Solar Solution to Lack of Electricity in Africa

 

Electricity is critical to improving human development and living standards. Yet, for many in the global South, electricity is either non-existent or its provision is patchy, erratic, unreliable or expensive.

Just as Africa has been able to jump a generation ahead when it comes to communications through the mass adoption of mobile phones – a much cheaper option than trying to provide telephone wires and cables across the continent – so it could also bypass the burdensome costs of providing electricity mains to everyone by turning to smaller electricity generation technologies such as solar power. This is called “off-grid” electricity.

The UN has set the goal of universal access to modern energy services by 2030. A report issued in April 2010 by United Nations Secretary-General Ban Ki-moon’s Advisory Group on Energy and Climate Change (AGECC) calls for expanding energy access to more than 2 billion people (http://www.unido.org/fileadmin/user_media/Publications/download/AGECCsummaryreport.pdf).

The report found that a lack of access to modern energy services represents a significant barrier to development. Some 1.6 billion people still lack access to electricity.

A reliable, affordable energy supply, the report says, is the key to economic growth and the achievement of the anti-poverty targets contained in the Millennium Development Goals.

When a person has electricity and the lighting it powers, it is possible to do business and study late into the night. Electric lighting also makes streets and living areas safer. Electricity can power a plethora of labour-saving and life-enhancing consumer goods: televisions, refrigerators, vacuum cleaners, air conditioners and fans, washing machines, clothes dryers, computers. And electricity recharges that most essential item, the mobile phone, on which millions rely to do their daily business.

After witnessing the struggle African health clinics have to access electricity, a Nairobi, Kenya-based company has developed a simple solution to ensure a steady supply of solar electricity. One Degree Solar’s (http://onedegreesolar.com/) founder, Gaurav Manchanda, developed and sells the BrightBox solar-charging system for lights, mobile phones, tablet computers and radios.

He first gained experience working in the West African nation of Liberia with the Clinton Health Access Initiative (http://www.clintonfoundation.org/main/our-work/by-initiative/clinton-health-access-initiative/about.html). Working at the country’s Ministry of Health, he found most health clinics operated without electricity.

He identified solar power as the only viable energy source. Trying to deliver fuel to power generators by the road network had two impediments: the diesel fuel was expensive and the road conditions were poor.

After seeing that large solar-power systems required significant maintenance and upkeep, he started to explore the possibility of low-cost, and simple-to-use solar electricity products that would be useful to community healthcare workers.

This became the beginning of One Degree Solar and its mission.

The company’s main product is the BrightBox, a cleverly designed solar charger. A bright orange box with a folding, aluminum handle at the top for easy carrying, it switches on and off simply with a bright red button. It has a waterproof solar panel. The BrightBox has USB (universal service bus) (http://en.wikipedia.org/wiki/Universal_Serial_Bus) ports so that mobile phones and radios can be plugged in. It is also possible to plug in four lights at once with the four outports on the side of the box.

It meets the standards set by the Lighting Africa initiative (http://lightingafrica.org/specs/one-degree-brightbox-2-.html) of the International Finance Corporation and the World Bank.

One Degree Solar claim it is possible to set up a BrightBox in 10 minutes. When the indicator light has turned green, the box is fully charged and capable of providing 40 hours of light.

A full charge can power two light bulbs for 20 hours. Manchanda told How We Made It In Africa (http://www.howwemadeitinafrica.com/) that he has sold 4,000 units of the BrightBox since its launch in October 2012.

According to The Nation, the BrightBox is currently retailing in Kenya for Kenyan shillings 7,000 (US $82).

One Degree Solar’s product range is sold to local resellers and distributors. The products are designed to be repaired using locally sourced parts and can be fixed by local electricians.

Most of the sales so far have been in Kenya but the firm has also sold units to other countries.

Testimonials on the BrightBox website tell of the transformation to people’s lives the clean energy source makes: “BrightBox has helped us in so many ways! We used to spend 800 Shillings (US $9.50) a month for two paraffin lanterns. The fumes smelled and always made us feel sick.”

