AFRICA’S NEW MIDDLE CLASS
By Prof. Michael Lofchie, Department of Political Science, UCLA
A VEHICLE FOR PROGRESSIVE CHANGE OR MORE OF THE SAME?
History offers sobering lessons for those concerned with the prospects of broad based development in Africa. Entrenched political oligarchies do not willingly surrender their power and privilege out of a benevolent concern for the wellbeing of the many because they fear that, if they do, they might erode the basis of their dominance. Africa’s incumbent oligarchies share the political anxiety of oligarchs everywhere; if they widen the circle of citizen engagement and distribute wealth more widely, this would empower those who wish to contest their hold on power. Their determination to retain power helps explain the scarcity of development policies that share the benefits of Africa’s growing wealth with poorer Africans.
Africa’ development challenge is not a scarcity of economic resources; nor is it a scarcity of policy options that will distribute those resources more broadly. Nor is it a lack of administrative capacity to implement alternative policies. It is the reluctance of dominant elites to adopt policies that might require them to share their privileges. Political reforms do not come about because governing elites undergo an intellectual epiphany. They emerge because changing economic realities give rise to new social forces with an interest in different policies and the capability to demand change. History’s lesson is clear: the adoption of fairer economic strategies in Africa is unlikely to originate from above; it is more likely to originate from below as emergent social groups acquire the resources to insist upon reforms. The question of overriding importance for Africa is not whether its governing elites can be persuaded to adopt policies that improve the conditions of their fellow citizens. It is whether there are new, countervailing social forces with the ability to wrest reforms from those who hold power.
To address this question, it is critically important to move beyond a prevailing imagery of Africa that portrays African societies in binary terms, as consisting of two social strata, the very rich and the very poor. The point here is not to deny the importance of this cleavage. Few would doubt the reality of Africa’s entrenched elites or the yawning chasm between them and the mass of the continent’s poorer citizens. The oligarchies that preside over many African countries enjoy a level of wealth unimaginable to previous generations. Their affluent lifestyles compare to those of dominant elite groups almost anywhere; their grasp on political power enables them to increase their wealth in virtually unrestrained fashion. Africa’s poor are among the world’s most desperate, often living at the barest margin of survival. Their poverty constrains their ability to participate on equal terms in the political realm.
This two-part vision of Africa is no longer adequate. Africa is no longer a continent inhabited only by the very rich and the very poor. The process of economic growth has brought into being a growing middle class consisting of skilled professionals and independent business entrepreneurs. The foundation study of this middle class is the African Development Bank (AfDB) monograph, The Middle of the Pyramid: Dynamics of the Middle Class in Africa. The AfDB study calls attention to the expanding size of this class, its affluence, and its autonomy from state control. Many of the members of the new middle class enjoy a lifestyle similar to that of middle classes in industrial societies in Western Europe, Asia and North America. Their deepening political involvement in their countries’ politics has the potential to transform the continent. It could reinforce democratic trends that are already underway; it could result in economic policies that might improve the lives of the majority population, and it could avert the tendencies toward civil disruption that are inherent in polarized societies.
The Old and the New Visions
The older conception of Africa presents extremes of wealth and poverty as the by-product of the neo-liberal economic policies, sometimes termed structural adjustment, that were put in place during 1980s . There is firm basis for that view. To understand the emergence of the new middle class, however, it may be helpful to entertain a mixed appraisal of the neo-liberal reforms, which have brought both benefits and challenges to African countries. The principal benefit was that structural adjustment brought an end to the roughly twenty-year experiment in state-sponsored industrialization, which had lasted in most cases from the early 1960s to the early 1980s.
Following the advice of such prestigious economists as W. Arthur Lewis, Gunnar Myrdal and others, many African countries had sought to transform the basis of their nations’ economies from agriculture to industry.
The policy pillars of their industrial strategy were central planning, protectionism and taxpayer-provided subsidies that transferred wealth from agriculture to industry. This experiment, which these economists termed import-substituting industrialization (ISI), was perhaps the most important cause of Africa’s economic stagnation during the two decades following independence.
The ISI approach failed virtually everywhere, not only in Sub-Saharan Africa but also in Latin America and South Asia. In Africa, it not only failed to bring about industrialization, it resulted in faltering agricultural performance as farmers were called upon to bear an unsupportable burden of taxation to help defray the costs of the new industries.
