Signs you’re officially middle class

The fact that Ann* and her fiancé had modest jobs did not stop them holding a colourful wedding. The two had resolved nothing would stand in the way of a show of extravagance.

With contributions from their church, relatives, friends, savings and her fiancé taking a personal loan, they raised Sh1 million for a ceremony that would occupy prime time on one of the popular wedding shows on television.

They had the motorcade of posh cars, the fancy location, the bride decked out in an expensive gown and flanked by a bevy of beautiful bridesmaids, and the wide selection of food and drinks. To add icing on the cake, they were able to afford a honeymoon at a luxury holiday resort.

“Everyone is having such flashy weddings, why shouldn’t we? It is the in thing,” Ann told Business Beat.

Though she does not think so, she likely got the idea that “everyone” is throwing lavish ceremonies from the pervasive wedding shows. And the high-flying lives chronicled in painful detail on social media.

“Consumerism,” said XN Iraki, an economics lecturer at the University of Nairobi, in a past article, “is on the rise and is driven by media.”

Spending more

This consumerism is spawning a class of individuals like Ann who are propping up their spending using loans, but are still captured in reports as part of the country’s growing middle class.

People are spending more in a misguided attempt to keep up with the Joneses. This kind of conspicuous consumption has been brought about by average citizens being more exposed to the excesses of the rich and famous.

Of course, this has led to ubiquitous debate on who warrants being classified as middle class.

Economists suggest it is not just about income.

Take, for instance, the case of Jacky Nduta, a financial analyst in one of the leading insurance firms in Kenya. She would have no difficulties funding a Sh1 million wedding from her bank account.

With an annual income of more than Sh10 million, and substantial savings and investment income, such spending would not leave Ms Nduta struggling or borrowing to maintain her lifestyle.

A bachelor of commerce graduate from the University of Nairobi and a certified accountant from Strathmore University, Nduta wears nothing but designer clothes from high-end boutiques in Nairobi’s upmarket malls.

Over the weekend, she dines at swanky hotels. When Business Beat caught up with her for lunch at a hotel in Nairobi one afternoon, there was no trace of incredulity as she read through the lengthy list of pricey, exotic dishes on the menu. Our meal was rather light, yet she forked out Sh6,000 for it. And she did not appear startled by it.

A ‘real’ middle class individual, in addition to having enough money to fund a rather lavish existence, is also educated, urbane and independent.

“To be middle class, you are supposed to behave in a certain way, from your attire to the language used. Your interactions with others when making merry or grieving should stand out,” said Dr Iraki in an interview.

Social trappings

Indeed, sustaining the social trappings that come with the middle class recreational lifestyle requires financial might.

“It [being middle class] is economic because of your income and asset ownership,” said Iraki.

For too many people, however, keeping up with the competition requires taking loans.

The World Bank puts the middle class individual’s or household’s daily income at between $10 and $50 (Sh900 and Sh4,500) per person per day. This works out to an average income of Sh27,000 to Sh140,000 a month.

On the other hand, the African Development Bank (AfDB) defines middle class as anyone living on between $2 and $20 a day (Sh180 and Sh18,000) — putting the middle class at 34 per cent of Africa’s population, or nearly 350 million people.

Some might argue that with a monthly salary of more than Sh800,000, Nduta is above middle class, and firmly in the upper class.

However, she is not upper class, as these definitions are not purely about money. Unlike those in this income category, Nduta derives her income from insurance commissions (wage labour) and not from money management and savings.

Also, unlike upper class individuals, she neither wields political influence nor was she born into nobility.

Nduta’s lifestyle, according to an AfDB report, bears all the markings of a middle class individual or household.

These include a tendency to “reside in big and more permanent dwellings equipped with modern amenities, widespread ownership of major household durable goods such as refrigerators, telephones and automobiles, salaried jobs, and smaller families.”

Get noticed

Iraki agrees. A middle class individual, he says, “lives in a suburb where there is power, sewerage and water, even if he or she is paying rent.”

He adds that a middle class individual can fuel his or her car for an entire month, afford to eat out, pay for cable TV, shop in a supermarket and has no school fees arrears.

This kind of person “also believes things can only get better through his or her own efforts”.

This kind of lifestyle is arguably beyond the reach of the average Kenyan.

But that has not stopped most from borrowing or holding back on savings and investment to buy cars, huge TVs, fancy clothes and other things that will get them noticed, creating the illusion of an expansive middle class.

That many Kenyans are taking up debt to break into the middle class party is not entirely their fault. The allure of this group’s lifestyle has been romanticised. Further, it is now easier to access credit to wedge your way into it.

Kenyans are today inundated with their pick of luxury global brands, thanks to an improved telecommunications sector, particularly social media.

According to the 2014 Economic Survey released by the Kenya Bureau of Statistics, the number of Internet subscriptions rose significantly from 8.5 million in 2012 to 13.3 million last year.

