Africa’s middle class conundrum

With the emergence of ‘Africa Rising’ narrative, came the related rise of interest in the ‘newly forming’ African middle class.

To be clear there are various definitions of this demographic group, but I think the most realistic definition is those who earn between Sh850,000 and Sh4 million a year.

You need to be making just over Sh70,000 a month to fit into this qualification. However, even with this relatively generous definition, this middle class is very fluid, limited and difficult to pin down as a ‘steady’ income group.

Indeed, perception and image aside, one can argue that the actual middle class segment that consistently fits within that definition is smaller than often imagined because dropping out of middle class into low income is very easy. That said, there is a middle class present in Africa and one of the key misconceptions of this class is that they have sizeable discretionary income.

The reality is more often that the middle class has several classes of priority spending and have to negotiate the use of their own money beyond meeting their basic needs.
Often the spending power of the African middle class is wildly over-stated in terms of funds for discretionary spending.

This is because the lack of a robustly government-financed social welfare net translates to the middle class financing social security services through their own money, thereby eating into ‘non-essential’ spending.

The Panglossian narrative about the spending power of the African middle class ignores the fundamental pressure that African middle-class pockets feel. Busy supporting friends and relatives, there is often little left over for indulgent spending for many people.

That said, aspirational capitalism has taken root in Africa. Many Africans want big cars, big houses, engage in leisure activities and buy luxury goods. Many are of the view that having worked hard for their money, they ought to spend some of it on themselves.

There is even an emerging trend, particularly among the younger middle class, of getting lines of credit to buy furniture, music systems, and go for lunches at high-end cafés; such is the pull of the lifestyle.

READ: Nairobi hosts a third of the fast-growing middle class

And while some may choose to spend their cash (or loans) on themselves, it does not negate the fact that many will forgo those purchases to support friends and family in need.

Ergo, African middle class pockets are pulled in two directions — financing friends and family in need, or using ‘extra funds’ for self-indulgent spending.

The weight given to each of those sides is often a personal choice that many must negotiate. It is not a simple choice, and the decision-making process is very personal, nuanced and complex.

Thus companies, particularly those with limited experience in Africa, ought to be careful of boldly strolling into Africa in order to tap into the middle class because not only is it easy for many target consumers to slip into low income, other priorities compete for the same resources.

It is time those watching the African market create more nuanced analysis of this income segment and take the time and effort to truly understand the strange and complex creature that is the middle class African.