When the planned industrial experiment ended, Africans with entrepreneurial ambitions, whose skills had been smothered during the era of state-centered economies, were free to play a larger economic role. The businesses they built have provided an important impetus to today’s economic recovery and to class formation in the middle of the social pyramid.
By almost any standard of measurement, the poor economic performance of the 1960s and 1970s has been replaced, in many countries, by a process of multi-sectorial economic expansion. Currency devaluations accompanied by trade liberalization and the end of costly taxes on agriculture have stimulated a broad-based recovery.
This recovery began with traditional agricultural exports but quickly embraced a range of other sectors including non-traditional exports, commercial real estate, retail sales, professional services, and housing.
Multi-sectorial growth has helped Africa attain rates of economic growth that are presently higher than those in any other developing region. The dramatic reversal of economic fortune has begun to change the world’s image of the African continent, from an impoverished region dependent upon donor nations to a scenario of rising prosperity worthy of large-scale investment.
The relationship between the neoliberal reforms of the 1980s and the democratic reforms that followed during the 1990s is less clear. Africa’s democratic transitions had numerous causes, both internal, such as a rising democratic ethos, and external, such as pressures from international donor agencies. The neo-liberal reforms were one factor among many. The best interpretation is that the transition to market-based economies removed an obstacle to democracy since the effort to build planned economies necessitated the suppression of competitive politics. A centrally planned economy is inherently authoritarian: countries that permit opposition groups to derail critical features of the industrial plan risk its failure. Central planning was inimical to democratic politics because it presupposed the planners’ strict blueprint for the allocation of resources must be enforced for the life of the plan. With the adoption of more open economies in the 1980s, this deterrent to democratic politics was set aside. Greater economic openness did not bring about democracy but it removed the idea that democratic opposition could not be allowed to challenge the planners’ economic blueprint or the burdensome tax policies it required.
Africa’s democratic transition has brought disappointment, however. The arrival of competitive, multi-party systems had encouraged those who hoped this might provide an opportunity for poorer Africans to challenge the oligarchic tendency. That hope has, on the whole, been frustrated.
The same neo-liberal policies that helped to nurture democratic competition have also insured its greatest deficiency, the tendency for wealth and power to reinforce one another.
Throughout the continent, those at the bottom of the social hierarchy face daunting obstacles in challenging their dominant elites. If global political processes hold out any lesson, it is that those with large financial resources enjoy decisive advantages over those who lack them. The social outcome is unmistakable: Twenty five years of more open politics, conducted in a policy environment dominated by the neo-liberal ethos, has not brought about a better distribution of wealth.
The economic wealth that flows from a political elite’s grasp on political power helps insure the status quo by placing opposition groups at a financial disadvantage. The wealth political leaders accumulate and their ability to deploy it in the political arena insulate them from pressures from below. There is a negative cycle: those who hold political power use it to acquire economic resources; those who have those resources then have an infinite variety of techniques they can use to maintain their status.
They can create extensive patron – client networks; they can fund supportive organizations; and they can offer tempting incentives for influential political leaders to join them rather than oppose them. The neo-liberal ethos described in Cosmas Ochieng’s essay, “kick back, relax and wait for the invisible hand,” serves the economic and political interests of the dominant elite; it discourages the idea that government policies can be employed to make things better.
The New Middle Class
Absent effective challenges to the oligarchic system by the poorer strata, the central question of modern African politics repeats itself: where to look for a social class with the resources and skills to extract reforms from a reluctant elite. The most hopeful answer to this question has to do with the rise of the new middle class and the expectation that it will introduce a new set of interests, aspirations and capabilities to the political process.
This viewpoint permeates the important volume edited by Mthuli Ncube and Charles Lufumba, The Emerging Middle Class in Africa.
The essays in this volume demonstrate critical differences between the new middle class and the old. Although the earlier vision of African social structures made provision for the presence of a middle class, its conception was more limited. There were valid reasons for this. During the decades following independence, the African middle class consisted principally of government employees or the employees of parastatal corporations that were an integral part of the governmental apparatus. Africa’s older middle class consisted largely of the clerical, technocratic, and supervisory personnel in government offices or those employed in businesses that depended on the government. During the era of state-led industrialization, which lasted in most cases through the mid-1980s, most private firms, such as banks, insurance companies and accounting firms conducted the bulk of their business with government agencies. Even the smaller firms such as those that provided office equipment, information technology, or custodial and catering services, did most of their business with governmental entities such as schools, universities or parastatal bodies. The all-pervasive pattern of dependence upon the government meant that their white-collar employees, even those with advanced university degrees, were limited in their ability to operate as an independent political force.