Mobile phones have also made going online easier, with the mobile subscriber base increasing from 30.4 million in 2012 to 31.2 million in 2013.

Scenes of foreign and local celebrities flaunting designer clothes and other fancy global brands are all around us. It is impossible to ignore advertisements urging purchase of the latest smartphone or mouth-watering fast food, whether in public transport, at the roadside, or on TV and radio.

Consumer goods stores are on every street corner and in estates. You can now buy products without stepping outside, and many businesses offer free delivery. Consumption at the click of a button.

We cannot help but try to fit in with those we think are doing better than we are. That is why, according to Iraki, ours is an “aspirational middle class”.

Floating class

Further, though AfDB painted a rosy picture of Africa’s growing middle class, it found that about 60 per cent of those in this income level fall in the “floating class”.

An individual or household in the floating class has a per capita consumption level of between $2 and $4 (Sh180 and Sh360) per day.

The floating class, according to the bank, “remains largely vulnerable to slipping back into poverty in the event of some [external] shocks.”

Kenya’s floating middle class, noted AfDB, is at 44.9 per cent, and without them, the country’s middle class would be at a low 16.8 per cent.

Further, the World Bank notes that less than 2 per cent of Kenyans can spend between $10 and $20 a day (Sh900 and Sh1,800), with 45 per cent of the working population earning $1.25 a day (Sh110).

But still, brands we once only saw on TV are setting up shop in Kenya. We already have American firms KFC, Cold Stone Creamery and Domino’s Pizza, as well as South Africa’s Ocean Basket and Steers, among others.

Retail giants Walmart (through South Africa’s Massmart) and French retailer Carrefour have booked space at upcoming malls.

This, it has been reported, is being driven by Kenya’s ‘burgeoning middle class’.

But, as audit firm Deloitte put it in a recent survey, this “rise and rise of Africa’s middle class” might be nothing more than a “construct” or “myth”.

Alex Owiti, a director of the East African Institute and professor at Aga Khan University, agrees that the growth of the middle class, though real, has been “romanticised”. Kenya’s middle class, he said, is “small, pretty broke and not growing as fast”.

Instead, Dr Owiti said, what is growing rapidly is the rank of the “educated underclass.”

Also growing is debt-driven consumption, with “personal unsecured loans increasing access to cash to non-investment spending, such as weddings, vacations, home improvement and purchase of automobiles”.

Seemingly, the social aspects of a middle class lifestyle — for instance, having a tertiary education — have outpaced its economic aspects, such as having a salaried job.

And so we have individuals who have been programmed to live a middle class lifestyle without the money to sustain it.

People are buying cars they cannot fuel, renting apartments in the right neighbourhoods that are gobbling up more than half their salaries, and have smartphones but cannot afford to purchase airtime.

In other words, Kenya’s middle class can be loosely described as a ‘petite bourgeoisie’. This French term refers to “a social class comprising semi-autonomous peasantry and small-scale merchants whose politico-economic ideological stance is determined by reflecting that of ‘haute (high) bourgeoisie’, with which the ‘petite bourgeoisie’ seeks to identify itself ...,” according to online sources.

Domestic demand

Geographer and freelance cartographer Jacques Enadea had this to say about the African middle class: “[They] have cell phones and email addresses but many can’t afford healthcare insurance. They own a car but sometimes need to save for weeks to have it fixed. They speak multiple languages but they won’t be able to pay for their children’s education.

“Whatever bracket they fall into, these are people who represent the bulk of African middle classes.”

Still, the need to expand the middle class cannot be overstated.

An expanded middle-class, noted AfDB, is not only associated with “better governance, economic growth and poverty reduction”, but it also holds the key “to re-balancing [an economy] towards more dependence on domestic demand and away from a heavy reliance on exports.”

But we do not need a middle class that simply consumes just for the thrill of it, because as Iraki notes, “we cannot drive an economy through consumption only, investment is needed”. This investment, he notes, comes from savings.

Essentially, we need to first cushion our precarious floating middle class from sliding back into poverty and into the lower middle class.

“We only spend what we earn, and without a surplus to invest, this floating group can easily slide back into poverty,” said Iraki.

To prevent this, he recommends the use of Government subsidies and social networks, as well as sufficient pension savings, which would push this class up a higher rung to the lower middle class.

The lower middle has a sense of economic security and no longer has to worry about sliding back into poverty.

According to AfDB, this sub-category has a per capita consumption of between $4 and $10 a day. Individuals in this group are “able to save and consume non-essential goods”.

“This is the group we need to grow to ensure social and economic stability,” said Iraki.

The other important thing Kenya’s middle class needs to do is keep track of spending. Most people are unaware they are being frivolous with their money and consuming more of it than necessary.

Tracking expenditure helps one know what to cut back on to grow savings, and consequently, investments.

*Not her real name.

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