Measuring Africa’s middle class


Africa has experienced substantial growth in its middle class over the past 14 years, according to a study by Standard Bank of South Africa, the continent’s biggest lender.

The report looks at the size and growth of the middle class across 11 of Sub-Saharan Africa’s most vibrant economies. The report also takes a future view to 2030, identifying where the greatest income growth will be and how economies are maturing to offer more diverse potential for investors.

The report, entitled “Understanding Africa’s middle class”, found that there are 15m middle-class households in 11 of sub-Saharan Africa’s top economies this year, up from 4.6m in 2000 and 2.4m in 1990 – an increase of 230% over 14 years.

The 11 focus economies are: Angola, Ethiopia, Ghana, Kenya, Mozambique, Nigeria, South Sudan, Sudan, Tanzania, Uganda and Zambia, which combined account for half Africa’s total GDP (75% if excluding South Africa) and half its population. However, of the total number of households across these focal economies, 86% of them remain within the broadly “low income” band. The report also found that the combined GDPs of the 11 measured economies had grown tenfold since 2000.

The study uses a proven methodology widely employed in South Africa, says the Pan-African News Agency. The report, based on the Living Standards Measure (LSM), gives investors to Africa data on which to base their investment decisions. In the past, the conventional wisdom was that as many as 300m Africans were categorised as ‘middle class’. The report points out that investors using an unquantifiable assumption might find individuals they had thought were middle class were in fact highly vulnerable to lose that status in any economic shock.

Standard Bank senior political economist Simon Freemantle, author of the report, says the prospective boom in middle class households – those earning between US$8,500 and US$42,000 a year – is also likely to be complemented by a swelling in the number of lower middle class households that earn between US$5,500 and US$8,500 annually. This will create an expanding consumer market for items such as vehicles, insurance policies, property and health products.

“Between 2014 and 2030, we expect an additional 14m middle-class households will be added across the 11 focal countries, tripling the current number. Including lower-middle-class households, the overall number swells to over 40m households by 2030, from around 15m today,” Freemantle says.

Nigeria, which is Africa’s biggest economy and has the largest African population, is leading the growth of new middle-class households with an estimated 7.6 million to be added in the next 16 years. Nigeria’s middle class grew by 600% between 2000 and 2014 giving the country 4.1 million middle-class households at present, 11% of its total population. Other countries expecting significant growth of the middle-class households by 2030, include Ghana (1.6m), Angola (1m) and Sudan (1m), according to the Standard Bank blog.

East Africa lagged other regions in the study, with more than 90 percent of households in Ethiopia, Tanzania, Uganda and Kenya defined as low-income, reported.


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African energy growth predicted


An energy boom is on the cards if the continent can attract vital investment.

Africa’s energy industry could boom in the coming years, with Mozambique and Tanzania set to emerge as new frontiers, a report by PriceWaterhouseCoopers said on September 3rd.

Six of the top 10 global discoveries in 2013 were made in Africa, with more than 500 companies now exploring across to the continent, according to the study.

Large gas finds in Mozambique and Tanzania would make the world “take note of east Africa as an emerging player in the global industry,” said the report’s advisory leader, Chris Bredenhann.

The boom has brought investment opportunities, despite the lingering challenges of corruption, lack of infrastructure and regulation.

Transactions worth some US$1 bn occurred every 17 days in Africa’s oil and sector in 2013, the report said.

Still, the continent faces fierce competition for vital investment from other parts of the world, the PWC report cautioned.

“A huge obstacle to growth in Tanzania and Mozambique is the cost of the infrastructure required, which neither country can afford without help from foreign investors,” it said.

Nearly nine million barrels of crude were produced every day in 2013, more than 80% of which came from established players such as Nigeria, Libya, Algeria, Egypt and Angola.

In gas that is even more concentrated, with nine tenths of annual natural gas production of 6.5 trillion cubic feet coming from Nigeria, Libya, Algeria and Egypt.

Still, Mozambique could become a major player in the Asian market on a par with Australia, the United States and Papua New Guinea when it starts exporting gas, expected in 2020, the report said.

Already majors such as Eni, Chevron and BP have invested in its gas fields, some of the largest discovered in the past decade.

