Sustaining the African Middle Class: Leveraging Green Technologies and the Fourth Industrial Revolution

By Camaren Peter

Africa’s rapid urbanisation, steady economic growth and growing – but precarious – middle class is cause for optimism, yet critical developmental challenges persist. Leveraging the overlap between green technologies and the offerings of the fourth industrial revolution is key to stabilising the middle class and closing the vast inequality gap on the continent.

 

Africa is currently undergoing a ‘revolutionary’1 urban demographic and spatial transition that has significant implications for economic growth on the continent and the globe. The emerging – mainly urban – African ‘middle class’ is central to this transition.2 The shape and form that this transition takes will largely depend on whether stable, consistent and sustainable growth and expansion of this middle class occurs in the medium to long terms. The question of what economic diversification trajectories can contribute to stabilising the African middle class is hence an important one. On a continent characterised by high levels of poverty, inequality, unemployment, food insecurity, and severe infrastructure and basic services deficits3, a socio-economically equitable and sustainable transition is required4. In this respect, the confluence between green technologies and systems solutions5,6, and the emerging offerings of fourth industrial revolution, hosts the potential to unlock new developmental and economic growth trajectories for the continent.

128 million households will transition to ‘middle class’ status by 2020, yielding a middle class that is set to grow from 355 million in 2010 to 1.1 billion in 2060.

Background

The “Africa Rising” narrative rose to precedence in the wake of the 2008 financial crisis, when the need for global growth necessitated accessing emerging markets. The optimistic outlook on Africa was predicated by significant increases in GDP growth since the 1980’s and 1990’s, with uniform spread of growth over sectors7. In addition, early projections were that 128 million households will transition to ‘middle class’ status by 2020, yielding a middle class that is set to grow from 355 million in 2010 to 1.1 billion in 20608,9. Moreover, the African labour force is projected to reach 1.1 billion by 204010 exceeding that of China and India11.

Underlying this growth is rapid urbanisation, with the continent’s highest performing 18 cities projected to achieve a purchasing power of USD 1.3 trillion by 203012,13.Africa exhibits the highest city growth rates in the world (i.e. above 4% between 1950-1990 and will remain at or over 3% to 2035-204014), with over a quarter of the 100 fastest growing cities residing on the continent15. Urban dwellers are set to increase from 400 million in 2010 to 1.26 billion in 2050, increasing its global share of urban dwellers from 11.3% in 2010 to 20.2% in 205016,17. Recent data puts African urban dwellers at 548 million and is likely to almost triple to approximately 1.5 billion between 2018 and 2050, constituting around 22% of the global urban population at that stage18.

Two critical and peculiar factors characterise urbanisation in Africa. First, that in contrast to the first wave of global urbanisation in the developed world, which coincided with the industrial revolution, urbanisation in Africa is unfolding largely with low levels of industrialisation19,20,21. Second, that 63.9% of urban growth – according to revised data published in 2012 – was occurring in small (54%) to intermediate cities (9.9%), that is; cities that range from under 500,000, and 500,000 to 1 million, respectively22.

With the majority urban condition being characterised by severe infrastructure and service provision deficiencies, the growth of small to intermediate cities presents a unique opportunity to leapfrog development and economic growth at relatively manageable scales23. In contrast to the development demands of megacities such as Lagos and Kinshasa, which are ‘locked in’ to patterns of spatial development that are characterised by high levels of slums and informality, small to intermediate cities offer the potential to work at manageable scales and still create wide scale impact.

This is not to de-emphasise the importance of larger cities on the continent, but simply to point to the opportunity that resides in small to intermediate scale cities to seed and catalyse broader scale developmental transitions. With average densities set to increase from 34 to 79 persons per km2 between 2010 to 205024, urban spatial development choices (i.e. infrastructures, technologies, urban design and planning) will likely prove critical in respect of what kind of foundation for economic growth is put in place. A low resource consumption and carbon intensive approach is necessary25,26.

 
Please login or register to continue reading... Registration is simple and it is free!

Camaren Peter (PhD) is an author and Associate Professor with the Allan Gray Centre for Values-Based Leadership at the University of Cape Town’s Graduate School of Business. His research and practice is concerned with the grand challenges of the 21st Century. These range from political, technological and socio-cultural transitions, to powerful global change phenomena such as urbanisation, resource scarcity, ecosystems degradation and climate change.

