Africa rising - but who benefits?

Woman in a branch of Zara in South Africa Glitzy shopping centres are being built across Africa

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Many of the fastest growing economies in the world are in Africa.

The continent's future appears to be bright, but do growth figures reflect an improving quality of life?

It is a story that is being told with increasing frequency.

Against the backdrop of a prolonged slump that has brought financial paralysis to much of the Western world, experts have identified Africa as having many of the world's fastest-growing economies.

Some point to the fact that high growth rates should be viewed in context, since African economies - mostly relatively small - are expanding from a low base, making improvements seem disproportionately impressive.

But, while the US and UK struggle to emerge from prolonged recessions and European nations such as Greece and Spain experience mass unemployment, the International Monetary Fund and the World Bank say countries such as Ghana, Ethiopia, Rwanda and Mozambique are experiencing a boom.

Chart showing how Africa's economic growth compares  favourably with other regions

Many have ascribed this trend to what they believe are burgeoning middle classes in many nations.

The African Development Bank's (AfDB) chief economist Mthuli Ncube has described this trajectory as "unstoppable."

For renowned economist Jeffrey Sachs, the mobile phone has become a symbol of this apparent new dawn. He has described it, and the access to the internet that it can bring, as the single most transformative tool for development.

It's good to talk
South African man with a tablet computer Mobile communications have been at the forefront of Africa's boom

More than 70% of adults in Nigeria - the continent's most highly populated country - own a handset.

And in Kenya the widespread use of mobile phone payment software has opened up opportunities for small and medium-sized businesses by providing ease and flexibility where transactions and banking are concerned.

Farmers, for example, can receive the latest market prices with a single text message or gather information about sales and stock.

World's 10 fastest-growing economies

Annual average GDP growth 2012, %

Source: World Bank

1

Sierra Leone

18.2

2

Mongolia

12.3

3

Niger

11.2

4

Panama

10

5

Ivory Coast

9.8

6

Burkina Faso

9

7

Papua New Guinea

9

8

Ethiopia

8.5

9

Lao PDR

8.3

10

Uzbekistan

8.2

The ubiquity of mobile phones in Africa has also created a new breed of entrepreneur that can be found in cities as far apart as Dakar, Dar es Salaam and Durban - the vendor selling air time.

Salim Evoudidi, one such salesman in the Democratic Republic of Congo, seems to typify the type of aspirational worker said to be driving the emerging middle class.

He arrives at his regular spot on a busy street in the capital, Kinshasa, beside other air time vendors, at around 0700 and works for nearly 12 hours every day.

"I have a family, I have a wife and four children. I've been able to send three of them to school and rent a house for us," he says.

"I've been doing this job since 2005 - so, for seven years. There is an evolution. There are more and more customers - Congolese people spend a lot on telecommunications."

Mr Evoudidi's ambition is to start a business, and he hopes the money he makes in his current venture will generate enough money to provide a launch pad.

The notion of "Africa rising" - the term that journalists have coined when referring to the idea of economic development on the continent - has, for some, become hackneyed, with bloggers now calling it a meme.

The Economist, which famously labelled Africa the "Hopeless Continent" in 2000, inverted that idea more than a decade later for special coverage looking at what it now considers to be the hopeful continent.

But, beneath the surface of what appears to be a good news story in a part of the world previously portrayed in the Western media as being ravaged by war and famine, questions remain.

What constitutes middle class status? And does that term really point to a heightened quality of life?

Middle class myth?

George Alagiah sees how Ethiopia has become a hub for making shoes

The UN defines a middle class person as someone living on $10-$100 a day.

However, the AfDB uses the measure of $2-$20 a day, which it says is an appropriate calculation, given the cost of living on the continent.

Middle class is defined in relation to the average income, and that average is lower than in the West.

Abdul Jalil, an English teacher at a school in Maputo, Mozambique's capital city, says the money he makes from his job, and extra tuition for adults, places him firmly in the middle class bracket.

"It depends how big your family is. I'm married with two children - so it's not a big family.

Analysis

There is no doubt that the proportion of wealthy Africans has increased.

The theory is that as there are more people in Africa with disposable incomes and that foreign companies view the continent as the last great market in the world in which to invest and sell their goods.