The middle class documented in Ncube and Lufumba does not suffer those constraints. Its members are the employees and owners of private sector firms that do not derive the majority of their business from government agencies; they are members of skilled occupational groups such as doctors, attorneys and academics that have global professional opportunities and can exit regimes that seek to constrain their freedom. Many are the employees of multi-national businesses that possess great economic leverage over local governments. For this new class, exit and voice are not opposite choices: members of a middle class who have the option to exit are also freer to speak with a more audible voice; they are freer to pursue political and economic interests that conflict with those of the dominant oligarchy.
Many have begun to do so. Estimates of the size and dynamics of the middle class are intrinsically subject to definitional difficulties and the AfDB’s analysis, which divides the African middle class into three separate tiers, has been controversial. The authors of the AfDB study utilize an absolute definition; middle class persons are those with a daily per capita consumption of $2 to $20 in 2005 purchasing power parity (PPP) USD.
By that standard of measurement, Africa’s middle class has grown by more than 3 percent per year since 1980. The AfDB study estimates that the new middle class may comprise as much as 35 percent of the total population of Sub-Saharan Africa, nearly 350 million people. The tangible indicators of the growing presence of this class are everywhere to be seen and include such diverse factors as cell phone use, automobile ownership and the rise of private services in areas formerly provided by governments including universities and medical facilities. It would be a gross understatement to suggest that AfDB’s optimistic scenario has gone unchallenged. Much attention has focused on its three-tier conception of the middle class with an upper tier of those enjoying consumption levels of between $10 and $20 per day; a middle tier of those enjoying consumption levels of between $4 and $10 per day, and a bottom tier, which the AfDB study terms the “floating class,” which consists of individuals with a daily per capita consumption of between $2 and $4.
Critics have questioned the idea that members of the floating class, who comprise approximately 20 percent of the continent’s population, should be included at all. The AfDB study acknowledges that members of the floating class are barely above the poverty line and, in the event of economic difficulties such as exogenous shocks, would be vulnerable to slipping back into poverty. If the floating class is removed from the definition, Africa’s middle class would comprise only about 13.4 percent of African society, not 34 percent.
The debate about absolute numbers, however, misses the major point, which has to do with the dynamic of socio-economic change in Africa. The basic facts are not in dispute. Since the beginning of this millennium, many African countries have enjoyed favorable conditions for both traditional and non-traditional commodity exports. The earnings from these exports have alleviated the foreign exchange scarcities that were such a conspicuous and damaging feature of the pre-reform economic crisis. This has permitted a surge of imports, making it easier to provide for the import requirements of Africa’s high growth sectors, especially housing and commercial real estate, infrastructure construction, and retail sales.
The AfDB’s depiction of Africa as a place where a new middle class is bringing about fundamental changes in the shape of the social structure has gained the support of several of the world’s most prestigious and conservative financial institutions. The Mc-Kinsey Global Institute, the research arm of the international consulting firm McKinsey & Company, for example, has also called attention to
The most hopeful answer to this question has to do with the rise of the new middle class and the expectation that it will introduce a new set of interests, aspirations and capabilities to the political process.
Estimates of the size and dynamics of the middle class are intrinsically subject to definitional difficulties and the AfDB’s analysis, which divides the African middle class into three separate tiers, has been controversial. The authors of the AfDB study utilize an absolute definition; middle class persons are those with a daily per capita consumption of $2 to $20 in 2005 purchasing power parity (PPP) USD.
By that standard of measurement, Africa’s middle class has grown by more than 3 percent per year since 1980. The AfDB study estimates that the new middle class may comprise as much as 35 percent of the total population of Sub-Saharan Africa, nearly 350 million people. The tangible indicators of the growing presence of this class are everywhere to be seen and include such diverse factors as cell phone use, automobile ownership and the rise of private services in areas formerly provided by governments including universities and medical facilities.
It would be a gross understatement to suggest that AfDB’s optimistic scenario has gone unchallenged. Much attention has focused on its three-tier conception of the middle class with an upper tier of those enjoying consumption levels of between $10 and $20 per day; a middle tier of those enjoying consumption levels of between $4 and $10 per day, and a bottom tier, which the AfDB study terms the “floating class,” which consists of individuals with a daily per capita consumption of between $2 and $4.