References
1. Pieterse, E., & Parnell, S. (2014). Africa’s Urban Revolution in Context. In S. Parnell & E. Pieterse (Eds.), Africa’s Urban Revolution. London: Zed Books.
2. AfDB. (2011). The middle of the pyramid: Dynamics of the middle class in Africa [Market Brief]. African Development Bank.
3. African Union. (2017). 2017 Africa Sustainable Development Report. Tracking progress on Agenda 2063 and the Sustainable Development Goals. Addis Ababa, Ethiopia: African Union, Economic Commission for Africa; African Development Bank and United Nations Development Programme.
4. Pieterse, E., & Parnell, S. (2014). Africa’s Urban Revolution in Context. In S. Parnell & E. Pieterse (Eds.), Africa’s Urban Revolution. London: Zed Books.
5. https://www.businesslive.co.za/bd/opinion/2017-11-20-
changing-the-system-for-sustainable-development/
6. Verdolini, E., Bak, C., Ruet, J., & Venkatachalam, A. (2018). Innovative green-technology SMEs as an opportunity to promote financial de-risking. Economics: The Open-Access, Open-Assessment E-Journal. https://doi.org/10.5018/economics-ejournal.ja.2018-14
7. McKinsey. (2010). Lions on the Move: The Progress and Potential of African Economies. McKinsey Global Institute, McKinsey and Company.
8. AfDB. (2011). Africa in 50 Years Time. The Road Towards Inclusive Growth. Tunisia, Tunis: African Development Bank (AfDB).
9. United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
10. McKinsey. (2010). Lions on the Move: The Progress and Potential of African Economies. McKinsey Global Institute, McKinsey and Company.
11. United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
12. Swilling, M. (2010). Africa 2050: Growth, resource productivity and decoupling. International Panel for Sustainable Resource Management of the United Nations Environment Programme.
13. United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
14. United Nations (2018), World Urbanization Prospects: The 2018 Revision, United Nations Department for Economic and Social Affairs (UNDESA), New York.
15.United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
16. United Nations. (2008). The State of African Cities Report 2008. A Framework for Addressing Urban Challenges in Africa. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
17. United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
18. United Nations (2018), World Urbanization Prospects: The 2018 Revision, United Nations Department for Economic and Social Affairs (UNDESA), New York.
19. Swilling, M. (2010). Africa 2050: Growth, resource productivity and decoupling. International Panel for Sustainable Resource Management of the United Nations Environment Programme.
20. Pieterse, E., & Parnell, S. (2014). Africa’s Urban Revolution in Context. In S. Parnell & E. Pieterse (Eds.), Africa’s Urban Revolution. London: Zed Books.
21.United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
22.United Nations (2012), World Urbanization Prospects: The 2011 Revision, United Nations Department for Economic and Social Affairs (UNDESA), New York.
23.United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
24. United Nations (2012), World Urbanization Prospects: The 2011 Revision, United Nations Department for Economic and Social Affairs (UNDESA), New York.
25. United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
26. Pieterse, E., & Parnell, S. (2014). Africa’s Urban Revolution in Context. In S. Parnell & E. Pieterse (Eds.), Africa’s Urban Revolution. London: Zed Books.
27. United Nations (2012), World Urbanization Prospects:
The 2011 Revision, United Nations Department for Economic and Social Affairs (UNDESA), New York.
28. Yahya, M. (2017, August 7). Africa’s defining challenge. Retrieved August 22, 2019, from UNDP in Africa website: http://www.africa.undp.org/content/rba/en/home/blog/2017/8/7/africa_defining_challenge.html
29. United Nations. (2015). Population Facts (No. May 2015/1). Retrieved from United Nations Department of Economic and Social Affairs (UN DESA) website: https://www.un.org/en/development/desa/population/publications/pdf/popfacts/PopFacts_2015-1.pdf