Unlike Europe, which has an ageing population and a diminishing work force, Africa has an increasing population, an expanding work force and a flourishing middle class with money to spend.

Analysts believe that as African economies are developing, the wealth will trickle down from rich to poor via the middle income group.

With growth of 6% and productivity rising by 3%, it is easy to see why things are looking up. A commodities boom and massive investment by China is giving Africa's young urban generation cause for hope.

However, not everyone is quite so optimistic. Some believe these are myths that have been overstated by the continent's corporate cheerleaders.

"My wife also works as a teacher. If I was the only one working, I wouldn't be satisfied with that money.

"At the end of the month I have some money left."

Some argue that the concept of the middle class as an engine for growth is a myth and wealth generated is not trickling down to wider society.

Instead, it is said, other interested parties - such as the local elite and foreign investors from China, India and Brazil - are benefiting from an abundance of natural resources and increased willingness by companies to do business in Africa.

Last month, a report released by Kofi Annan said that tax avoidance, secret mining deals and financial transfers were depriving Africa of the benefits of its resources boom.

It said such deals were costing the continent about $38bn (£25bn) a year.

Duncan Clarke, from the consultancy Global Pacific, says the reality is that Africa has a small middle class. He says those who live at a global middle-class income level comprise "less than 5%" of the continent's population.

Mr Clarke says the informal economy, which he calls "swathes of survivalist pockets of existence", remain the bedrock of the continent's economy.

BBC Africa Debate

Tune in to the BBC World Service at 1900 GMT on Friday 21 June to listen to the BBC Africa Debate - Africa Rising: Who benefits? - recorded in Lagos, Nigeria.

And on 28 June, the debate moves to Accra, Ghana, where the question is: Can the middle class drive growth in Africa?

Or take part on Twitter - using #bbcafricadebate - Facebook or Google+

Poverty, he notes, is still widespread.

Changing skylines

In Ghana, a country often cited as an economic success set to benefit from a relatively recent oil discovery, the reality of so-called middle class life differs from the experience of those in other parts of the world.

Electricity is currently being rationed, the country is undergoing a water shortage and doctors have been on strike to protest at salary cuts.

Meanwhile, people who fit in to the middle class bracket are said to have been priced out of prime property as expatriates and the upper class rent or buy luxury properties.

Africa's growth drivers

Expected annual average GDP growth, %

Country 2013 2014 2015

Source: World Bank

Sierra Leone

17.1

14.1

12.1

Niger

6.2

6.1

5

Ivory Coast

8

8

8.1

Burkina Faso

7

7

7

Ethiopia

7

6.9

7.4

An AfDB report on the continent's economic outlook has warned: "Growth has been accompanied by insufficient poverty reduction, persisting unemployment, increased income inequalities and in some countries, deteriorating levels of health and education."

Few places sum up this dichotomy more than Angola, which has enjoyed high growth rates thanks to its huge oil and gas reserves.

But most locals don't appear to be benefiting from the natural resources boom, with about two thirds of the country's population living on less than two dollars a day, according to the World Bank.

However, other nations appear to have found ways to to share the wealth generated by natural resources.

Botswana has used revenues from its diamond mines to make significant investments in education and health care.

And, by teaching locals to cut and polish diamonds, it has created jobs to spread wealth and ensure that the presence of multinational companies for expertise is not needed.

Those who believe lives are being improved across the continent point to the rapidly changing skylines of many African cities.

Start Quote

You can't rely on your salary”

End Quote Abdul Jalil Mozambican teacher and businessman

Modern apartments and office blocks are being built in heaving metropolises - such as Lagos, Nairobi and Johannesburg - to provide a new generation of homes and workspaces.

Meanwhile, shiny new shopping malls are opening up fresh opportunities to spend hard-earned money.

But it is too early to say whether this new generation of buildings will be matched by widespread improvements in the quality of life enjoyed by Africans.

About 15km outside Maputo, at his family home, Mr Jalil explains his hopes for the future.

He is building a new house and, like Mr Evoudidi, he believes the key to a successful middle class life is to become an entrepreneur.

The teacher is investing in a minibus, to be used a school bus.

Just under half the cost was funded by a bank loan, and the other money came from his savings.

"It's normal to run a small business on the side," he says.

"You can't rely on your salary."

Who do you think is benefitting from Africa's economic growth?