Critics have questioned the idea that members of the floating class, who comprise approximately 20 percent of the continent’s population, should be included at all. The AfDB study acknowledges that members of the floating class are barely above the poverty line and, in the event of economic difficulties such as exogenous shocks, would be vulnerable to slipping back into poverty. If the floating class is removed from the definition, Africa’s middle class would comprise only about 13.4 percent of African society, not 34 percent.
The debate about absolute numbers, however, misses the major point, which has to do with the dynamic of socio-economic change in Africa. The basic facts are not in dispute. Since the beginning of this millennium, many African countries have enjoyed favorable conditions for both traditional and non-traditional commodity exports. The earnings from these exports have alleviated the foreign exchange scarcities that were such a conspicuous and damaging feature of the pre-reform economic crisis. This has permitted a surge of imports, making it easier to provide for the import requirements of Africa’s high growth sectors, especially housing and commercial real estate, infrastructure construction, and retail sales.
The AfDB’s depiction of Africa as a place where a new middle class is bringing about fundamental changes in the shape of the social structure has gained the support of several of the world’s most prestigious and conservative financial institutions. The Mc- Kinsey Global Institute, the research arm of the international consulting firm McKinsey & Company, for example, has also called attention to economic growth and social change in Africa, publishing a major study Lions on the Move: The Progress and Potential of African Economies. The McKinsey study also portrayed Africa as the locus of a rapidly expanding consumer population.
In 2008, roughly 85 million African households earned $5,000 or more — the level above which they start spending roughly half their incomes on items other than food. The number of households with discretionary income is projected to rise by 50 percent over the next ten years, reaching 128 million.
The international consulting and accounting firm Deloitte has painted a similar portrait. Between 2000 and 2012, Africa’s aggregate household final consumption expenditure grew at an average annual rate of 10.7 percent, rising by more than $850 billion and reaching nearly $1.3 trillion…
The emerging middle class is more optimistic, brand conscious and connected. In 2013, there were over 375 million middle class people living in Africa. By 2030, over half a billion Africans are projected to be middle class.
This pattern of social change will be buoyed by a high rate of economic growth, expected to exceed 7 percent per year over the next decade, about double that of the world’s industrial countries. Africa is already a major actor in world markets as a source of raw materials and primary commodities.
Its importance as a market for goods and services will grow commensurately. Both Mckinsey and Deloitte describe Africa as one of the world’s most attractive regions for foreign investment.
As this occurs, it will further reinforce the expansion of the new middle class. These transformations have changed the visual face Africa presents to the world. The historic poster image of Africa was hungry children in food-deficit countries. The new Africa, sometimes termed “Africa Rising,” has generated a different imagery, the resplendent shopping mall, populated with a bewildering variety of high-end stores that cater to an increasingly affluent population. Even the most casual visitor to the YouTube web site can gain a glimpse of this prosperity by viewing the luxury shopping malls that have arisen in practically all of the major cities of Africa.
The middle class customers who frequent these malls have important socio-economic characteristics: they are urban and do not generally derive their income from farming or other rural activities; they have high levels of university education, often leading to specialized and valuable skills such as medicine, law, accounting, financial services, information technology, or business management; they have fewer children per family than rural residents or poorer urban families; they hold high salary positions in large business enterprises or they own lucrative businesses of their own. The higher levels of income enjoyed by members of this class make it possible for them to own automobiles and other expensive consumer goods; to live in housing that is spacious, comfortable and well built; to afford high quality privately-provided medical services, and to opt for private education for their children. Africa’s new middle class enjoys a lifestyle comparable to that of middle classes anywhere.
The political potential of the new middle class contrasts with the lesser influence of Africa’s poorer strata, which have generally been unable to use their numerical strengths to gain policy impacts.
Smallholder farmers, for example, are among the most numerous of the poor. However, Africa’s farmers have rarely been able to translate their large numbers into corresponding political influence. Poor farmers face collective action difficulties long familiar to African observers; they are spread out over vast distances, making it difficult to meet together; they lack the disposable cash income necessary to help defray the expenses of political organization; and existing farmer organizations, such as producer cooperatives, seem especially prone to principal – agent issues.
Sectorial differences have also hampered African farmers from acting together; farmers in the export sector, such as those producing cotton, tobacco, cocoa, coffee or tea, do not share policy preferences with those producing food staples for domestic consumption.