Demand for oil in Africa was also expected to “rise significantly” over the next 20 years, driven by population growth, urbanisation and the emergence of a middle class, the report said.

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Vaccine gives monkeys Ebola immunity


Vaccinated monkeys have developed “long-term” immunity to the Ebola virus, raising a prospect of successful human trials. Experiments by the US National Institute of Health showed immunity could last at least 10 months.

Now, human trials of the vaccine have begun in the US with the first patient a 39-year-old woman, and will be extended to the University of Oxford in the UK as well as in Mali and Gambia. Animal research, on which the decision to begin human trials was based, was published in the journal Nature Medicine. It shows four crab-eating macaques all survived what would have been a fatal dose of Ebola virus five weeks later. However, only half survived an infection 10 months after immunization, but Dr Anthony Fauci, the director of the US National Institute of Allergy and Infectious Diseases, believes a booster shot could make the vaccine really durable. People will be given just the initial jab, not a follow-up booster, in the trials.

The World Health Organisation (WHO) said safety data would be ready by November 2014 and, if the vaccine proved safe, it would be used in West Africa immediately with healthcare workers and other frontline staff being prioritised for vaccination.

There will also be separate trials of the vaccine against just the Zaire Ebola species.

At present several experimental treatments are being considered to help contain the spread of Ebola including a vaccine being developed by the US National Institute of Allergy and Infectious Diseases and pharmaceutical giant GlaxoSmithKline. It uses a genetically modified chimp virus containing components of two species of Ebola – Zaire, which is currently circulating in West Africa, and the common Sudan species.

The viral vaccine does not replicate inside the body, but it is hoped the immune system will react to the Ebola component of the vaccine and develop immunity.

Existing supplies of all experimental medicines are limited and will not be sufficient for months to come, while the outlook for vaccine supplies looks “slightly better”, the WHO said in a statement on September 5th after two days of talks in Geneva attended by nearly 200 experts.

The UN agency said blood-derived products and serum from survivors may be used to treat Ebola virus immediately and two vaccines could be available for health workers by the end of 2014. According to the WHO, 256 health workers have been infected and 134 have died in this outbreak.

However, good clinical care, rigorous infection prevention and control measures, and the tracing of people who have been exposed remain crucial for ending the epidemic, which has killed at least 2,097 in West Africa since March.

ZMapp, made by California-based Mapp Biopharmaceutical Inc., has been given to seven people infected with Ebola, including two American aid workers and a Briton who all recovered, but it remains unproven and supplies have run out. The US government has pledged up to $42.3m to accelerate its testing. Mapp Biopharmaceutical president Dr. Larry

Zeitlin said was vital to conducting early-stage safety studies of the drug as the jury is still out on both its safety and efficacy.

“The U.S. support will enable us to figure out what the appropriate dose is and scale up manufacturing. With a drug you have not only to make it, but make it consistently to the same quality. The award given us is for 18 months. We will probably be in human trials beginning in 2015,” Zeitlin said in an interview on the sidelines of the WHO meeting.

More than six months into the crisis, the disease is spreading faster than ever and organisations across the world are directing cash and supplies to the region. The UN has said $600m will be needed to fight the outbreak and an Ebola crisis centre would be set up to coordinate the response. The European Union (EU) on September 5th pledged $180m (€140m) to boost the fight against Ebola in West Africa. The funding will be used to strengthen health systems, train health workers and pay for mobile testing laboratories.

Over €97m will be spent on budget support to Liberia and Sierra Leone in order to help them deliver public services, including health care, and maintain macroeconomic stability, the European Commission said in a statement.

A ‘Market Failure’

Meanwhile the scientist leading Britain’s response to the Ebola pandemic, Professor Adrian Hill of Oxford University, has launched a devastating attack on “Big Pharma”, accusing drugs giants of failing to manufacture a vaccine, not because it was impossible, but because there was “no business case”.

According to Professor Hill, the outbreak could have been “nipped in the bud”, if a vaccine had been developed and stockpiled sooner – a feat that would likely have been “technically more doable” than making one for other challenging and more widespread diseases such as TB, HIV and malaria, which receive more funding..

