Surge in Africa’s middle class

A new Standard Bank study finds that there are 15 million middle-class households in 11 of sub-Saharan Africa’s top economies in 2014, up 230% since 2000.

The report, entitled ‘Understanding Africa’s middle class,’ noted that there were 4.6 million middle-class households in 2000 and 2.4 million in 1990.

However, of the total number of households across these focal economies, 86% of them remain within the broadly “low income” band.

The report also found that the combined GDPs of the 11 measured economies had grown tenfold since 2000.

In the past, the conventional wisdom was that as many as 300 million Africans are categorised as ‘middle class’, Standard Bank said.

South Africa’s LSM measure as a methodology is not income-based but rather uses a wider range of analysis. The report covers 11 selected sub-Saharan African countries which combined account for half Africa’s total GDP (75% if excluding South Africa) and half its population.

The methodology identified LSM5 and above as middle class and categorises household income into four distinct income bands: low income; lower middle class; middle class and upper middle class.

“Standard Bank has attempted to fill the knowledge gap by using comprehensive household income data and adopting our own measure of the middle class using South Africa’s LSMs as a framework in order to provide cross-quantifiable reference points for peer African economies,” the bank said.

The 11 focus economies are: Angola, Ethiopia, Ghana, Kenya, Mozambique, Nigeria, South Sudan, Sudan, Tanzania, Uganda and Zambia.

“Looking ahead, an even greater elevation in income growth is anticipated in the next 15 years; between 2014 and 2030, we expect an additional 14 million middle-class households will be added across the 11 focal countries – tripling the current number.

“Including lower-middle-class households, the overall number swells to over 40 million households by 2030, from around 15 million today,” the report states.

Furthermore, while figures for 1990, 2000 and 2014 all contain more lower-middle class than middle class households, by 2030 it is expected that “there will be notably more middle-class households than those in the lower-middle-class bracket (19.2 million versus 22 million)”.

As a caution, the report said: “Though there has been a meaningful individual lift in income, it is clear that a substantial majority of individuals in most countries we looked at still live on or below the poverty line (measured as those with a daily income of USD2 or less).”

Income discrepancies are vast among the 11 economies, with almost 86% of the 110 million households in the focal grouping falling within the low-income band. This is expected to fall to around 75% by 2030, Standard Bank said.

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Surge in Africa’s middle class