Although Africa’s rural and urban poor have a common cause in the remediation of their poverty, protest movements that link the two groups in a united worker-peasant alliance have been the rare exception. The common explanation points to the underlying difference in economic interest between the two.
Food-producing smallholders have an interest in higher farm gate prices for their crops whereas the urban poor are concerned about the cost of food items, which consume a major part of the family budget. Perhaps more importantly, the policies that might address rural poverty are different than those that might improve the conditions of the urban poor. These differences have made it difficult for Africa’s farmers to enlist support from urban-based political organizations. Africa’s urban poor face challenges of their own in creating broadly based political movements, with the result that the political potential of Africa’s working classes remains unfulfilled.
There are several explanations. One is that there is not necessarily a crosscutting sense of worker economic interest. Workers in the export sector, such as agricultural workers, railroad workers, mine workers, and dock workers, for example, have benefitted more from the new atmosphere of openness to trade than industrial workers, whose conditions may have worsened due to the surge in manufactured imports.
The new Africa, sometimes termed “Africa rising,” has generated a different imagery, the resplendent shopping mall, populated with a bewildering variety of high-end stores that cater to an increasingly affluent population.
Workers in the service sector, such as household workers, custodial employees and workers in catering and laundry services are not well organized. Even where unions have begun to gain traction, worker poverty may necessitate a focus on the material necessities of day-to-day life, such as wages and benefits, rather than such distant and seemingly abstract concerns as the unequal distribution of privilege across society. The cumulative effect of these factors is unmistakable. In contrast to the political limitations of the rural and urban poor, Africa’s middle class has great potential to become an influential political force. The members of this class are aspirational, confident and, perhaps most importantly, well situated to express their economic interests in the political realm. The difference between the middle class and the poor is not one of political consciousness. Members of Africa’s poorer strata are deeply aware of the extreme inequalities in their societies.
Their difficulty lies in translating that consciousness into effective political action. Nor is the critical difference a lack of common interest.
The poorer citizens of African countries have a powerful common interest in policies that will ameliorate poverty. The difference between the two strata lies in their differential capacity to bring about meaningful political change. Members of Africa’s rising middle class are not only aware of the wealth and power of the governing elites; they are in a strong position to build political organizations that will challenge the status quo. The new middle class has many political assets. Middle class Africans can well afford the expenses entailed in building modern political parties, which require offices permanently staffed by professional administrators, not to mention the costly equipment required in the digital age. Since the middle class is overwhelmingly urban and is generally concentrated in only one or two major cities in each country, geographical dispersion is not a constraint on forming organizations.
Africa’s cities are already densely populated with the numerous civil society associations of business and professional groups. These provide the base of the organizational pyramid on which political movements are constructed. Since members of the middle class generally have high levels of university education, and are for the most part already engaged in the management of large bureaucratic organizations, the constitute a reservoir of the administrative and technical skills necessary to build effective political movements. Members of the middle class are also united in a powerful shared cause; their interest in policies that will protect their share of national from invasive behavior by the very powerful.
Africa’s democratic challenge is all-too clear. It is the same as that in countless countries across the globe. Dominant classes use their power to aggrandize their wealth, and in turn, they use their wealth to aggrandize their power. Lower strata seek to use their numerical strengths to pursue changes in the existing order but are all-too often in a weak position.
Throughout too much of the African continent, the political weaknesses of the poorer strata have made it possible for the gap between the wealth of the wealthiest and the poverty of the poorest to go uncorrected. There is no mystery about how to reverse this; the first step is to strengthen the democratic process. Africa’s new middle class holds out the best prospect of bringing this about. Barrington Moore’s famous dictum, “no bourgeois, no democracy,” holds as true today as it did when first articulated 50 years ago. The extended version of Moore’s argument was more cautious, however. He did not believe that the greater inclusiveness brought about as the rising middle class gained traction in the public realm would necessarily benefit strata in a less advantageous socio-economic position.
For Moore, the working class did not enter the political equation at all and, in his various case studies, the eventual fate of politically weak peasants was the outcome of conflict between other, more powerful political actors, the rising bourgeoisie and the landed aristocracy.
This viewpoint has utmost relevance for modern Africa. It remains uncertain whether the middle class’ pursuit of greater political and economic influence will generate benefits that extend downward to poorer elements in society. There is no simple answer.
