rose from $750 million in 2004 to $3.6 billion in 2011
  • In 2000, roughly 59 million households on the continent had $5,000 or more in income. By 2014, this number is forecast to reach 106 million.
  • Africa’s poverty rate is dropping by 1% a year and has been for the last decade – despite global economic conditions and internal challenges.
  • From 2008 to 2009 Sub Saharan Africa’s inflation dropped from 10.6% to 4.3%   while the majority of the world’s countries inflation rates went up!
  • Africa is NOT overpopulated. It has a population density similar to the USA and less than the UK. Africa has 65 people per square mile, USA 76 per square mile and the UK 660 per square mile. To add some context, courtesy of Gérémie Sawadogo, India has a larger population than the entire African continent even though it is a 10th of the size! Ironically the country with the highest population density in the world is also considered one of the richest – Monaco!
  • Africa is not at war. There are 4 sites of major conflict on the continent at the moment (Chad, DRC, Somalia, Sudan) and if we include, by the World Bank’s definition, fragile states we would have to add another 13. Still less than half the continent and not even far off Asian or European figures at present! Good news as a whole, globally? No, but certainly not the continent of conflict portrayed by most and much more similar to the West, in political and economic terms, than anyone would like to admit.
  • Sub Saharan Africa is bang on global average for the percentage of women parliamentary members at 18%. The country in the world with the most female members of parliaments is Rwanda and South Africa also features in the top 5 – yes we occupy 2 of the top 5 spots! Better than you expected? Just to be clear I believe this is not good enough (who wants to be average anyway) and there is still a very large amount of work to be done in terms of gender relations but again we’re not as bad as we’re told.
  • The percentage of Sub Saharan Africa’s population that is undernourished has dropped from an unimaginable and horrific 60% in 1990 to 26% in 2009. It’s important to not forget that these numbers represent actual people, so a quarter of the population being undernourished is, as said before, simply not good enough BUT progress is progress, must be recognised, learnt from and enhanced. No one can deny this is incredibly impressive progress in the face of a very daunting challenge.
  • In 2002 the average primary school completion rate for Sub Saharan Africa was 52%. In 2009 this had increased to 64% – that’s an increase of more than 1% per annum! At the same time the primary school enrollment rate increased by 16%.
  • The maternal mortality rate has dropped from 870 per 100000 live births in 1990 to 650 per 100000 live births in 2009.
  • The number of patent applications by African residents increased from 745 043 in 1999 to 994 324 in 2006
  • Algeria, South Africa, Gabon, Tunisia, Mauritius, Botswana, Morocco and Mauritania all have higher mobile penetration rates than the world average of 60%
  • In 2000 there was 1 internet user per 100 people. In 2010 this number had increased to 11 internet users per 100 people.

And there you go my highlights package of the good news from the continent I have the honour of calling home. Want to know more? Watch this space!

* I am generally not a fan of talking about Africa as if it is one country. It is not and it’s now 54 countries are all very different but do so here simply to make a general point and promise to be more specific in the future!

 
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Posted by on February 5, 2012 in General

 

Why a blog about believing in Africa is needed

There is no doubt that the countries of Africa have their issues – let’s just be clear about this from the start. I am in no way denying that there are challenges and crises that every day cost lives and impact on standards of living. However I am not aware of any country in the world that doesn’t. You?

African countries are often associated with negative descriptions involving words like ‘dark’, ‘failed’, ‘undemocratic’, ‘corrupt’, ‘dangerous’ and ‘chaotic.’ The reasons given for the frequent use of these terms (by both local and international media particularly) are the dictatorial governments of our countries who loot indiscriminately and in so doing become slave masters and murderers of their own people (strong words intentionally used). Unfortunately this is true for a small minority of the 54 countries of our continent.

It is however also true of the UK – remember the UK expenses scandal of 2009? A corruption problem of significant proportions which took place in a year when the UK had a 16.1 billion pound tax deficit by August of the same year. While we’re talking about the UK let me also point out this is a country (considered democratic) that does NOT limit the numbers of terms a Prime Minister can sit for, yet this is a characteristic, when applied to an African country such as Senegal, that makes them undemocratic and dictatorial. It is also the country still resolving the phone hacking saga, which has been found to involve all sorts of senior leaders of both governmental and non-governmental organisations.                                                                                    Consider the US who in 2000 were given a new President, George W Bush, an ‘elected’ leader who received less votes than this rival democrat candidate, Al Gore. A country still beset by a recession essentially caused by a minority of rich and seemingly above the law political contributors who took until there was no more to take. These same people were then given bail-outs from the government which they promptly re-loaned to the government at a much higher rate. Worst this was done quite openly while unemployment spiraled to historic highs and standards of living to historic lows.

We haven’t even started yet on the un-elected government currently ruling Italy, another country in dire financial crisis, or the shutting down of major airline routes to and from Australia by one stubborn but powerful man, Qantas CEO Alan Joyce. His actions cost the Australian economy $250 million a day, resulting in a total cost just to the tourism industry of $10 billlion!

Despite all this (and I could go on and on) you never hear the same words used to describe these ‘first world’ issues – they’re about ‘recessions’, ‘ill-considered policies’,  ’global downturn’, ‘changing economic climates’ and other descriptors that clearly indicate that ‘they’re’ not to blame and all these challenges are just a result of current circumstances – nothing to do with them. And herein lies my issue. If anything all this proves is that politicians are politicians and as such we should all be judged equally. How dare countries with similar or worse issues judge us so hypocritically? How dare they continue to perpetuate an African stereotype that still has a negative impact on us, when the characteristics of that stereotype are increasingly reflected in their own countries? It’s time to change this. It’s time for tourists to flock to our stunning mountains, beaches and parks without their heads being filled with horror stories of what they’ll endure in the process. It’s time for investors to invest their money in the fastest growing region on earth with peace of mind – as they would in a “First World” market that was growing at 6% per annum. The US is not growing at this rate – they’ll be lucky to reach a GDP growth rate of 2%, but Africa is.

I hope that by sharing my experiences working and travelling through Africa will help further this cause…let me know won’t you?  Please also feel free to share your own experiences – I’d love to hear about them!

 
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Posted by on February 4, 2012 in General