Spurred on by robust economic growth over the past two decades, just under half of the Botswana population is considered to be in the middle class. However, a significant proportion is still vulnerable to economic shocks and can easily slip back into the low-income class, the African Development Bank (AfDB) says in a report released this week.
According to the report, 47 percent of Batswana are considered to be in the middle class, although only 29 percent is in the stable category (non-floating) and are therefore not susceptible to falling back into poverty in the event of exogenous shocks. The study titled; The Middle of the Pyramid: Dynamics of the Middle Class in Africa dissects the African middle class into three categories.
The lowest class (floating class) has per capita consumption levels of between P13.6 and P27.2 ($2 to $4) per day. Individuals at this level are only slightly above the developing world's poverty line of $2 per person per day.According to the report, about 18 percent of Batswana fall into this category, which translates into about 360,000 people.
The second sub-category is that of the, lower-middle class with per capita consumption levels of $4 to $10 per day. This group lives above the subsistence level and is able to save and consume non-essential goods. The third sub-category is the upper-middle class with per capita consumption levels of $10 to $20 per day. The report says Africa's middle class is strongest in countries that have a robust and growing private sector, as many middle class individuals tend to be local entrepreneurs. However, in Botswana where the private sector is not so robust because half the workers are employed by government and the economy is largely dependant on government's diamond revenue, middle class status could have been catapulted by the number of people that have stable, secure and well-paid jobs with good benefits.
The results of this study reveal that Botswana's middle class has increased in size and purchasing power as strong economic growth in the past two decades has helped reduce poverty significantly, lifting previously poor households into the middle class. In 2010, about 23 percent of Batswana lived below $1.25 per day, compared with South Africa (20 percent), Namibia (43 percent), Gabon (5 percent) and Zambia (64 percent).
The worst country in Africa is Liberia at 86 percent, while Tunisia is the best at just one percent of the population living under $1.25 per day.
The study uses other proxies to determine the middle class status of individuals in a country, which include enrolments in private schools, access to health, Internet use, vehicle and property ownership, petroleum product consumption per capita and total electricity net consumption per household. Per every 1,000 people, Botswana has only about eight people who have subscribed to fixed broadband Internet compared to South Africa (9), Mauritius (72), Seychelles (45), Senegal (5) while the Africa average is 4 people.
The AfDB report says vehicle ownership is also associated with lifestyles of the middle class and that trends for countries where data are available show an increase in vehicle ownership, which is an indication of more people attaining middle class status.
For Botswana, the number of vehicles per every 1,000 people has increased
The average across Africa is that the number of vehicles per every 1,000 people has increased from 40 in 2002 to 80 in 2007.
Total petroleum consumption in Africa, on the other hand, has increased three-folds - from 1.5 million barrels per day in 1980 to 3.2 million barrels per day in 2009.
Another barometer used by the researchers is access to electricity for households. According to the report, there has been a noticeable increase in total electricity consumption on the continent, going from 170.1 million kilowatt hours in 1980 to 513.8 million kilowatt-hours in 2007, with electricity consumption per household increasing by 15 percent from 2,386 kilowatt-hours in 1980 to 2,740 kilowatt-hours in 2007.
In Botswana, total electricity net consumption per household has increased from 3,000kilowatt hours to 8,000kilowatt hours. "Sales of refrigerators, television sets, mobile phones, motors and automobiles have surged in virtually every country in recent years," the report says.
Typically, middle class Africans also own their own houses, opt for private rather than state medical care, and spend more on food and schooling for their children, the report notes.
The North African states of Tunisia, Morocco, Egypt and Algeria fared best in the overall assessment, with more than 75 percent of their populations ranked as middle class.
Consumer spending in Africa, primarily by the middle class, was surprisingly resilient during the recession. It reached an estimated $680 billion in annual expenditures in 2008 (based on per capita consumption of more than $2) - or nearly a quarter of Africa's GDP based on 2008 purchasing power parity.
Assuming consumption expenditure in Africa continues to grow at roughly the same rate as the past 20 years, by 2030 Africa is likely to reach $2.2 trillion in annual expenditure, comprising about 3 percent of worldwide consumption, says the AfDB report.
"The continued rise of Africa's middle class will require governments to introduce policies that bolster the incomes of those already in the middle class, and social policies to expand the middle class, such as through greater spending on education and health.
"Over the next 20 years, with the appropriate middle class friendly policies focused on human capital development and better jobs, Africa can continue and even accelerate the reduction of poverty and improvements in the living conditions of the population," reads the report.
The report's projections suggest that by 2030, much of Africa will have attained lower middle class majorities.Ethiopia, Nigeria and South Africa are expected to provide the largest number of new middle class, while smaller countries will see faster or slower emergence, depending on the absorption of their resource base and labour forces into higher value added supply chains.