Nigeria’s middle class jumped six-fold in 14 years as economic growth spiked between 2000-2014 with the return to democracy and increase in private sector investments, according to Standard Bank in a new report.

According to the bank, middle class households in 11 leading sub-Saharan African economies, including Nigeria, are set to balloon to about 40 million by 2030 as the benefits of economic growth are more inclusively distributed.

The report notes that the phenomenal growth will be propelled by Nigeria, where the middle class grew six times since 2000 to its current level of about 4.1 million households.

This is equivalent to about 23 million middle class people, using the National Bureau of Statistics (NBS) estimates of 5.7 individuals per household in Nigeria.

The report, entitled ‘Understanding Africa’s middle class’, found there are about 15 million of the 110 million households in Angola, Ethiopia, Ghana, Kenya, Mozambique, Nigeria, South Sudan, Sudan, Tanzania, Uganda and Zambia, consuming from $15 to $115 a day. This is up from 4.6 million in 2000 and 2.4 million in 1990 – an increase of 230 percent over 14 years.

“Between 2000 and 2014, we have seen a tripling of middle-class households across these 11 countries,” says Simon Freemantle, a political economist at Standard Bank in Johannesburg, South Africa.

“It confirms the idea that Africa has structurally changed, that there has been real improvement in the last 10 years. Not just cyclical, it has been a structural change,” says Freemantle.

The emergence of a middle class was found to be most profound in Nigeria, Africa’s largest economy. About 4.1 million households or 11 percent of the Nigerian population consume $23 to $115 a day, according to the report.

However, of the total number of households across these focal economies, 86 percent of them remain within the broadly “low income” band, emphasising the nascent maturation of many of the continent’s markets.

The report also found that the combined GDPs of the 11 measured economies had grown tenfold since 2000.

Freemantle, author of the report, says the new report is cause for optimism among investors, as it suggests even greater scope for future growth, and indeed forecasts acceleration in the accumulation of middle-class households in Africa.

Commenting on the lower-than-anticipated total number of middle class households, Freemantle says any view concerning the undoubted ongoing improvement in Africa’s economic performance has to be tempered with the reality that the level of this growth and the nominal size of the continent’s middle class had not until now been adequately measured.

“Standard Bank has attempted to fill the knowledge gap by using comprehensive household income data and adopting our own measure of the middle class using South Africa’s LSMs as a framework in order to provide cross-quantifiable reference points for peer African economies,” he says.



http://businessdayonline.com/2014/08/nigerias-middle-class-jumps-six-fold-to-23m-in-14-years-standard-bank

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