In several respects - reinforcement of democratic practices, the struggle against corruption and improvement of property rights, middle class political involvement may provide collateral benefits to the very poor. In the supremely important areas of income distribution and poverty alleviation, it may not.
Democracy is not an either – or proposition. Its meaningfulness can be enhanced or degraded depending upon the conduct of the key actors. For now, the principal class dynamic of Africa is conflict of interests between the rising middle class and the entrenched oligarchy at the very top of the continent’s class structure. Members of the middle class are anxious to stabilize their newfound affluence by breathing greater life into the more open political arenas that were created during the 1990s. Those at the top of the class system are more reluctant partners in a political process that could result in loss of incumbency. They prefer to remain in power. There is nothing unfamiliar about this pattern, which resonates with trends in other world regions. The great uncertainty in modern African politics is whether the middle class’ challenge to incumbent elites will result in collateral improvements for those at the very bottom of the class pyramid.
There is a basis for optimism and a basis for pessimism. On the optimistic side, members of the new middle class have a vital stake in building a more level political playing field. To protect their interests as entrepreneurs and professionals, the members of this class require a political environment in which opposition parties can organize openly, recruit members, address their supporters, and contest elections. They have an urgent stake in freedom to access the media and to criticize government officials without harassment or intimidation. If African’s new middle class can play an instrumental role in bringing about these improvements, members of all social strata would benefit.
A further basis for optimism lies in the middle class’ interest in lowering corruption because corruption transfers wealth from the bottom and middle strata of society to the very top. It makes industrial investment more insecure and expensive, slowing the growth of industries that might generate employment growth for workers.
To defray the cost of corruption, investors may be tempted to reduce other costs such as workers’ wages and benefits. Corruption also diverts a nation’s economic resources away from investments that improve general wellbeing, such as education, infrastructure, and educational institutions, toward private consumption by members of the dominant oligarchy.
Business entrepreneurs require an economic playing field that is predictable and transparent and in which the courts enforce contracts in a fair manner. Above all else, Africa’s fledgling business entrepreneurs need an environment free from monetary extractions by rent-seeking officials, where they can conduct day-to-day business without the burdensome side payments that are so pervasive in many countries.
Africa’s new middle class also has a stake in the creation of a more secure property rights environment. The economic benefits of an improvement in this area have been argued by a host of development theorists; it is a policy area in which the neo-liberal ethos presents convincing arguments. Few investors will risk resources in an economic environment where the normal uncertainties of the business cycle are compounded by the absence of secure property rights. Improvements in this area could trickle down to other classes. Increased investment could result in greater demand for workers and hence in improvements in wages and working conditions.
More secure property rights could offer important benefits to farmers; it would encourage those farmers able to do so to invest in their farms and offer better protection against dispossession by the large land concessions that have become a growing source of farmer insecurity in some rural regions. Inequality and Poverty On the pessimistic side, there are unanswered questions as to whether the political muscularity of the middle class will help address the continent’s persistent problems of socio-economic inequality and absolute poverty.
The best evidence on these matters is not encouraging. One of the most detailed studies of income distribution across countries is that by the Cambridge University economist, Jose Gabriel Palma. His article, “Homogeneous Middles vs. Heterogeneous Tails, and the End of the ‘Inverted-U’: It’s All about the Share of the Rich” surveys income distribution for 135 of the word’s countries for the twenty year period 1985 to 2005. This time frame is of utmost relevance to Sub- Saharan Africa because it coincides with the economic transition to neoliberal policies and the democratic transition to more open regimes. Palma’s findings show that the political involvement of Africa’s new middle class has not provided spillover benefits to the poor. In the countries he surveyed, the middle class - defined as the middle five income deciles — has been secured its economic position by capturing about 50 percent of national income. Worldwide, middle classes have been able to resist encroachment on that income share from above and prevent policies that share their income with those below.
Owing to their higher levels of education, which makes it possible to attain the better-rewarded positions in the division of labor, as well as their ownership of business firms, the middle tiers in each country have been able to carve out and defend a 50 percent share of national income. What varies across the globe is not the share of national wealth going to the middle; it is the way the very rich and the very poor divide the remaining 50 percent.
In Africa, the two sides in that struggle are as unequal politically as they are economically. This manifests itself in Palma’s data and in other research that supports his conclusions. In the majority of African countries, the wealthiest decile of the population may receive as much as 45 percent of national income, leaving only about 5 percent for the bottom 40 percent of the population. This represents extreme inequality. The Economic Commission for Africa sustains this viewpoint, showing that Africa’s track record in reducing inequality is poorer than all the world’s regions except Latin America.