Manchanda is a strong believer in Africa’s potential and its future and dismisses those who are negative about the continent.

“That was not a holistic assessment, but rather, an unnecessary and damaging generalization,” he told How We Made It In Africa. “Fortunately, most news outlets in Africa are now available online and offer a wider range of perspectives. The middle class is booming in certain countries. We have seen the success of mobile phones in enabling people to access other services. I think hope and progress come with innovation. Technology access has helped create entirely new markets and reach populations that otherwise could have taken decades to service with traditional approaches.

“India was in a similar space 15 years ago before the Internet boom, and today parts of Nairobi (Kenya) are just like Delhi (India): people have a cell phone or two, there are large shopping malls, a booming middle class, and new construction everywhere.”

By David South, Development Challenges, South-South Solutions

Published: June 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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Kenya Reaches Mobile Phone Banking Landmark

 

Financial transactions and banking with mobile phones have been a Kenyan success story.

Now, one service, M-Shwari, has reached a significant milestone in the history of m-banking (mobile phone banking): it was able to record a billion Kenyan shillings (US $11,926,100) in savings deposits in a month after its launch in November 2012 and reached deposits of Kenyan shillings 2.8 billion (US $33 million) by February of 2013. This outstripped the Kenyan shillings 378 million (US $4 million) in loans lent by the service, reports Daily Nation.

M-Shwari is a mobile phone banking product that allows people to save and borrow money by phone and earn some interest too. The service offers small emergency loans to customers, offering a financial lifeline to people who would have been frozen out of financial services in the past.

There is no need to have any contact with a bank or bother with paperwork. And loans are instant because they are small.

Safaricom Chief Executive Officer Bob Collymore told the Daily Nation “Trends show that it has become more of a savings service than a lending service. This is what we intended since the beginning.”

As of February 1.6 million customers had used the service.

On top of this success, the pioneering M-PESA (http://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/relax-you-have-got-m-pesa) mobile phone banking platform developed in Kenya by Safaricom is set to roll out across India and help bring banking services to the country’s 700 million “unbanked.”

Both these developments are solid proof that innovation aimed at drawing in the poor into the mainstream economy not only works, it is profitable and exportable.

M-Shwari (http://www.safaricom.co.ke/personal/m-pesa/m-shwari/m-shwari-faqs) works like this: a customer can save as little as one Kenyan shilling to receive an interest rate of up to 5 per cent. If they want a loan, then they can borrow from 100 Kenyan shillings (US $1.19) to a maximum of 20,000 Kenyan shillings (US $238) for a processing fee of 7.5 per cent which will need to be paid back after 30 days.

By offering greater access to loans, M-Shwari s increasing competition in the banking sector and giving customers a choice.

It joins an ongoing revolution in access to credit for the poor. Powerful mobile phones enable individual depositors and businesspeople to organize their financial affairs and business needs on the phone. This is a revolutionary development in many places where people previously had to contend with poor access to financial services – or no access at all.

M-Shwari and products like it allow people to borrow, save and conduct transactions with family, friends, business partners and customers over their mobile phones.

M-Shwari is a collaboration between Kenyan telecoms company Safaricom and the Commercial Bank of Africa. It is being hailed as an example of how banks and telecommunications companies can cooperate to offer innovative financial products to the country.

For the unbanked in India, the initiative between Vodafone India (https://www.vodafone.in/pages/index.aspx) and ICICI Bank, India’s largest private bank, has started to roll out the Kenyan M-PESA mobile phone banking platform in India as of April 2013. They are hoping to open up access to banking to 700 million Indians who currently do not have bank accounts or access to banking facilities. The rollout starts in the country’s eastern regions of Kolkata and West Bengal (CNN).

It looks like access to banking services for the poor in the global South will soon undergo radical change with these large-scale initiatives.

By David South, Development Challenges, South-South Solutions

Published: May 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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Online Education Could Boost African Development

Education is recognized as a major catalyst for human development. During a high-level meeting on the Millennium Development Goals (MDGs) (http://www.undp.org/content/undp/en/home/mdgoverview.html) in 2010, UNESCO – the United Nations Educational, Scientific and Cultural Organization – pointed out the necessity of making rapid gains in education if all the MDGs are to be achieved. The goals deadline is 2015 – just two years away.