Africa is a clear case study of poor trickle-down of resources. We are yet to have our teeth in the real national cakes. Here is how: Economic figures which are in most cases doctored to paint a rosy picture are only empty words to a majority of poor Africans. Even as we discover bounties of natural, we are sure of one thing; Only our leaders will share the spoils as the masses battle with buffaloes of poverty in our villages and slums. Only our selfish leaders and former colonialists are invited to the banquet to discuss how to share the offing wells of oil in Kenya and Uganda and the gas in Tanzania. Why should authorities in Tanzania insist on piping the gas resources in poor Mtwara province to Dar es Salaam? Why can`t the so-called investors invest in the villages in Mtwara? This is our cardinal sin since independence[ if any]. The bottom line is that the very colonial powers who divided Africa in the Berlin conference of 1884-1885 are the ones eating from the pots of gold with our presidents and prime ministers getting a few remains! Because our leaders are getting the spoils, they are quick at giving sinful tax holidays to the so-called investors.

BENJAMIN OBEGI, Nairobi, Kenya

It is only a small niche of people at the top who are benefitting. I would hasard a guess at 5% of the population is benefitting. it is the corrupt members of Governments and their hangers-on.

Name withheld, Harare, Zimbabwe

This article contains competing narratives about the economies of (sub-Saharan ) Africa: One the one hand record-high average growth rates for more than ten years. On the other hand a continent still plagued by high poverty, wide inequalities, poor human capital and inadequate infrastructure. Can one reconsile seemingly contradictory narratives in order to answer the question who benefits from Africa's economic growth? The last ten years has benefited well connected elites as well people who have escaped absolute poverty, been able to send one more child to school or buy better protection against malaria. A bigger pie has has some trickle-down effects. But a legacy of many decades with low growth is difficult to overcome. Igniting growth is easier than sustaining it. In order for a rising Africa to stand up-right institutional reforms will be needed in order to secure more labour-intensive growth, modernize eduacion and infrastructure, improve governance and increase agricultural productivity. Then, at best contonued high growth rates will benefit larger segments of the continent's population.

Peter Stein, Stockholm, Sweden

One would hope that as the economies grow in the African continent - that would translate into improvement in the lives of the people. Regrettably, given a number of reasons including corruption, and clandestine deals with foreign companies, only political leaders and their affiliates benefit - while the majority of people suffer utterly. This is extremely sad and must stop!

Unisa Dizo-Conteh , London, UK

1. in Zimbabwe, the few influential politicians are benefitting. they win big tenders, they are dubiously awarded mining rights especially for diamonds and gold. 2. multinational companies, and foreign countries benefit from Zim's mineral wealth in two parts, just as examples: a. we do not have processing plant for platinum in Zim, and the raw ore is exported to SA. in the raw ore there are 7 other minerals which are not declared such as gold, copper etc, which will benefit that multinational or that importing country. b. there are no tight security proceedures at our diamond mines whereby if the mining company decides not to declare the diamond, they will do so. or they decide to declare half of it, they do so without being noticed nor being asked, and noone bothers except the few influential politicians. 3. In Zimbabwe there is absolutely no middle class. there are the poor and a few with wealthy. the rest are just peasants, surving below the poverty datum line. 4. Informal sector in Zimbabwe i think is destroying the economy. firstly they do not pay any taxes, secondly quality is not maintained, we end up with substandard "everything", pensions for informally employed people are not paid, and they are setting up everywhere uncontrolled

Dhuwa EDC, Harare, Zimbabwe

Africa's Politicians and business leaders. It is incongruous that Nigeria, a rich oil-producing nation, relies on charity - WHO, Oxfam, MSF, DFID, Water Aid to fund its health programs. Same thing in DRC. Other countries (CAR, Chad) have limited natural resources and need all the help they can get.

J Barber, High Peak, UK

Zambia is not mentioned, however it fits very well under the title of this article. It is a fact that the inequality gap has been insufficiently reduced regardless of the increase in growth that the economy has seen.Human Capability and human growth is almost non existent. Many parts of the capital city are dirty (garbage), lack infrastructure of quality, and the streets are a carnival of bad drivers, street vendors, and homeless people. It is an obvious fact that this will never change, because of the exact "reason d,etre" which stemmed the title of this article. If we have to ask who benefits, it means that soemthing is wrong, the prime questions that people should be asking are, "where is all the money going? Which individuals, or groups of people are taking the benefits of the majority and creating an upper class minority?"

