The immense economic growth that the African continent has been experiencing throughout the past decade has certainly not gone by unnoticed, although widespread scepticism remains. How sustainable is the region’s growth in the first place? And should we doubt the inclusiveness of regional growth, and whether this may be catalysing a social and economic divide in the societies concerned? According to Carlos Lopes, Executive Secretary of the UN Economic Commission for Africa, we have plenty of reason to be optimistic about a sustainable and inclusive economic growth in the near future.
“You have heard often that Africa is one of today’s fastest growing regions in the world. But you have not heard enough”, Lopes declared in his opening statement at a recent lecture organized by Erasmus University’s Institute for Social Studies (ISS). According to Lopes, it is important to realise that the region’s growth has gradually become fuelled by domestic consumption, which is a direct result of a growing middle class. In fact, two-thirds of Africa’s current growth can be attributed to domestic consumption, which has played a decisive role in reducing the region’s much-criticized over-reliance on primary goods exports. Considering the role of domestic demand, Lopes estimates a continuing economic growth of around 5% for much of the region.
“If I am an optimist, I am in very good company” Lopes states, referring to research and forecasts which share a similar positive outlook on the region. Analyses by consultancies such as McKinsey and Deloitte demonstrate how the growing consumer market is one of the key aspects that make the African region particularly attractive for business, whilst figures by E&Y show how Intra-African Foreign Direct Investment has been growing at 32.4% a year. This goes hand in hand with a growing middle class, which according to the African Development Bank constitutes 34% of the continent’s 1.1 billion people, meaning that more than one in three Africans have entered the middle class in the last decade alone.
At the root of much scepticism regarding the African middle class, Lopes explains, is the fact that estimates of the size of the African middle class vary depending on the definition employed. Although Lopes argues that the middle class is best identified as a new group of consumers and as the carrier of democratic values and societal progress, it is difficult to reach consensus on the exact parameters which distinguish lower, middle, and higher incomes. Nonetheless, no matter what type of definition is preferred in the identification of the middle class, there is no denying a trend in middle class growth, and this will play a fundamental role in further fostering economic growth throughout the African continent.
Read Carlos Lopes’ speech here.
Author: Celeste Flores, Netherlands-African Business Council