Two of the eight goals are directly related to education systems. MDG2 focuses on boosting universal primary education by 2015, and MDG3 calls for the elimination of barriers to primary and secondary education for women and girls.

UNESCO found that between 2000 and 2007, the share of total government education expenditure devoted to primary education across sub-Saharan Africa fell from 49 per cent to 44 per cent (Rawle, 2009). It also found total aid for education was on the decline and foreign aid for basic education began to stagnate in 2008. This contrasted, UNESCO stated, with the “strong advances made over the past decade.”

Overall, in the countries of sub-Saharan Africa, resources for education fell by US $4.6 billion a year on average in 2009 and 2010 (UNESCO, 2010).

With funding for education dependent on fluctuating factors such as foreign aid, government budgets and the state of the global economy, alternatives are needed to retain the gains made in education and to improve them even further.

Thankfully, one new innovative learning tool, dubbed massive open online courses (MOOCs) (http://en.wikipedia.org/wiki/Massive_open_online_course), is about to have a major impact in Africa. Rapid improvements in access to the Internet in Africa means that online learning tools could be a growing solution to the education deficit.

MOOCs mean people will have access to a global treasure trove of free online courses in science, technology, engineering and math. Many believe the leapfrog into digital education will do for education what mobile phones have done for African’s ability to communicate and do business.

These online courses vary in approach – some have set start and finish dates and can last from six to 10 weeks, while others are more loosely structured. But they all offer students the ability to learn from online video lectures and use online forums as a replacement for seminars, debates and question-asking.

According to a recent paper by Harvard University Professor of International Development Calestous Juma, “There is a real possibility for Africa to dramatically improve its teaching – especially in science, technology, engineering, and math – through the deployment of MOOCs.”

The diffuse nature of the Internet means many of the drivers behind promoting this trend in Africa will be found at the regional rather than the national level. The Internet helps remove the dependence on national governments and their education policies and funding – or lack thereof – to further education goals. This means the ability to make the most of the powerful new resource of MOOCs will be amplified by innovators within Africa, from entrepreneurs to information technology pioneers.

Their solutions will help make it easier to access these learning resources.

MOOCs are a variation on OpenCourseWare (http://en.wikipedia.org/wiki/OpenCourseWare) university courses, created for free distribution on the Internet. MOOCs bypass the hazard in the past of digital courses going missing or being mislaid: they are online and always available. Nobody can mislay the content by accident.

The Khan Academy (khanacademy.org) is one of the best-known popular MOOCs pioneers. It was founded in the United States in 2008 by Salman Khan, who quit his job as a hedge fund manager to run the business full time. Khan is academically highly accomplished – he has three degrees from MIT and an MBA from Harvard University. The Khan Academy targets mainly secondary school students and claims to have 5.5 million unique users a month. It is run as a not-for-profit and receives donations to keep it going.

It does this with a staff of just 37: proof of how much can be achieved when the power of the Internet is leveraged to pass on knowledge.

The Khan Academy platform greets readers with questions such as “What is the eccentricity of an ellipse?” or “What if there’s a negative exponent?” And if you do not know, you better get cracking doing their problem sets. Students can practice their math skills, answer other students’ questions or watch a video walk-through of the services on offer on the website. The main categories are math, science and economics, computer science, the humanities and help with preparing for various standardized tests such as the GMAT (Graduate Management Admission Test). There are over 4,000 videos on offer on the website.

“Each video is a digestible chunk, approximately 10 minutes long, and especially purposed for viewing on the computer,” the website states.

“I teach the way that I wish I was taught. The lectures are coming from me, an actual human being who is fascinated by the world around him,” states Khan.

MOOCs offer not just course materials, videos, readings and problem sets but also discussion forums for the students, professors/teachers and tutorial assistants to build a community. This is considered an ideal model for reaching students over great distances and in remote regions. So-called “open” educational resources are used and often no fees or tuition are charged.