Professor Hill maintains that the fact that a vaccine had not been available to stop the disease when it emerged in Guinea six months ago represented a “market failure” of the commercial system of vaccine production which is dominated by the pharmaceutical giants.

Professor Hill explained that the GSK/NIH vaccine, which is based on a strain of chimpanzee cold virus and known as ChAd3, was originally developed in the US for potential use against a bio-terror attack – and only existed because of high levels of funding allocated to vaccines designated for defence.

Asked why a fully tested and licensed vaccine had not been developed, Professor Hill said: “Well, who makes vaccines? Today, commercial vaccine supply is monopolised by four or five mega- companies – GSK, Sanofi, Merck, Pfizer – some of the biggest companies in the world.

“The problem with that is, even if you’ve got a way of making a vaccine, unless there’s a big market, it’s not worth the while of a mega-company …. There was no business case to make an Ebola vaccine for the people who needed it most: first because of the nature of the outbreak; second, the number of people likely to be affected was, until now, thought to be very small; and third, the fact that the people affected are in some of the poorest countries in the world and can’t afford to pay for a new vaccine. It’s a market failure.”

In the wake of the outbreak, governments should now work with the pharmaceutical industry to push through development of vaccines against “outbreak diseases” such as Ebola, as well as Sars, Marburg and Chikungunya, Professor Hill said, with the goal of establishing stockpiles in vulnerable countries.

Lockdown for Ebola

Sierra Leone has announced a four-day nationwide lockdown in a desperate attempt to halt the continuing spread of Ebola. In a move to slow infection rates and allow health workers to isolate fresh cases of the disease, people will not be allowed to leave their homes from September 18th to 21st. More than 21,000 people will be recruited to maintain the lockdown.

Médecins sans Frontières (MSF) said the measure risked driving victims “underground”, and potentially spreading the disease further. The fight against it has already been hindered by misinformation, and mistrust of health workers.

Ebola casualties

Up to September 5th: 2,105

Ebola deaths – probable, confirmed and suspected

* 1,089 Liberia

* 517 Guinea

* 491 Sierra Leone

* 8 Nigeria

(Source: WHO)

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Video: Ghana’s growing fisheries


Between 2000-2010 Africa’s aquaculture industry grew tenfold, with much of the growth focused in Ghana. The country is expecting to start exporting fish in the next five to ten years.

Chaired by former UN Secretary General, Kofi Annan, the Africa Progress Panel presented this year’s Africa Progress Report, ‘Grain, Fish, Money — Financing Africa’s Green and Blue Revolutions’, in London on Thursday, May 8.

The report found that African countries can reduce poverty and inequality by boosting agriculture, which affects two thirds of the continent’s population. 

The panel has now published a video showcasing the potential for African fisheries. The film focuses on the work of Ghana’s Tropo Farms, West Africa’s biggest fresh-water fish farm, which now produces and sells 6,000 tonnes of tilapia every year. Set up in Ghana in 1997, it shows Africa’s potential to develop its aquaculture sectors.

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Lesotho: Political crisis boils over


 Army denies a military coup


Lesotho’s protracted political crisis boiled over on August 30th, after the military laid siege to the police headquarters, jammed radio communication and took control of key government installations. Prime Minister Thomas Thabane had suspended parliament in June, fearing that the MPs were going to pass a vote of no confidence against him.

The African Union (AU) warned on August 31st it would not tolerate an unconstitutional change of government in Lesotho, after Thabane fled to neighbouring South Africa, alleging a military coup against his government.

AU Commission Chairperson Nkosazana Dlamini Zuma said she was “deeply concerned” with the ongoing developments and that the political parties in Lesotho should resolve their differences within the confines of the country’s constitution, the PanAfrican news agency (PANA) reported.

Regional power South Africa and the Commonwealth also warned the Lesotho Defence Forces that such action “shall not be tolerated”. The United States voiced concern at the security clashes and called for “peaceful dialogue”.

The military however denied it had seized power. The army’s operation was aimed only at disarming police which were preparing to provide arms to certain political parties, military spokesman Major Ntele Ntoi told the Africa News Network, ANN7 news channel. The military was acting on information that police would be arming demonstrators in a political protest planned for September 1st.

