A recent BBC Africa Debate saw a number of Ghanaian entrepreneurs, leaders and members of the public discuss the definition of the middle class in the country.
How do you define an African Middle Class? According to the African Development Bank (AfDB), 46% of Ghanaians are now classified as middle class compared to a continent-wide average of 34.3%.
The debate, titled and held at the Accra Mall in the country’s capital, heard most of those participating in the discussion disagree with the AfDB’s definition of the middle class as those who spend US$2-$20 a day.
“I want to be very clear from the outset; there is no consensus on the definition of middle class. It is a decision we made in April 2011,” said Marie-Laure Akin-Olugbade, country representative of the AfDB in Ghana. She added that the definition was based on a study published in 2011 where the AfDB chose to classify the middle class as the population that spends between $2 and $20 a day.
“So it is a per capita consumption per day,” she said. “We have looked at the spending bracket between $2 and $4 – we call it the floating class. In Ghana we consider that it is about 27% and we know that it is a very fragile class. It is a class that is always at risk of falling below the poverty line.”
In response, a member of the audience said the spending of between $2 and $20 – equivalent to about four to 40 Ghanaian cedis (GHS) – was a very wide bracket. “And even spending GHS 4 a day doesn’t really feel middle class,” she said. “GHS 4 is not enough, in most cases, to get you through to the end of the day.” She added that she spends between $2 and $20 a day but does not feel middle class. “I feel lower class, because that money is just enough to cover my basics.
It doesn’t cover more than my basic necessities.” A discussion panel member – Robert Eghan Asiedu, a cashier at a forex bureau – shared the sentiment. “As a family man, I really, really am scraping through… I have five kids.” One of the BBC moderators said the typical middle class family usually has about two children. “You see our society has a different way of looking at the number of children,” Asiedu pointed out. “We wanted four kids.
The last one became twins so I had to deal with it. [But] how do you get by?” As his children are all in school, Asiedu said he spends around GHS 40 a day on transport alone. “[With] these amounts we are only scraping through,” he said, adding that he has no opportunity to save money. Another member of the audience, a home loan officer, said he considers home ownership to be a tool to defining the middle class. “If you own property of any nature, by my definition, I think you are there. You might not feel rich, you might not feel middle class, but you are on your way.
And what does it mean to own property here in Accra… in Ghana today? Some rough numbers: if you want a two bedroom semi-detached property, say on a 40 ft by 70 ft plot – and that is normally the starting point – it is going to cost you about $30,000. On a 100% mortgage, which means you don’t have to make a deposit, you have to earn about $900 dollars or GHS 1,900 a month.” When asked if he is seeing an increase in the number of home owners, the home loan officer said: “Absolutely, and we see them every day hitting our office. We see a growing number and it’s actually very encouraging.
Now they might not feel very rich, they might not feel they have joined the middle class, but by owning their own property, they are on their way and the potential and access to credit that gives them is the hope we hold for the future.” Kofi Bentil, vice president of think tank IMANI Ghana, shared his thoughts. “For our work we have three ways [of defining middle class] – the cultural middle class, the economic middle class and I think the third one is what we call the educated middle class. And it really has to do with who is the first generation out of poverty,” he explained. “Cultural middle class: usually your parents got out of poverty.
You may not be cash rich but your parents were educated – they could have been in the middle class by virtue of being in the civil services. The educated middle class is usually first generation out of poverty. You may have come from a village, got into certain schools, [and] became a lawyer. And then the economic middle class, we are talking about spare parts dealers… people who don’t even consider themselves rich but could give you $100,000 cash if you really shook them down.
“Our definition of the middle class does not have to do with disposable income or comfort,” continued Bentil. “It has to do with the ability to mask poverty… many of the people who are [considered] middle class sometimes in the month have a problem feeding [themselves]… but the thing is [they] can get through the month without looking dirty or poor. Some of them have cars and there are days when they can fuel their car… So someone who is middle class here would be lower class in a developed country.”
Another member of the audience said she thinks the definition of the middle class has more to do with politics and less to do with reality. “The problem, I think, is that we do not want to tell ourselves the truth… We have the policies, we have the plans. The thing is we do not want to tell ourselves the truth. We are not middle income.” She said the $2-$20 bracket was the problem and needed to be revised as the government uses it to show a middle class status when, in fact, the reality is quite different. “It’s a lie. It’s a lie,” she said.
Debates concerning the definition of the middle class are not unique to Africa. An EY report notes that, depending on the standards used, the size of India’s current middle class ranges from 30m to 300m people. Last year, David Cowan, a senior economist for Africa at financial services group Citi, wrote that the more widely accepted definition of an emerging market middle class consumer is someone earning at least $13.70 per day. “It is at this level and above that people really increase their purchasing of large consumer durables, notably autos and houses.”
While there may be dispute over whether there is a rise in the middle class in Africa, the continent is still seeing a rise in consumer spending power, even if it is in the lower-end. “We think that at least in the coming decade or so, the key consumer markets in sub-Saharan Africa will largely be low-end, with a splash of high-end colour…
While there can be talk of an emerging middle class, we think it is much more logical to talk about the emergence of a new consumer market in sub-Saharan Africa. This new consumer will, for all extents and purposes, largely consume basic goods and services for the next decade or so, assuming that the overall sub-Saharan Africa growth trend remains robust,” added Cowan.