Up and Coming in Kampala: Africa’s Growing Middle Class Drives Development

Published on Spiegel Online International, by Horand Knaup and Jan Puhl, July 6, 2012. (Photo Gallery). (Translated from the German by Christopher Sultan).

Africa’s growing middle class is fueling development across the continent. Ambitious entrepreneurs are creating growth with companies focusing on everything from fashion to pharmaceuticals. But poor infrastructure, corruption and political conflict are hampering their efforts … //

… Growing Domestic Demand:

  • She is the epitome of a success story. And success stories are no longer a rarity in Africa, despite its reputation as a continent of poverty and suffering.  
  • Africa’s economy is developing at a pace similar to that of Asian countries, including Japan. Five of the 10 faster growing countries in the world this year are south of the Sahara. Commodities like oil, natural gas, lumber, ores, gold and diamonds make up a shrinking share of economic output. In many up-and-coming countries, mineral resources no longer play the decisive role, as the service sector and manufacturing expand.
  • This growth is producing a middle class that’s growing from year to year. According to the African Development Bank, this middle class already includes 313 million people, or 34 percent of the total population.
  • Africa’s middle class lives in the cities, and its members are either salaried workers or, like Sylvia Owori, have their own firms. They are young and well-educated, and they want TV sets, cars and fashionable clothing. The continent now boasts 430 million mobile phone users. The growing domestic demand coming from the middle class served as a “buffer” when the West plunged into crisis in 2008, says Mthuli Ncube, chief economist of the African Development Bank.

Recycling What the West Throws Away: … //

… The Age of Entrepreneurs Has Begun:

  • Emmanuel Katongole is a typical representative of this middle class. He drives a shiny black Mercedes SUV and wears tailored suits. The African Development Bank awarded him a business prize for opening a pharmaceutical plant in Luzira, a suburb of Kampala. His company, Quality Chemical Industries, produces 6 million pills to treat HIV and malaria a day, half of which Katongole exports to neighboring countries.
  • Quality Chemical Industries is a joint venture with Indian manufacturer Cipla, which holds the license for the HIV and malaria drugs, and owns more than 40 percent of Katongole’s company. The company offers its 350 employees training, meals and medical care. “People like to work for us, and we have no disciplinary problems,” says Katongole.
  • “The age of entrepreneurs has begun in Africa,” says Katongole. When he began importing antiretroviral drugs in the 1990s, about 15 percent of the population in Uganda was infected with HIV. Today it’s only about 7 percent, a decline for which Katongole deserves some of the credit.
  • He convinced the Indians to come to Africa, and he won over both South African venture capitalists and the Ugandan government, which helped him start the project. President Yoweri Museveni, a mild autocrat by African standards, takes the fight against AIDS seriously — unlike other rulers on the continent.
  • The government had the ground cleared and leveled for the laboratories, installed the power supply and provided the company with tax incentives. “Quality Chemical Industries is a successful example of a partnership between the private and the public sector,” says Katongole. “Africa has to produce more finished products.” If the world wants to do the continent a favor, he adds, it should help companies like his with financing. “Classic development aid makes governments lazy,” says Katongole. In fact, the reputation of development aid has suffered considerably. African economists argue that it keeps millions of Africans trapped in poverty.

Juice Dreams: … //

… Voter’s Know What’s at Stake:

  • But the next potential problem is already on the horizon. Kenya holds elections next spring. During the last election, five years ago, politicians incited violence between gangs of thugs, fueling ethnic hatred. As a result, 1,300 people were killed, hundreds of thousands were driven from their homes, the tourism industry was shattered and many businesses were destroyed.
  • “It won’t be that bad this time,” says Kimani. “Voters know what’s at stake now.” The middle class in Kenya has a lot to lose, he says. It won’t tolerate the same kind of chaos that erupted five years ago.

(full text).

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