Washington Post: In Africa, a New Middle-Income Consumerism

A very interesting piece.


In Africa, a New Middle-Income Consumerism

Denis Ruharo, a Ugandan entrepreneur, is able to spend his salary on Diesel jeans and a health club membership. More private sector employment has expanded the ranks of sub-Saharan Africa's middle-income earners. (Photos By Stephanie Mccrummen -- The Washngton Post) By Stephanie McCrummenWashington Post Foreign Service
Monday, September 1, 2008; Page A01


KAMPALA, Uganda -- Meet Denis Ruharo, an entrepreneur with a master's degree, a man who carries a BlackBerry and two Nokia cellphones, buys organic greens at a grocery store and sometimes does business over a cold Nile beer at a club called Silk.

"I have the mortgage and home improvement, " he said, glancing at the budget he and his wife keep on their computer. "The car, carwash and parking tickets. Entertainment -- cable TV, two movies a month. The health club. Then normally we vacation twice a year. Last time it was Nairobi."

"What else," he said, scrolling down on his Mac PowerBook. "Newspapers, charity, clothes, books and CDs . . . "

In a region more often associated with grinding poverty, Ruharo is part of a modestly growing segment of sub-Saharan Africa -- upwardly mobile, low- to middle-income consumers.

The group includes working Africans who make as little as $200 a month, a paltry sum by Western standards, yet hardly the $1 or so a day in earnings that describe life for about half the continent's population. Perhaps a third of all Africans, or 300 million people, fall into a middle category -- people struggling to put their kids through school and pay rent, but able to buy a cellphone or DVD once in a while.

Their buying power is evident around Kampala, a green and hilly city where iron-sheet homes are interspersed with high-rise condos, streets are crowded with bikes and Japanese sedans, and the city's newest mall, Oasis, is under construction. It will be anchored by what amounts to sub-Saharan Africa's first Target-style superstore chain, Nakumatt, which sells corn flour, aromatherapy bath salts and nearly everything else. The company is opening two other superstores here, plus two in Rwanda, three in Tanzania and 11 in Kenya, where it began as a trading firm in the 1960s.

"It's psychological -- people want upward movement," said Thiagarajan Ramamurthy, Nakumatt's operations director. "The appetite is increasing -- the 14-inch TV became a 21-inch. The 21 became a 29 and the 29 became plasma. It's an aspiration."

Although the continent has always had a modest middle class made up mostly of government workers or others tied to the ruling elite, the middle ranks have begun to expand in recent years with private sector employees. They include secretaries, computer gurus, merchants and others who by virtue of education, geography or luck have benefited from economic growth of around 6 percent annually in such countries as Uganda, Ghana and Kenya, and around 8 percent in Rwanda. Increasingly, they are entrepreneurs such as Ruharo, who represents the wealthier end of the spectrum and whose company is an offshoot of the newly booming cellphone industry.

Though critics say the trickledown effect is meager, others credit leaders of those countries with adopting relatively sound economic policies that have allowed the private sector to expand, driving what analysts say is the highest level of consumer demand the continent has ever seen.

Nakumatt's annual sales have increased from $100 million in 2004 to a projected $350 million this year. That's peanuts compared with Wal-Mart, which has annual sales of $350 billion. But Ramamurthy expects the growth to continue and the company to surpass a billion dollars in annual sales in the next decade.

As he and other observers see it, the growth of consumer culture reflects something more significant than the availability of Chilean wines and red patent leather pumps from Paris. It reflects a gradual opening up of African economies, a freer flow of information and a parallel rise in expectations, some political.

During Kenya's recent post-election crisis, for instance, many observers say people in this middle group, who were steadily losing money, helped to pressure the country's warring political leaders into a compromise.





Sisters Mariam, left and Kahadija Adam hang out at Kampala's Garden City mall. People go to be seen, Mariam says, even if they can't afford much.


Middle-income Africans are spawning the advent of new services, such as fertility treatments and funeral homes. And their habits are changing how people define themselves.

