Global emerging middle classes are Africa’s GEMs

By | July 28, 2013
Kentucky Fried Chicken at The Junction, Nairobi, Kenya  2011 Photo Credit: Niti Bhan

Bright Simons cautioned us about hyperbole and exuberance in a recent article published on the HBR site. In “Beware Africa’s Middle Class“, he points out with great clarity that the ’emerging market consumers’ spotted by the optimists over at the African Development Bank (AfDB) were nothing like the bourgeois conjured up by the prosaic “middle class” labeling. In fact, he says, university educated graduates were still looking for their mythical middle class job, all white collar and old school ties of course, while the economic engine was actually being run by successful entrepreneurs, smallholder farmers, opportunistic traders – most of whom were growing informal micro enterprises without having completed their educations due to financial pressures.

Here is what Simons has to say:

Across Africa, incomes are rising fastest among those engaged in brokering trade in goods and services across fragmented markets. These are the people who shuffle goods from one trade-post to the other, braving tattered roads, noisome customs officers, leaking kiosks (serving as warehouses), clueless laborers, and even more clueless technicians. As economic conditions improve across Africa, these folks are the first to know and the first to scale up their operations.

These are the importers who have never heard of a “letter of credit,” much less opened one, the “suitcase merchants” who travel to Dubai and the Far East every month to haul in cheap consumer goods on baggage trolleys, as well as their collaborators who stay at home to push the stuff in the open-air markets. These are the second-hand goods dealers and distributors opening up small towns to commerce. They are the vanguard of the African middle-class.

These people are rarely well-educated, though, and they share none of the cultural traits seen in the West and Asia as prerequisite to a middle-class life. Many young and educated Africans, on the other hand, share few of the economic traits associated with middle-class status elsewhere. Lacking a regular income and strong social networks, and bereft of the professional grooming and mentorship opportunities available to true middle-class types, they have become a monument to an educational system increasingly at odds with the social and economic realities of the new Africa.

This amazing contradiction in most African societies — of an expanding educated underclass and an ‘uneducated’ rising economic class — sums up why the African economy is struggling to acquire the characteristics one would expect of an economy bursting with middle-class vibes. Simply put, even were the number of middle-class people expanding as dramatically as some observers claim, there is no guarantee that market and consumer behavior would look anything like what emerged in other societies when their middle-class population begun to approach critical mass.

Naturally not. Bright Simons has hit the nail on the head. This emerging consuming class has none of the characteristics assumed as a given when considering the “middle class” household’s consumption patterns or preferences. Few credit cards or regular payslips may be present; the majority being one of the vast majority of Africans – 96% of all mobile phone owners – who are on cash only prepaid phone and data plans. While their incomes maybe too volatile for market researchers seeking to segment them into neat pigeonholes of disposable incomes, their activities are too dynamic to relegate them to the ‘bottom or base’ of any poverty indicator. In fact, these characteristics describe the bottom of the pyramid (BoP) consumer mindset and behaviour without the assumption that poverty is a steady state uninfluenced by aspirations.

Light fixtures installed and ready for future electric connection, Kitui, Kenya April 2013

This dynamism is a characteristic of the opportunity available at a certain point of time or when factors are just right, and it swings enough to allow the aspiring informal bourgeoisie to risk the additional investment in symbols of ‘having arrived’ – a much larger and tangible shift in daily life such as a vehicle upgrade (bicycle to motorcycle) or an LPG cooking stove to replace the charcoal. These are not simply the additional momentary cost of a brand name takeaway meal but usually imply an increase in household budget.

And these aspirations are very often signaled to the entire community, especially when they are one of the tangible class markers of clear upward mobility like a connection to the electric grid. It is not uncommon to see homes of the global emerging middle class all kitted out with wiring and fixtures just waiting for that last jump up for the brass ring.

These dynamic GEMs are far more likely to be representative of the Africa Rising narrative, than the now obsolete image of the ‘poor African’ villager.

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