Characterisation, definition, and measurement issues of the middle class in sub-Saharan Africa

ABSTRACT

In this study, we evaluate how both the definition of middle class and the dataset considered affect the estimated size of the middle class in sub-Saharan Africa. By considering the feasibility of a single definition of a middle class for all African countries based on the World Bank’s PovcalNet database, we estimate the size of this segment for a selection of countries. As part of the regional analysis, we follow with a country and city case study for Kenya and Nairobi. In the case study, to show the complexity and dynamics involved in the measurement at a more disaggregated level, we add the dynamic of currency unit conversion. This statistical assessment, as an investigation into the accuracy of past and current estimates of the middle class in sub-Saharan Africa, is helpful for both assessing the growth of the middle class on the continent and its potential to attract foreign investment.

KEYWORDS:

• sub-Saharan Africa
• middle class
• data
• income
• expenditure

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 McKinsey & Company’s (2010) estimate that there were about 85 million middle class households, which, assuming an average household size of five in SSA, translates to 425 million individuals.

2 As indicated in the Table, Nigeria’s numbers are from a 2009 survey, while South Africa’s and Ethiopia’s are from 2014 and 2015, respectively.

3 The PPP conversion factor we use is ‘the number of units of a country’s currency required to buy the same amount of goods and services in the domestic market as a U.S. dollar would buy in the United States', and 2011 is the base year for Kenya (World Bank, International Comparison program database).

4 The nominal exchange rate is the average exchange rate for 2011 based on the average daily trading from the Central Bank of Kenya figures, which was Kshs 88.87 per USD1, and the PPP exchange rate is as given by the World Bank for 2011, which is 31.32. The ratio between the nominal exchange rate and the PPP exchange rate is 2.84.

5 We do not consider expenditure per-capita because it assumes household members do not share resources.

6 Estimates by total expenditure tables although not presented here are available on request. They, however, show that most Nairobians and Kenyans are middle class when either nominal or PPP exchange rate is used.