The OpenCourseWare (OCW) (http://ocw.mit.edu/index.htm) project at the Massachusetts Institute of Technology (MIT) seeks to “publish all of our course materials online and make them widely available to everyone,” according to Dick K.P. Yue, Professor at MIT’s School of Engineering.

Through its website, it offers nearly all of MIT’s course content, a treasure trove from one of the top research universities in the world, a long-standing home for pioneers and innovators in science and technology.

By way of the Internet, anybody anywhere in the world can access this resource. The most visited courses online as of February 2013 included undergraduate “Introduction to Computer Science and Programming,” “Physics I: Classical Mechanics,” “Introduction to Electrical Engineering and Computer Science I,” “Principles of Microeconomics,” “Introduction to Algorithms,” and “Principles of Chemical Science.” There are 2,150 courses and so far 125 million visitors to the website.

Having access to the courses allows teachers to gain new insights into the subjects they teach and benefit from the impressive resources of MIT.

MIT also sees it as a way to aid people to tackle the big development issues of our time, including climate change and health problems such as cancer.

Other MOOCs providers include Peer-to-Peer University (https://p2pu.org/en/), Udemy (udemy.com), Coursera (coursera.org), Udacity (udacity.com), and
edX (edx.org), a not-for-profit partnership between Harvard and MIT to develop courses for interactive study on the Internet.

In the United Kingdom, the Open University (open.ac.uk) and Futurelearn (http://futurelearn.com/) also offer online courses, as does Open2Study (http://www.open.edu.au/open2study) in Australia.

Boosting access to MOOCs presents a great business opportunity for Africa’s mobile phone entrepreneurs and its mushrooming information technology (IT) hubs (https://africahubs.crowdmap.com/).

“I view online learning as a rising tide that will lift all boats,” Anant Agarwal, professor of electrical engineering and computer science at MIT and president of edX, told The Financial Times. “It will not only increase access, it will also improve the quality of education at all our universities.”

All of this matters because it means Africans will increasingly have the tools to participate in the global marketplace of ideas and products and services on a more level playing field. By far the biggest obstacle to competing is the lack of timely information and knowledge about what is happening in the global economy. It is a frequent complaint, from the farmer desperate for the latest news on market prices and trends and innovations, to the strivers in the growing megacities of the continent who have their sights set on global success.

By David South, Development Challenges, South-South Solutions

Published: April 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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Slideshare: http://www.slideshare.net/DavidSouth1/development-challenges-april-2013-issue

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Preserving Beekeeping Livelihoods in Morocco

The clever combining of tourism and long-standing beekeeping skills has revived a local craft and is also helping to preserve the ecology of Morocco.

Beekeeping, or apiculture (http://en.wikipedia.org/wiki/Beekeeping), has two clear benefits. Bee products, including honey, beeswax, propolis, pollen and royal jelly can be a valuable source of income. The other benefit is the critical role bees play in the ecology by pollinating flowers and plants as they go about their daily business.

Bees are at risk around the world, as reports of the dying-off of bees from colony collapse disorder (http://en.wikipedia.org/wiki/Colony_collapse_disorder) raise concerns about the impact on the earth’s ecology and plant life should bees disappear.

North Africa and the Middle East are considered the cradle of beekeeping, with records showing beekeeping going back to 2400 BC in Egypt. According to “A review of beekeeping in Arab countries” by Moustafa H. Hussein, “The total number of honey bee colonies in Arab countries is approximately 42 million, the total number of beekeepers is 321,700”.

In the paper “The Future of Bees and Honey Production in Arab Countries” by Moustafa A. EL-Shehawy, Egypt has the largest number of bee colonies in Arab countries (48 per cent), with Algeria in second place and Morocco with 9 per cent of the bee colonies.

Support for beekeeping comes from the Arab Beekeepers Union (http://abu.saudibi.com/index.php?page_id=115), which was established in 1994 with the aim to improve “the beekeeping profession all over the Arab World”, according to its website, and the Arab Apicultural Congress, first launched in 1996.