District police commissioner Mofokeng Kolo later said that one police officer died in the army attack.

A day after Thabane had fled, Deputy Prime Minister Mothejoa Metsing also left Lesotho for talks in Pretoria at the invitation of the South African president who currently heads regional bloc the Southern African Development Community, SADC’s security committee, ANN7 said.

 ‘Nobody is Protecting the People’

The turmoil is understood to be linked to a power struggle between Thabane, reportedly supported by the police, and Metsing, said to have the loyalty of the army.

Metsing’s Lesotho Congress for Democracy (LCD) party is in an uneasy coalition government with Thabane’s All Basotho Convention (ABC). The LCD has denied allegations of involvement in the alleged coup.

However, the attempted assassination of a top military commander plunged the country into further unease on August 31st. Gunmen attacked the Maseru home of Lieutenant General Maaparankoe Mahao, DPC Kolo confirmed, deepening a seeming battle for control of the military. Mahao survived however, the Lesotho Times reported.

Mahao had been appointed head of the Lesotho Defence Force by Thabane shortly before he fled. The previous commander Lieutenant General Tlali Kamoli was accused of leading the alleged coup attempt against him.

Low-ranking soldiers contacted by AFP said it was unclear who was now giving their orders. They remained confined to barracks.

SADC on September 1st rejected calls by Thabane for the immediate deployment of troops to help restore order. Instead, an observer team would be urgently sent.

In Maseru, there were fears that the conflict was in no way over. The military was said to be rounding up policemen and stripping them of their uniforms. Some policemen had reportedly abandoned their posts and fled to South Africa.

“Police fear for their lives because we have intelligence that there will be an attack while we are in stations on duty,” said Assistant Police Commissioner Lehloka Maphatsoe.  “At the moment, really, there’s nobody protecting the people,” he said.

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Madagascar: The Karenjy car – it’s a question of patriotism


When you next shop around for a new car, the chances are you will not buy a Karenjy. For a start, only a dozen are built each year, by hand, on the Indian Ocean island of Madagascar and none are exported outside the impoverished nation.

During a visit to Madagascar in 1989, John Paul II travelled in this custom-built Karenjy Mazana I Popemobile

During a visit to Madagascar in 1989, John Paul II travelled in this custom-built Karenjy Mazana I Popemobile

They don’t come with electric windows, airbags, sat nav, or other conveniences long considered standard.

And in terms of looks, their long sloping front and boxy hindquarters may be something of an acquired taste.

All this has meant that since Karenjy was founded by the state in 1984, the island’s only car manufacturer has been thoroughly pummelled by foreign competition on its home turf.

“Everything is based on design and the previous Karenjys looked very bulky,” said Nantenaina Andrianaivoson, a young Malagasy father who drives a Peugeot 307.

“There was plenty of room for improvement.”

Even a Papal endorsement from John Paul II, who cruised around the central city of Fianarantsoa on a custom built Karenjy “Papamobile” during a 1989 visit, was not enough to save the firm.

In 1993, Karenjy – which means ‘a stroll’ in Malagasy – was placed under administration and the government simply abandoned it, spelling a slow walk to death.

The factory became dilapidated, its shop floor surrendered to vegetation that grows quickly in the hot sun on this island.

Building materials were unusable, but a few tools and a spare car remained.

In 2008, French-Malagasy company Le Relais bought the carcass of the firm hoping to turn it around.

But after a year-long refurbishment, a coup plunged the country into a deep political and economic crisis which brought punishing international sanctions.

The resultant strife cost Madagascar — already one of the world’s poorest countries — $8 billion and tens of thousands of jobs, according to World Bank estimates. Not an ideal market in which to sell cars.

But now, according to Le Relais’s Luc Ronssin, “Karenjy is rising from the ashes after a 15 year coma.”

In mid-August Karenjy unveiled its latest model, the Mazana 2, along with plans to increase production around twentyfold to 200 units a year by 2017.

Hopes are pinned on the new Mazana – meaning strong in Malagasy – which will hit the market in 2015 and is a low maintenance 4×4 designed for the island’s rugged terrain.