FP, Lusaka, Zambia

The common man would benefit in the long run in the long run, the idea behind the chart is that Africa as an emerging continent is no longer a myth.The increase in the number of middle class means more Africans have a higher purchasing power and can spend a little extra on stuffs other than basics,This implies that new businesses, new investments and in effect more people below can be employed and at least earn a token . The real reason why the common man does not have a share of the national cake hitherto is because of our very selfish Leaders in Government, challenges in Electricity etc. I stand to be corrected but this is my candid opinion.

Tente, Lagos, Nigeria

The only people who are really benefiting from economic growth in sub-Sahara Africa are the same people who have been benefiting since the colonial powers left. The politicians and civil servants who run the countries, the military who back them and the business men who corrupt them; it's just that there's more money to spread around now and 5% of the population are now included instead of 3% or 4%. The fact is that the vast majority of the populations of these countries will never be able to aspire to even living above the poverty line until corruption is conquered and the money used to develop the infrastructure of the countries rather than feather the luxurious nests of the few at the top. I lived and worked in west Africa for five years and that's the way it was and unfortunately still is.

Hugh Hunt, Elhovo, Bulgaria

Claiming there is economic boom in Africa citing countries like Ethiopia is nothing less than lazy journalism. One has to look at the drivers for the GDP figures. In case of Ethiopia, it's aid driven construction boom (4 billion a year to be exact) which is neither sustainable nor does it reflects true economic output growth. Africa needs to pursue sustainable growth by first building infrastructure, developing human resources and creating a conducive climate for investment.

Sam, London, UK

The short answer is China. If you look at the quality of investment in Africa's natural resource industries, it is poor. Production ssets are sourced from China. Engineers and artisans too. Soft loans (probably) include clauses which allow for increased immigration into Africa of relatively poor Chinese. How else to explain why we have Chinese marketeers, chicken-rearers, shopkeepers etc.? China offers seductive loans for infrastructure projects, identified by them, and which are almost always built by Chinese firms. Look at the growing national debt of, say, Zambia. The other beneficiaries are indeed, the growing middle class. With their increased wealth, they shop at foreign owned shops, buying imported, most often Chinese ,goods. There is some trickle down through employment in service and transport industries, but to the shanty town or rural dweller, the middle classes are remote and elite.

Name withheld, Paris, France

The oil in Ghana was discovered around 2006 by the previous NPP government. Production was started in 2009 when the present NDC administration came to power. All decisions by this govt is on the premis that there is oil in Ghana and that anything goes. Loans are being taken from any quater and govt expenditure keeps on rising. meanwhile the proposed salary increase for workers is being curtailed. It is the govt and businesses close to govt who are benifitting. By some strange agreement last year the oil companies never paid taxes. Personnaly the oil in Ghana is taking Ghana on the road as Nigeria took in the 80s. Corruption here corruption there corruption everywhere.

SAMUEL B QUARSHIE, Accra, Ghana

Having seen the "other" side of the world economy at work in my two decades of living in the diaspora, I can confidently recommend my fellow Africans to come back home and start investing their motherland. Despite all the negative, bad press, and dark coverage of Somalia in the media, I truly wonder what is the true scale of economic growth in Mogadishu city as evidently seen in the city streets.

Abdalla Dheere, Mogadishu, Somalia

No one can deny that Africa is rising indeed, and this is not a conclusion driven simply by looking at economic numbers or charts. You simply need to visit some countries (i.e.: Ghana, Rwanda, Mozambique) to realise that. You do have a middle class growing but not consuming from local businesses enough. Once the government provides a good environment for local entrepreneurs to thrive, locals will consume from them which will in turn make growth sustainable. Africa is the perfect example showing how GDP growth does NOT equal sustainable economic growth. It is all good showing those charts, but it does NOT translate into an improving and sustainable growth for the locals. If you look at most EU GDP numbers, the Economist should have a cover that says ''Hopeless Continent''.

