Africa’s rising, aspirant middle class
23 January 2013 | Kentse Radebe
The World Bank indicates that 34.3% of Africa’s population is middle class and according to a Deloitte report by 2060, this number will have grown to 42%.
Tunisia, Morocco, Egypt, Algeria and Gabon have the highest concentrations of middle-class citizens on the continent, according to Deloitte’s The Rise and Rise of Africa’s Middle Class.
The Deloitte survey describes the African middle class as having greater entrepreneurship ambitions, higher educational standards, living in urban areas, being a younger and more politically assertive generation, and consisting of aspiring individuals who have higher paying jobs.
Africa Analyst at Rand Merchant Bank, Nema Ramkhelawan? Bhana, says that contrary to the notion that growth in Africa is derived from mining and commodities, it is in fact driven by consumer growth in banking, telecommunications and retail.
These demographic changes are attracting more investment globally as well as from African countries, with several South African retailers and banks recognising the opportunities that come with expanding into Africa.
One such company is leading local wine and brandy producer KWV, which plans to have 20%-25% of its profits coming from Africa in the next 10 years.
Wilhelm Theunissen, general manager for KWV Africa, says that because Africans have become brand conscious and aspirational it made sense to expand into the rest of the continent.
The growth of the middle class allows companies to also sell luxury goods, Theunissen emphasises.
Retailers are also expanding their footprint. Shoprite currently dominates the African market, with a presence in Mauritania, Ghana, Nigeria, the Democratic Republic of Congo, Angola, Tanzania, Zambia and Madagascar, among others.
Mr Price, Massmart, Woolworths and Foschini are among others hot on its heels.
South African telecommunication service provider Telkom has the largest presence in Africa, which may be largely driven by its landline operating services.
Telkom is followed closely by MTN and trailed by Vodacom.
Standard Bank, having switched to focusing only on Africa, is the company with the largest African footprint among the banks.
The data shows that most companies are situated in East and West Africa, with very few venturing North into countries such as Egypt and Morocco.
Ironically, the latter are identified by the Ernst & Young Africa Attractiveness survey as the countries with the greater opportunity for growth considering that their GPP per capita stands at $2 698 and $4 451 respectively. The survey estimates that Africa’s collective GDP currently stands at $2 trillion.
The relevance of Africa in the global markets is increasing: The Economist reported that since seven of the fastest growing economies were identified as coming from Africa.
Consumer growth, increased population, urbanisation and political stability are some of the factors contributing to Africa’s progress, says Ramkhelawan? Bhana. If companies do their research, there is a lot of growth potential for them, says Theunissen.
However, according to the Brics Export Import Forum, only 11% of African countries are taking advantage of the growth potential by engaging in intra-Africa trade.
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