It bears a passing resemblance to a Hummer but makers say it will also suit the wallet of impoverished Malagasy consumers.

The company’s optimism about the market has been spurred on by the 2013 election, which

But Karenjy is not just aiming to make a quick buck, it also wants to be socially responsible. Owners have so far resisted bringing robots to the factory floor, there is no production line and work is done by hand by 70 specialised workers.

“Le Relais has a specific approach to business: making money is not a problem, the question is what to do with it to create real social development,” said Ronssin.

On an island that has felt the full force of globalisation, that is a message that resonates with the patriotic Malagasy.

Resident Patrick Fananontsoa drives a Mazana 1 originally bought by his brother.

“My brother wanted to buy a Mazana 1, because he was fed up with all the Chinese cars,” said Fananontsoa, “it was a question of patriotism.

“It was also a little cheaper and efficient with decent petrol consumption. The design may be a bit rustic, but lots of people like it.”

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Ebola: The economic impact


With more than 1,300 reported deaths from Ebola in West Africa, the hemorrhagic disease which can kill up to 90% of those it infects has provoked a mounting health crisis, but it is also having a devastating impact on the economies of Guinea, Liberia and Sierra Leone.

Ebola virus virion (Public Health Image Library)

All three West African nations are already poor, but the Ebola outbreak could make them even poorer. Sierra Leone and Liberia have both emerged from horrific civil wars and managed to rebuild their economies. Liberia has been trying to revive its mining sector which before the civil war accounted for more than half its export earnings. But now there are fears that all the good work that has been achieved since those conflicts could be destroyed.

Sierra Leone’s Agriculture Minister Joseph Sam Sesay told the BBC that the economy had been deflated by 30% because of Ebola, with the agricultural sector the most impacted in terms of Ebola because about 66% of people in Sierra Leone are farmers. Mr Sesay described how farms are being abandoned by people running away from the epicentres and going to areas that don’t have the disease.

Twelve out of 13 districts in Sierra Leone are now affected by Ebola, although the epicentres are in the Eastern Province near the borders with Liberia and Guinea. Road-blocks manned by police and military are preventing the movement of farmers and labourers as well as the supply of goods.

Although the United Nations Development Programme (UNDP) chief co-ordinator David McLachlan-Karr thinks that the road-blocks are absolutely crucial to containing the outbreak, he admits agriculture in Sierra Leone has been brought to its knees.

“We are now coming into the planting season which means a lot of agriculture is not happening, so down the line that will create food shortages and pressures on food prices. We are starting to see a rise in inflation and pressure on the national currency as well as a shortage of foreign exchange,” he told the BBC.

The UNDP has appealed for $18m to bolster Sierra Leone’s health system but the UN’s Food and Agriculture Organisation (FAO) and World Food Programme (WFP) will also be asking for a further $60m to help the government deal with food shortages and its farmers cope with the crisis.

In Guinea and Liberia the economic predictions are also causing concern. The World Bank said it was expecting GDP growth in Guinea to fall from 4.5% to 3.5%.

The Liberian economy had been expected to grow by 5.9% in 2014 but the country’s Finance Minister, Amara Konneh, said this was no longer realistic due to a slowdown in the transport and services sectors and the departure of foreign workers because of Ebola. Steel giant ArcelorMittal has halted work at its iron ore mines in Liberia after some of its staff were evacuated. The mining firm said contractors working to expand its Yekepa and Buchanan mines had declared “force majeure” and were moving people out of the country.

The closure of borders in West Africa and the suspension of flights are also having a detrimental effect on trade, severely limiting the ability of countries to export and import goods.

Recent examples are the closure of Cameroon’s border with Nigeria and the announcement by Kenya Airways that it is suspending flights to and from Sierra Leone and Liberia. Equatorial Guinea’s  national airline Ceiba International has suspended until further notice all of its flights to Accra, Ghana, Lome in Togo, Abidjan in Cote d’Ivoire, Dakar in Senegal and Cotonou in Benin. The Equato-Guinean government has also stopped issuing visas to West African citizens wishing to visit until further notice. Arik Air, Asky, British Airways and Emirates have suspended flight operations to and from any of the Ebola affected countries. Saudi Arabia also suspended the issuing of visas to Muslim pilgrims from West African countries. Serious screening for Ebola has also begun at several international airports before passengers are allowed to board an airplane.

