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Nigerian middle class: A myth?

Filed under: Analysis,Intelligence |

For some time now, almost everybody has been obsessed with Nigeria’s middle class. There is no denying that the per capita income increased close to 75 per cent to US$1,541 in 2011 from US$390 in 2000, reflecting the dividends of rapid economic growth over the past decade. In this period, economic growth not only elevated millions of people out of poverty, defined globally as less than US$1.25 a day, but also parked them into a more secured income-class.

Economists’ categories the definition of middle class into two broad heads; relative and absolute terms. In relative terms, individuals or households that fall between the 20th and 80th percentile of the consumption distribution or between 0.75 and 1.25 times median per capita income, respectively.

Who represents the Nigerian middle class? African Development Bank (AfDB) used an absolute definition of people whose daily consumption is between US$2 and US$20 (in 2005 PPP) daily to characterize the middle class in Africa. The definition is based on the average cost of living of about 1 billion people in the continent. Population spending between US$2 –US$4 a day is considered as ‘floating class’, vulnerable enough to slip back to poverty. The remaining population earning between US$4 and US$20 a day is categorized as ‘stable’ middle class.

Given the World Bank’s global absolute poverty line of US$1.25 per day, the minimum average of middle-class as defined by AfDB appears too low. Moreover, in the Nigerian context, the daily spends on all the essential needs including accommodation, food, transportation, health and education works out to be over US$12 a day. Thus, the middle class has to spend anything above that. More suitably, the Nigerian middle class consumes between US$12 and US$20 a day, i.e., their disposable income boils down to US$360 – US$600 a month, which translates to N57, 600 – N96,000 a year.

AfDB estimates that close to 123 million Africans fall in the category of stable middle-class, i.e., people earning US$4 -US$20 a day and Nigerian middle class accounts for 12.9 million or 10.5 per cent of the continent. Nigerian middle income class accounts for 8.1 per cent of the total population of Nigeria. The floating class in Nigeria is estimated at 9.9 million or 6.2 per cent of the total population of the nation.

Where does this overdose of statistics lead us to? Nowhere.

As rightly said by Ron DeLegge II, “99 per cent of all statistics only tell 49 per cent of the story”; so, is the case with Nigerian middle class. Let’s not myopically restrict the definition of middle class to the middle third of the country. In socio-political terms, middle class is that segment of the society which is economically secured, upholds the rule of law, invest and desire stability.

Economic security implies that a household is cushioned against the catastrophic spell of downturns of the normal business cycle. The household is either secured through savings or by virtue of formal insurance. The household is equipped financially to see through a brief period of unemployment without having to sell its house or withdraw its children from school.

Falling back on statistics, World Bank estimates that over 80 per cent of Nigerians live in informal housing structures in major urban areas or traditional villages on which they have no ownership rights. Is there still room for selling of houses in dire needs when the Nigerian middle class does not own one? As per media sources, the country has a housing deficit of 17 million units as investment in housing accounts for only 0.4 per cent compared to the global average of 15 per cent – 35 per cent.

The lamentation continues with Nigeria being home to the highest number of school dropouts of 10.5 million. Adult illiterates are estimated at 35 million or close to 22 per cent of the population. The sadder part is that illiterate adults have increased by 10 million over the past two decades as per World Bank.

Economic security according to Dr. Nancy Birdsall, founding President of Center for Global Development, is associated with individuals getting entrepreneurial and exploring business opportunities since they are comfortably taking care of their basic needs. With the rising unemployment rate to 23.9 per cent in 2011 from 21.1 per cent in 2010, as revealed by National Population Commission (NPC), economic security appears a far cry for the nation. Nigerian economy is growing without an iota of doubt but the growth is not translating into jobs. This could possibly be a repercussion of stagnation of Small and Medium Enterprises (SMEs) which fuel job creation for unskilled labour. This adds close to 2 million to 4 million unemployed youth every year, which equals the total population of Congo Brazzaville.

To be continued next week….

By:  Ruchi Gupta

8 Responses to Nigerian middle class: A myth?

  1. Clever. Intelligent. Thank you for writing this.

    Tosin
    January 19, 2014 at 2:04 pm
    Reply

    • Thanks for your encouraging words !

      Ruchi Gupta
      January 27, 2014 at 4:12 pm
      Reply

  2. This is a vexed issue.But as usual it lacks a dose of reality.Looking through the analysis most of the figures were rendered in dollars.In effect therefore the writer was talking about a dollarized Middle Class.So it would have been more realistic to render the figures in Naira.True a number of Nigerians live in informal housing and in the process they have given some validity to the contentions of Hernando Soto who wrote the Mystery of Capital.However let the debate continue for any society without a coherent and large middle class cannot be democratic.Courtesy of SAP, Nigeria’s middle class was destroyed

    Kayode Soremekun
    January 20, 2014 at 5:04 pm
    Reply

    • Thanks for your critical comments. Point taken, in my future writings, I would try and include the numbers in local currency, where possible.

      Ruchi Gupta
      January 27, 2014 at 4:15 pm
      Reply

  3. The analysis is interesting.However the (Band) chosen especially the lower band of $360 a month seems too low to define what a middle class should be.At 160 Naira to the Dollar this works out at N57,600.00 Naira per month.

    Ade Joe
    January 22, 2014 at 8:28 pm
    Reply

    • Thanks for reading ! The band of $12 (N1,9210)- $20(N3,200)was arrived at after factoring in food, dwelling and transportation need of an individual on a daily basis. Moreover, the ‘below poverty line’ is defined at $1.25 (N200) per day by the World Bank. Keeping the above two facts, the band was arrived at.

      Ruchi Gupta
      January 27, 2014 at 4:21 pm
      Reply

  4. Nigeria “middle class” is a myth. Nigeria lacks basic infrastructures upon which middle class anywhere rides on. Most of the Nigerian “middle class” are civil servants and some from the banking sector. These as a whole is not up to 18% of the entire work force. Most of their spending comes from corruption,money collected in the form of bribe, i.e diverting money from government into their accounts, collecting penalties, agency levies and submitting less or non at all. The worst is that these Nigeria Middle Class are the least productive no matter how you measure it. Once they leave their job, they fell to the worst bottom in poverty within a month. In Nigeria, you have about 2% super corrupt rich and the rest wriggle in and out of survival struggle.

    onuigbo
    January 30, 2014 at 11:13 am
    Reply

  5. U said disposable income boils dwn to $360-$600 a month and translates to N57,600-N96,000 a year. Its sppsd to be a month or N691,200-N1,152,000 with conversion of $1-$160

    Bala
    February 5, 2014 at 9:51 am
    Reply

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