Advocates of the neo-liberal ethos sometimes question the importance of these comparisons, arguing that inequality is less important than changes in real material conditions of the poor. In the neo-liberal viewpoint, expanding the size of the economic pie could provide improvements for the poorest stratum, even if its share of national income is not increasing. To address this issue, the survey organization Afrobarometer has created an index of poverty called the Lived Poverty Index (LPI), which is an attempt to assess the conditions of poorer social classes in absolute terms, rather than relative to other social strata. The LPI measures whether an African family may have gone without enough food to eat, without clean water for home use, or without needed medical care during the course of a year.
Afrobarometer has been collecting data on this topic for more than a decade. Its major recent study of lived poverty offers telling evidence that economic growth in Africa has not improved economic conditions for the very poor: “we find little evidence for systematic reduction of lived poverty despite average GDP growth rates of 4.8 percent per year.” The Afrobarometer data portray a continent in which the conditions of poverty have not been ameliorated by economic growth. [R]oughly one in five Africans still experiences frequent (‘many times’ or ‘always’) deprivation with respect to their most basic needs for food (17%), clean water (21%), and medicines and medical care (20%).
Approximately half experience at least occasional shortages.” Afrobarometer’s findings have found partial corroboration in World Bank research on global poverty. According to the Bank’s PovcalNet research project, Africa’s economic growth during the twenty-five year period 1990 – 2015 reduced the percentage of the population living on less than $1.25 per day by about 10 percent, from approximately 57% of the population to 47%. However, owing to population growth, Sub-Saharan Africa is the only world region where the number of people living on $1.25 per day or less increased during this period. Although Africans living in countries where there has been civil conflict are especially vulnerable to lived poverty, some of the worst poverty conditions also appear in countries with a reputation for democratic stability, including Lesotho, Togo, and Tanzania. Afrobarometer’s household surveys suggest that economic conditions for the poorest Africans may be worsening.
The majority of the African poor are small farmers who engage in semi-subsistence agricultural activity that combines household production with production for the marketplace.
A variety of factors have worsened their situation. One is sheer population growth in the countryside, which decreases the amount of arable land per family and forces families to move to less arable districts. Another is urban expansion, which in some areas gobbles up valuable farmland.
The variable with the greatest influence on the conditions of small farmers is weather: when rainfall is adequate, conditions improve.
During periods of drought, they suffer. Because of global climate change, drought has become more frequent. Those who still have farms to cultivate are not the worst off.
Throughout Africa’s rural areas, the poorest stratum consists of a growing population of landless persons who support themselves as migratory workers or as squatter-settlers on farms owned by others. The troublesome feature of rural poverty is that so many of the rural poor seem beyond the reach of the most commonly utilized anti-poverty programs.
In Africa’s cities, the poorest stratum consists of unemployed, unskilled, and semi-skilled workers, a heterogeneous grouping that includes household workers, custodial workers in offices and hotels, and workers in food services. Africa’s industrial workers also face strong downward pressure.
The willingness of Africa’s elites to embrace hybrid policy arrangements may have portentous implications for the democratic process.
The booming commodity exports that have yielded such favorable figures on economic growth have been accompanied by trends toward deindustrialization and worker lay-offs as neo-liberal approaches to trade have resulted in a surge in manufactured imports. The figures on youth unemployment in large African cities are especially troubling: they foretell a generation of Africans whose hopes for the future are especially bleak.
Conclusion: Heterodox Economics
The persistence of absolute poverty in Africa is a painful reminder of basic truths. The encouraging figures on economic growth, which may also show increases in GDP per capita, are not an indicator of better conditions for citizens, nor a proxy for the amelioration of socio-economic inequality.
African economic statistics show a glaring inconsistency between macroeconomic data, which show impressive growth, and household surveys, such as those conducted by Afrobarometer, which reveal stagnant or declining incomes among the poorest African families. Only one conclusion is possible: Africa’s embrace of neoliberal policies has not improved the share of national income going to the poor; it has probably made their situation worse. Even assuming that the growth data is real — not a universal assumption — its benefits have been concentrated among the more well to do Africans at the top and middle of the social structure. This explains why the emergence of an affluent middle class is consistent with a trend toward more and more Africans living in deep poverty.