In Sierra Leone, commercial banks have reduced their hours of business by two hours to reduce contact with clients and the country’s tourism industry has taken a severe knock – some hotels are empty and are laying off staff.

Impact on Tourism

Tourism elsewhere is feeling the effects too. According to Reuters, the outbreak is putting off thousands of tourists who had planned trips to Africa in 2014, especially Asians, including to destinations thousands of miles from the nearest infected community such as Kenya and South Africa. Visitors from the United States, Brazil and Europe have also scrapped their plans altogether or delayed their trips.

There is a problem of perception – and geography. Hannes Boshoff, managing director of Johannesburg-based ERM Tours, says. “A lot of consumers just see Africa. They see it as one country … I try and tell people that Europe and America are closer to the Ebola outbreak than South Africa”.

This month, one Brazilian business delegation cancelled a trip to Namibia, in southern Africa.

Thompsons Africa said it had also seen the biggest cancellations from Asian clients but recently had a luxury group of US tourists withdraw, which will cost the South African travel firm 500,000 rand.

Intense media cover has magnified fears, although no current Ebola cases have been confirmed anywhere in the world outside Sierra Leone, Liberia, Guinea and Nigeria. Two suspected Ebola cases in South Africa in August tested negative.

The national tourist agency South Africa Tourism sought to reassure travellers.

“Any contagious disease will have an impact anywhere in the world, whether it was happening in Asia or in America it would have been the same thing,” chief executive Thulani Nzima told state television.

“The message is: come enjoy South Africa, it is definitely Ebola free.”

Lagos-based financial advisory and research firm, Financial Derivatives Company Limited (FDC), has forecast that Nigeria – now the continent’s largest economy – may lose about $2bn to the Ebola outbreak, Nigerian newspaper This Day reported on August 18th.

In a report entitled: “Making Economic Sense of the Ebola Scare,” it listed sectors that would be impacted to include aviation, hospitality and tourism, trade, medical and agriculture. Analysing these sectors’ contribution to the country’s GDP, it stated that though the chance of the outbreak going into a second quarter was very slim, it could extend the loss to $3.5bn.

Ratings agency Moodys said, “Whilst a small part of the Nigerian economy is already benefiting from the Ebola scare such as shop owners selling sanitisers, a larger part is experiencing losses”.

“We expect revenues in the aviation sector to plunge downwards, which would affect both the airlines and the support industry (handling companies, oil marketers, catering, duty free shops, etc.),” the report also stated.

Commenting on the impact on the hospitality and tourism sector, it said preliminary information showed that many hotel and airline bookings in Lagos had been cancelled by in-bound travelers.

“This is not surprising since India and Greece have openly advised their citizens to avoid non-essential travel to Nigeria and other Ebola-affected countries. It is estimated that restaurant visits in Lagos have already declined by 50%. The accommodation and food services sector was approximately one per cent of total GDP in first quarter 2014.

Dianna Games, chief executive of Johannesburg-based consultants Africa@Work, thinks Nigeria is the only affected country that has the health system and infrastructure to deal with Ebola. At the moment there have only been 12 confirmed cases, all of which were linked to the death of one man from Liberia in July.

She says fears about the virus could damage Africa’s economic revival of recent years.

“Ebola has made a dent in the Africa Rising narrative,” she told the BBC. “The stereotypes of Africa as a place of poverty and disease have started to re-emerge again.”

However, In the long run, Ms Games believes history will view the 2014 Ebola outbreak as a temporary blip rather than a permanent U-turn in the continent’s fortunes.

“The fundamentals pushing this Africa Renaissance are still there,” she said.

Meanwhile, the African Development Bank (AfDB) has given $60m in budgetary aid to the affected countries, Radio France Internationale on August 19th. Bank president Donald Kaberuka told a news conference the aid would go towards making it possible to pay health personnel and equip monitoring systems.

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