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Africa: The Next Global Middleclass Juggernaut

Hardly a week goes by without an African investors’ conference or growth summit. Portuguese professionals are looking for opportunities in Angola. Silicon Valley companies are coming to Kenya to learn about its home-grown ICT revolution. This is not an irrational fad.

Since the turn of the century, Africa’s growth has been robust (averaging 5-6 per cent GDP growth a year), making important contributions to poverty reduction. The current boom is underpinned by sound macro policies and political stability. Unlike in some rich countries, public debt levels in most of Africa are sustainable.

One way to track Africa’s progress is by charting the number of countries that have achieved “Middle Income Status”. In the World Bank’s definition, you become a middle-income country (or “MIC”) when you cross the $1,000 GDP per capita threshold.

To be sure, even at $1,000 per capita, many of these countries still have high levels of poverty and poor human development indicators. Gabon, at over $10,000 per capita income, has one of the lowest immunisation rates in Africa.

Nevertheless, reaching middle-income status signifies membership in the same group as, say, Indonesia, Mexico and China, which have access to global capital markets.

How many MICs are there among Sub-Saharan Africa’s 48 economies? We have informally asked this question of 200 people (many pundits and professionals among them). The standard answer is “around five”.

Only one person got it right and almost everyone is surprised to hear the result: Africa today is home to 22 MICs (23 if South Sudan is included)! Kenya, East Africa’s largest economy, is not among them (or for that matter is any other EAC member).

In fact, if you ranked all Sub-Saharan African countries by per capita income, Kenya would be right in the middle, ranked 24th out of 48.

If Sub-Saharan Africa were one country, it would already be a MIC with an average per-capita income of around US$ 1,500. This average, however, masks wide differences…

Read More:  cp-africa.com

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