Beekeeping has significant potential for further development, many argue, and can be a great source of income and sustainable livelihoods for communities with a long history of beekeeping.

In Morocco, one solution to preserve beekeeping as a skill and source of income is to turn beekeeping into a tourist destination and event, which has the dual aim of boosting a local food product and reviving a traditional craft and skill.

The Berber heartland of the Agadir region is an area with a reputation for beauty, filled with waterfalls and mountains – and plentiful flowers, which attract bees. As a result, the area is home to the proud local specialty of honey, as well as for its argan nuts and oil, almonds, palm, juniper and olive production.

Now a “Honey Road” route for tourists, combined with community honey festivals, is helping preserve local skills and give a boost to this long-standing economic activity.

Beekeeping is a centuries old skill for the Berber people of North Africa. Berbers (http://en.wikipedia.org/wiki/Berber_people) are spread out across North Africa and were traditionally nomadic herders. Most now live in Morocco and Algeria, but Berbers can also be found in Tunisia, Libya, Mauritania, Mali and Niger.

Starting at the beginning of May, a honey festival takes place in the Moroccan village of Imouzzer des Ida Outanane (http://en.wikipedia.org/wiki/Imouzzer_Ida_Ou_Tanane), 60 kilometres from Agadir.

The honey festival brings together the region’s beekeepers. Tourists can sample honey and prizes are offered based on the quality of the product. It is part of the “Honey Road” route that tourists are encouraged to journey along.
The villagers share responsibility for the care of the bees. Demonstrations take place showing the basics of honey production and the keeping of queen bees.

A few kilometres away on the Honey Road is the village of Izourki Oufella, which produces honey perfumed with thyme and lavender.

The Honey Road runs a triangular pattern south and west of Marrakech between Argana, Oued Tinkert, Asif Tamraght, Agadir and Imouzzer. Argana is reputed to have the “largest and oldest collective beehive in the world” (http://www.morocco.com/blog/tantalizing-tastes-of-the-honey-festival).

Abdelhakim Sabri, owner of Auberge Zolado (aubergezolado.com) – a hilltop hotel with a restaurant and spa – is located in Agadir on the Honey Road.

Sabri works to preserve local culture. “Rural beekeepers struggle, so we’re introducing visitors to apiculturists like Ahmed – and Morocco’s finest honey,” he told High Life magazine.

Ahmed is a Berber beekeeper. He builds cylindrical hives for the bees by rolling sheets of woven reed and then caking them in earth. When the earth has dried, the bees quickly make it their home.

The region’s honey is prized for its distinctive flavour, infused with the aroma of herbs such as thyme, or flowers such as lavender, orange blossom or cactus. A mixture is made of honey, argan oil and almonds and is usually given to couples on their honeymoon.

“Different flowers bloom during different periods, so honey changes through the year,” said Sabri.

It sounds like the Honey Road is worth regular visits to sample the honey as it changes with the seasons!

By David South, Development Challenges, South-South Solutions

Published: April 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=8vNcAwAAQBAJ&dq=development+challenges+april+2013&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challenges-april-2013-issue

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Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

The first five issues of Southern Innovator. The highly influential magazine was distributed around the world and each issue was launched at the annual Global South-South Development (GSSD) Expo hosted by the United Nations Office for South-South Cooperation (UNOSSC).

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Global South’s Middle Class is Increasing Prosperity

The global middle class is on the rise – and this is creating both challenges and opportunities. As poverty rates have come down across the global South, many countries have seen a rise in the proportion of their population categorized as “middle class”. Globally, being middle class is defined as a person able to consume between US $4 a day and US $13 a day (ILO).

According to the Organization for Economic Cooperation and Development (OECD), most of this growth will be in Asia and the region will soon make up 66 per cent of the world’s middle class. Historical experience shows that members of the middle class quickly become absorbed in spending their accumulated capital on housing, equipment, industry and business, health and education. In countries with a growing middle class, policy makers need to show a strong interest in creating stable economic conditions to encourage this expanding consumption and domestic demand, the OECD advises.