There is no mystery about how to reverse these patterns. The countries with the most equitable income distribution, the Nordic countries, Japan, and Netherlands, have tax systems and welfare programs that redistribute income downward. The implication for the development debate is unmistakable. The most productive conversation is not about the abstract merits of market forces versus state interventions; it is about how to combine market forces with state interventions in hybrid arrangements that promote economic growth while, at the same time, improving the welfare of the poor.
In the search for workable hybrid arrangements, there is no single formula. The precise mix of hybrid policies may vary greatly across countries and, indeed, within a single country over time. Adaptation to local conditions is critical, as is the willingness to be flexible as between market forces and policy interventions. Economists refer to this viewpoint as heterodox economics, to distinguish it from the neo-liberal tradition. For those concerned to promote more equitable development in Africa, hybrid policy arrangements merit the most serious consideration.
The willingness of Africa’s elites to embrace hybrid policy arrangements may have portentous implications for the democratic process. Although poor Africans continue to participate actively in their countries’ democratic institutions, their faith in democracy could easily diminish if they are unable to use their democratic rights to bring about policies that improve their lives.
Further reading:
- AfDB, The Middle of the Pyramid: Dynamics of the Middle Class in Africa (Market Brief, April 20, 2011.)
- The use of the term “neo-liberal” here follows that of Dr. Cosmas Ochieng’s introductory essay, “Africa’s Last Best Chance for Development.”
- Shantayan Devarajan and Wolfgang Fengler, “Africa’s Economic Boom,” in Foreign Affairs, May/June 2013, p. 68.
- Acha Leke, et. al., “What’s Driving Africa’s Growth,” (McKinsey & Company, 2010).
- McKinsey Global Institute, 2010, p. 3. Available on-line.
- Deloitte, The Deloitte Consumer Review Africa: A 21st Century View (Deloitte, 2014), p. 2. Available on line).
- Acha Leke, et. al., “What’s Driving Africa’s Growth” (McKinsey& Co., 2010).
- This term was popularized in the Economist article, “The HopefulContinent: Africa Rising.” (Dec. 3, 2011).
- See, for example, https://www.youtube.com/watch?v=1hJlHJ0-nVI , which shows the re-opening of a major shopping mall in Nairobi, Kenya. The web site https://www.youtube.com/watch?v=Q1eB_QpJYtY shows the famous Palms shopping mall in Lagos, Nigeria. Soweto, South Africa boasts the Maponya Shopping Mall, https://www.youtube.com/watch?v=wQV4FDKyN_k.
- Barrington Moore, Jr., Social Origins of Dictatorship and Democracy (Beacon Press, 1966), p. 418.
- See, for example, Hernando de Soto, The Mystery of Capital (Basic Books, 2000).
- Palma G. DeHomogeneous Middles vs. Heterogeneous Tails, and the End of the ‘Inverted-U’: It’s All About the Share of the Rich. Development and Change, Vol. 42, No. 1, 2011, pp. 87 – 153.
- United Nations, Economic Commission for Africa, MDG 2014 Report: Assessing Progress in Africa toward the Millennium Development Goals (United Nations, Economic Commission for Africa, n.d.), p. xv. URL is http://www.uneca.org/sites/default/files/PublicationFiles/2014_mdg_report.pdf
- Afrobarometer, Lived Poverty in Africa: Desperation, Hope and Patience (Afrobarometer Briefing Paper No. 11, April 2004.
- Boniface Dulani, et. al., After a Decade of Growth in Africa, Little Change in Poverty at the Grassroots (AfroBarometer, 2013), http://www.afrobarometer.org/publications/pp1-after-decadegrowth-africa-little-change-poverty-grassroots , p. 1.
- Dulani, p. 2.
- Figures on smallholder incomes must be approached with a level of caution. It is practically impossible to assign cash value for certain estimates, such as the subsistence portion of a farm household’s income.
- The population reference bureau anticipates that Africa’s population will approximately double, from 1.1 billion to 2.4 billion in the next 35 years. http://www.prb.org/publications/datasheets/2013/2013-world-population-data-sheet/data-sheet.aspx
- Kathleen Caulderwood, “Sub-Saharan Africa Falls Behind in Fight Against Extreme Poverty: World Bank Report,” International Business Times, April 14, 2015, http://www.ibtimes.com/sub-saharan-africa-falls-behind-fight-against-extreme-poverty-world-bank-report-1881460
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