April 25 2019 / by Baldwin Tong / Market Pro
Africa: A growing middle class
Poverty in Africa is falling. While it is not falling fast enough across the continent to achieve SDG 1 by 2030, there are many countries who will make significant progress towards eradicating poverty over the next decade. Using our web tool Market Pro, which allows users to look at any country’s spending forecasts and market power in real time, we found that the countries expected to make the most progress towards fulfilling SDG 1 are forecasted to experience strong growth in their middle class segments (those with a daily spending power of $11-$110 USD in 2011 PPP).
Strong growth from countries who will fall just short of achieving SDG 1
According to our poverty forecasting website, World Poverty Clock, countries such as Ethiopia, Côte D’Ivoire, Djibouti, and Angola will make significant progress towards eradicating extreme poverty over the next decade but will fall just short of achieving SDG 1. Nevertheless, the percentage of the population living in extreme poverty in these countries will be less than 5% by 2030, a reduction from 25% (Ethiopia), 21% (Côte D’Ivoire), 14% (Djibouti), and 6% (Angola) today.
A surprising find during our analysis is what’s expected to happen in Ethiopia—the middle class is set to explode over the next decade and will grow from approximately 716 thousand people today to over 9.6 million by 2030, a growth of over 1,200%. Spending power will also increase by a similar amount: 1,230% from $4.72 billion to $62.78 billion.
Côte D’Ivoire, Djibouti, and Angola are also poised to increase the ranks of their middle class. Their respective middle classes will grow at an impressive rate: 143% for Côte D’Ivoire, 131% for Djibouti, and 45% for Angola, or approximately 6.5 million, 250,000, and 5.1 million in absolute figures. Spending power will increase by similar amounts $63 billion (154%) for Côte D’Ivoire, and $2.2 billion (152%) for Djibouti, and $61 billion (49%) for Angola.
Stronger growth from countries on-track to achieve SDG 1
The countries expected to achieve SDG 1 by 2030, Mauritania and Gambia, are expected to have their middle classes grow 279% (900,000) and 290% (140,000) respectively over the next decade, stronger growth than all the countries listed above except for Ethiopia. Spending power is forecasted to grow from $1.9 billion to $7.4 billion (303%) in Mauritania and from $303 million to $1.2 billion (289%) in Gambia over the next decade.
Weaker growth from countries who’ve already achieved SDG 1
Countries which have already achieved SDG 1 such as Equatorial Guinea and Mauritius are forecasted to experience some of the lowest growth of their respective middle classes among the countries mentioned so far. Equatorial Guinea is expected to grow only 22% (116,000) and Mauritius, 20% (147,000), over the next decade. Annual spending power is expected to grow around 20% in Equatorial Guinea from $6.2 billion to $7.5 billion and 44% in Mauritius from $15 billion to $21 billion. However, in contrast, Gabon’s middle class is expected to grow 128% and add 316,000 people. Its spending power is expected to grow by a relatively similar amount (145%) from $1.5 billion to $3.7 billion.
Insight for businesses
While much of the press attention regarding Africa is concerned with the challenges of reducing poverty, what may be overlooked is the rapid growth of its middle class both in sheer terms of population size and spending power numbers over the next decade. While we’ve only gone into detail for a small number of African countries, overall across the continent, the middle class population will increase 71% and add over 138 million Africans.
It is clear that the global middle class will be dominated by Asia over the next ten years, but the growth of the middle class in Africa should be considered in the five and ten year plans of regional and global businesses.
April 18 2019 / by Andreas Birnstingl / Market Pro