Growth of the world’s middle class took off after 2001, with an additional 400 million workers joining this group. The McKinsey group of consultants found the total number reached 2 billion in a dozen “emerging nations” in 2010, collectively spending US $6.9 trillion every year (McKinsey).

Forecasters predict a further increase in the middle class across the global South will bring with it a surge in consumption (a combination of spending and demand). Areas being highlighted by various studies and reports include China’s small and mid-size cities, other areas of East Asia and Africa.

Middle class spending in these dozen emerging nations could reach US $20 trillion during the next decade – twice the amount of consumption occurring in the United States right now (McKinsey).

The result is a re-shaping of populations, with growing numbers of people now neither rich nor desperately poor, but landing in the middle of the income distribution.

And local competitors in the global South are fighting hard for these consumers on their own turf.

The Hangzhou Wahaha (http://en.wahaha.com.cn/) beverage maker in China has been able to compete against multinationals such as Coca-Cola and PepsiCo, according to McKinsey. It has turned itself into a US $5.2 billion business using a multi-pronged strategy: targeting rural areas, catering to local needs, keeping costs low and positioning itself as the patriotic choice.

And this change is also occurring in Africa, where a growing middle class is fuelling sales of refrigerators, television sets, mobile phones, motors and automobiles across the continent, according to the OECD. In Ghana, for example, car and motorcycle ownership has risen by 81 per cent since 2006.

According to the African Development Bank (AfDB), Africa’s middle class has reached 34 per cent of the population, or 350 million people. In 1980, it was 126 million people, or 27 per cent of the population.

Countries with the largest middle classes in Africa include Tunisia and Morocco, while Liberia and Burundi have the smallest number of people in the middle class.

The economic growth that is fuelling this middle-class surge is coming from a combination of increasing investment in the services sector, the tapping of the natural resource sector and better economic policies in the past two decades. Africa’s middle class is driving growth in the private sector and boosting demand for goods and services, most often also provided by the private sector.

“The liberalization of African economies has resulted in improved efficiencies and led to a rapid growth in the service sector, which has spurred the growth of the middle class,” Lawrence Bategeka, a principal researcher at the Uganda-based Economic Policy Research Centre, told The East African newspaper.

How important the middle class is to increasing consumption levels can be seen in the cases of Brazil and South Korea.

According to the OECD, both countries had similar income levels and growth rates in the 1960s. But by the 1980s, high income inequality in Brazil capped the middle class at 29 per cent of the population. In South Korea in the 1980s, the middle class population reached 53 per cent. This larger middle class population enabled South Korea to switch from an export-driven growth strategy to domestic consumption.

While Brazil wasn’t able to do this at the time, it has since made impressive gains in reducing poverty – from 40 per cent of the population in 2001 to 25 per cent in 2009. This has seen the middle class grow to 52 per cent of the population and boosted domestic consumption.

While a rising middle class in the global South is good news for improving human development and living standards, the OECD found much of the new middle class was vulnerable and could easily slip out of that category. They also often lacked enough income to purchase more expensive durable goods such as automobiles (OECD Yearbook 2012).

The success of this fragile but growing middle class will be key to how well the global economy fares in the coming years.

A new report by the UN’s International Labour Organization (ILO) argues that the global South’s growing middle classes are just the thing to spur growth across the wider world economy.

“Over time, this emerging middle-class could give a much needed push to more balanced global growth by boosting consumption, particularly in poorer parts of the developing world,” said Steven Kapsos, one of the authors of the report.

In Indonesia, an example of the economic impact of the middle class trend in action can be seen in the surging life insurance business.

Association of Indonesian Life Insurance Companies (AAJI) chairman Hendrisman Rahim believes the growing middle class are potential customers for the country’s thriving life insurance industry.

“They are the ones who have the need to be insured and can afford to purchase a policy. Extremely rich people are financially capable [of buying], but may not have the need. Extremely poor people have the need, but require financial assistance to be insured,” he said to the Jakarta Post.

As the Indonesian middle class increases, the life insurance industry is expecting to see revenue rise by 30 per cent in 2013.

By David South, Development Challenges, South-South Solutions

Published: February 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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