For example, although older Ugandans were forced to see themselves in terms of ethnicity during the brutal reign of Idi Amin, Ruharo's identity has more to do with where he shops and what he buys, which in turn reflects the wider world he greets each day on the Internet and cable TV or on occasional trips to London.

"What matters is your lifestyle," said Ruharo, whose current reading includes a motivational book, "The Greatness Guide."

"The car you drive -- it should be a Japanese import. Where you hang. You have to live in an apartment -- I live down here in Bakoto Flats. The BlackBerry is important. It's purely a status symbol because no one here is that busy yet."

Ruharo, who started his own business developing text-messaging products for cellphone companies, now has 14 employees, recent college graduates who share his taste for Diesel jeans and iPods. He said the growing consumerism, including his own, is because "people are more exposed to the world than 10 years ago" and because of a stretch of stability in a country with a turbulent political history.

Although President Yoweri Museveni has been criticized for treading the path to dictatorship -- he's been in power more than 20 years and has imprisoned political enemies -- he has been praised for policies that have fueled a steady economic upswing since the 1990s. Extreme poverty in Uganda, defined as those who earn less than $1 a day, has been cut in half to about 30 percent.

Vijay Mahajan, a business professor at the University of Texas in Austin, recently coined the phrase "Africa 2s" to describe people who are neither desperately poor (Africa 3s) nor obnoxiously rich (Africa 1s), and says the middle group is one of the most important drivers of economic growth in Africa.

"I'm convinced that Africa is going to be built by Africa 2s," said Mahajan, who has written a book, "Africa Rising," on the subject. "These are the people sending their kids to school . . . who are the most optimistic, the most forward-thinking. "

Kenyan economist James Shikwati suggested that middle-income consumers are also a driving force for political change.

"It's empowering," he said. "If you give people a sense of freedom in the economic sector, then you deny it in the political sector, you have a problem."

On a Tuesday afternoon in Kampala, the parking lot of the Garden City mall was full of Africa 2s, people pushing carts past fake palm trees to their sport-utility vehicles, or, like Zubedah Nanfuka, shopping inside the dimly lit, air-conditioned expanse.

"It's the one place you can be international and keep up with friends from Western countries," said Nanfuka, a 27-year-old program assistant at an embassy who until recently hosted a local lifestyle TV show called "Cook and Dine." "If you say, 'I shop at Garden City,' it puts you in a certain class."

Nanfuka buys clothes from boutiques in the mall once a month or so, she said. She shops at the bookstore, stops for an ice cream and recently enjoyed cocktails at the rooftop bar before the local premiere of "Sex and the City." Although Nanfuka is heading to the United States to get a master's degree this fall, she said she plans to come back to Kampala to work.

"It's an ongoing struggle, but I think things are promising here," she said, as people traipsed past shelves of flat-screen televisions or sat on benches under hanging ferns.

Adams Lorika was there taking a break. Her mother was a rural shopkeeper, and her father was exiled during Amin's rule for being from the wrong ethnic group, but her life is better by many measures, she said. She married a man who earns a decent salary shipping imports to shops such as those in the mall; she works at a store selling housewares. Together, they earn about $1,000 a month, of which she can spend about $50 on movies, shoes or dining out. They have a bank account and are in the process of obtaining a mortgage to buy a house.

"I come on Saturday with the kids," Lorika said. "They hang out and eat at the food court. The prices here are a bit expensive, but if you want something, you have to go for it."

A young woman in jeans and a tie-dye headscarf was yelling into a red metallic cellphone: "I'm coming! Have a drink!" heading toward the Chick'n Express in the food court. Mariam Adam, a cosmetologist and playwright, said that her friends come to the mall even though they can't afford to buy much. She said it's not so much about shopping, but rather what the mall represents.

"People come to be seen here, so people assume you have money, even though that may not be the case. Things have changed a lot," she said, recalling the days when she felt shabby compared with a visitor from London. "Now, someone from London can come and they're wearing the same shoes I have."