30. AfDB. (2016). Jobs for Youth in Africa. Catalyzing youth opportunity across Africa. Retrieved from African Development Bank (AfDB) website: https://www.afdb.org/fileadmin/uploads/afdb/Images/high_5s/Job_youth_Africa_Job_youth_Africa.pdf
31. United Nations. (2014). The State of African Cities 2014.Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
32. AfDB. (2011). The middle of the pyramid: Dynamics of the middle class in Africa [Market Brief]. African Development Bank.
33. AfDB. (2011). The middle of the pyramid: Dynamics of the middle class in Africa [Market Brief]. African Development Bank.
34. Africa Progress Panel. (2012). Africa Progress Report. Jobs, Justice and Equity. Seizing Opportunities in Times of Global Change. Africa Progress Panel.
35. Water, Food and Energy | UN-Water. (n.d.). Retrieved August 16, 2019, from https://www.unwater.org/water-facts/water-food-and-energy/
36. De Magalhães, L., & Santaeulàlia-Llopis, R. (2018). The consumption, income, and wealth of the poorest: An empirical analysis of economic inequality in rural and urban Sub-Saharan Africa for macroeconomists. Journal of Development Economics, 134, 350–371. https://doi.org/10.1016/j.jdeveco.2018.05.014
http://r-santaeulalia.net/pdfs/CrossSecSSA.pdf
37. De Magalhães, L., & Santaeulàlia-Llopis, R. (2018). The consumption, income, and wealth of the poorest: An empirical analysis of economic inequality in rural and urban Sub-Saharan Africa for macroeconomists. Journal of Development Economics, 134, 350–371. https://doi.org/10.1016/j.jdeveco.2018.05.014 http://r-santaeulalia.net/pdfs/CrossSecSSA.pdf
38. De Magalhães, L., & Santaeulàlia-Llopis, R. (2018). The consumption, income, and wealth of the poorest: An empirical analysis of economic inequality in rural and urban Sub-Saharan Africa for macroeconomists. Journal of Development Economics, 134, 350–371. https://doi.org/10.1016/j.jdeveco.2018.05.014 http://r-santaeulalia.net/pdfs/CrossSecSSA.pdf
39. Kojima, M., Zhou, X., Han, J. J., de Wit, J., Bacon, R., & Trimble, C. (2016). Who Uses Electricity in Sub-Saharan Africa? Findings from Household Surveys. https://doi.org/10.1596/1813-9450-7789 http://documents.worldbank.org/curated/en/967821470756082684/pdf/WPS7789.pdf
40. Water, Food and Energy | UN-Water. (n.d.). Retrieved August 16, 2019, from https://www.unwater.org/water-facts/water-food-and-energy/
41. https://unhabitat.org/books/state-of-african-cities-
2014-re-imagining-sustainable-urban-transitions/
42. OECD, & FAO (Eds.). (2018). OECD-FAO Agricultural Outlook 2018-2027.
43. IRENA. (2013). Africa’s Renewable Future. The Path to Sustainable Growth. Retrieved from International Renewable Energy Agency website: https://www.irena.org/documentdownloads/publications/africa_renewable_future.pdf
44. Watson, V. (2009). The planned city sweeps the poor away…’: Urban planning and 21st century urbanisation, Progress in Planning 72, 151–193.
45. United Nations. (2014). The State of African Cities 2014. Reimagining Sustainable Urban  Transitions. Nairobi: United Nations Human Settlements Programme,UN HABITAT.
46. https://www.businesslive.co.za/bd/opinion/2017-11
-20-changing-the-system-for-sustainable-development/
47. Africa Progress Panel. (2014). Africa Progress Report 2014. Fish, Grain Money: Financing Africa’s Green and Blue Revolutions. Africa Progress Panel.
48. World Bank: SMEs have $1.6tr clean tech opportunity | Eco-innovation Action Plan. (n.d.). Retrieved August 16, 2019, from https://ec.europa.eu/environment/ecoap/news/world-bank-smes-have-16tr-clean-tech-opportunity_en
49. Verdolini, E., Bak, C., Ruet, J., & Venkatachalam, A. (2018). Innovative green-technology SMEs as an opportunity to promote financial de-risking. Economics: The Open-Access, Open-Assessment E-Journal. Retrieved 25 August, 2019, from  https://www.g20-insights.org/wp-content/uploads/2017/04/05_Climate_Innovative-green-technology….pdf

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.