Jini Sebakunzi, Geneva, Switzerland

Africa..its getting better, after living abroad for 10 years i am actually happy to settle back home, there are lots of opportunties provided you have saved some funds to start a business. As for Ghana there is hope if the governemnt decides to provide constant power and water. Not having those basic necessities like Nigeria just hinders growth.

Ella Tieku, Port Harcourt, Nigeria

This African boom is a fable, a mirage waiting to fizzle. The current boom is mainly in service sector. In Uganda you can clearly see that the service sector has grown , spawning a huge chunk of middle class yuppies. Foreign banks, telecom companies, retail outlets etc are all over the place; they are even going 'down town' to near-slum segments to fight for the low end customers. This economic boom is not the result of producing; the service sector - championed by international multinational vultures - is only scavenging on a transcient income (mostly from remittances from Ugandans abroad and aid, NGO projects etc). There is nothing much being added; agric which is the main productive sector is in a slump >> climate change issues; oil monies are being repartriated. I will give it ten years.... if this boom will still be there. America has seen first hand the startling mirage of service sector based economy, now they are demanding for 'Made in America'. Until Africa's economic boom is production base

David Mulabi, Buikwe, Uganda

Economic growth rates must take population growth into account: for an economy to grow in a meaningful sense, it must cover the growth of its population. With populations in African countries often growing at more than one-and-a-half percent per year, one-and-a-half percent of economic growth goes merely to keep the population at existing levels of average income. This means that the headline projected figure of eight percent growth for the whole continent could in fact equal less than six-and-a-half percent. This may still sound encouraging, but if growth drops to the same level as in the developed countries, it will hardly be growth at all.

Mr Henderson, Teddington, UK

The issu with Africa is that all the economic benefits are captured and monopolised by a class of elite politicians. There are no mmechanisms for redistribution of wealth. In Malawi, for example, taxes are spent on politician's travels, ministerial fleets of petrol-guzzling Mercedes, maintaining 6 or so presidential palaces, etc. The ordinary Malawian still struggles to get a single decent meal a day. Kids, especially girls still drop out of school in grade 4. Hospitals run on empty drug shelves. All the while, politicians are swimming in the luxuries of whatever little the country gets from taxing the poor!

DM, Nsanje, Malawi

Is this not a stage that Africa has to negotiate Just as all developed nations went through an emerging from a "peasant" culture. Britain, the USA, etc saw the rise of business moguls who became obscenely rich through exploitation of the masses and control of the means of production. Over time however the wealth became more evenly distributed and a rich middle class evolved. Just give Africa some more time and a true middle class will arise

Neville Smith, Moss Vale NSW Australia

The impact and continuing prevalence of neo-colonialism, though subtle and indirect, is still widespread and unbelievable. Though the West seems eager to downplay it and present a "rosy" continent on the rise, the fact remains that Africa is still light years behind in terms of development. Development must start with the people and when one considers the quality of human capital it is sad that there's still a huge gap. This remains the single reason why brazenly corrupt and despot governments still hold sway in these African nations. The under developed educational infrastructure presents a huge challenge for the much needed human capital improvement. The recent aggressive foray of China is merely an attempt by this emerging nation to continue where the imperial powers of old stopped. It remains to be seen if the African leaders will allow China to emerge as a stronghold but with the brazen opening of the borders to substandard Chinese goods leading to the collapse and uncompetitiveness of local industries there seem to be less hope in this regard. Haven worked in the financial industry for close to a decade in Nigeria I can confidently say this: MUCH OF THE EMERGING MIDDLE CLASS IS DISGUISED POVERTY with the consumerist culture that contributed to the recession in the west taking hold of young working class Africans with extra cash.

Joy Meregini, Northampton, UK

The World Bank's Africa Development Bank has to lower the global standard of measuring middle class to a very ridiculous level in order to justify the façade of phenomenal growth in Africa. ADB categorises living between $2 and $20 a day as middle class! This means in Nigeria if you earn N10,000 a month, well below national minimum wage, you are a middle class! This is absurd. Of course, there is what is called "floating class" within middle class bracket i.e. between $2 and $4 who can "slip back into poverty". Living between $2 and $4 is poverty, there is no question of slip back into it; you are in it deep seated. The so-called economic growth is reflected in the opulence of the thieving capitalist elite and not in infrastructural development or the living standards of ordinary people.

Peluola Adewale, Lagos, Nigeria

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