Middle Class – Myth or Reality? [analysis]

Experts divided on middle class status and who qualifies to be in that group

Barely in his mid 30s, Allan is the proprietor a high-end boutique at Garden City that deals in the latest outfits. The majority of his clients are ‘corporates’ who can afford to buy an average shirt at Shs 400,000 or a suit Shs 6 million. Indeed, his shop attracts Kampala’s top elite with high-paying jobs – or what he describes as the ‘middle class.’ Every weekend, Allan takes off time to patronise some of the top ‘middle-class’ hangouts in Kampala such as Big Mike’s and Sky Lounge etc to network with some of his clientele. Also, he lives in a posh apartment in Kiwatule with his wife and two kids, drives a sleek car, but he wants to own a brand new Mercedes and a bungalow before he is 40 years old.

Allan is part of a growing social group that has started to cause excitement among government development planners as an indication of development. According to The Poverty Status Report 2014 – a survey compiled by Ministry of Finance, Planning and Economic Development – Allan is part of the 37% of Uganda’s population that are said to be in the ‘middle class.’ The report says 2.6 million Ugandans have acquired middle class status in the last three years alone. But other experts disagree.

Traditionally, the term ‘middle class’ was used refer to the group of people who fall socio-economically between the working class and the upper class (nobility). But the African Development Bank defines the ‘middle class’ as a group of people who earn between the minimum threshold of $4 a day and a maximum of $20 a day. The majority in this group are driven by the desire to spend their money because they want to live large and enjoy the luxuries their incomes can afford them. Due to this compulsive spending culture, there is increasingly less money to save and even less to invest – a situation some economic experts call ‘a rat race.’

James Muwonge, the director of Social Economics Surveys at the Uganda Bureau of Statistics (UBOS) says the best way to ascertain middle class status is by looking at people’s consumption habits.

Joseph Enyimu, the acting commissioner for Economic Development Policy and Research at Ministry of Finance, says that the ministry uses the standard international definition for the middle class to define the people in the said category. “If your income is twice or above the poverty level, then one automatically belongs to the middle class,” he says. According to the ministry, middle class is used to define households while the term ‘middle income’ is the generic term for nations whose population is majorly in the upper middle class. This is in line with Vision 2040, a policy document – a blue print for Uganda’s economic prospects aimed at making it a middle income nation by the year 2040.

Experts disagree

However, Prof. Augustsus Nuwagaba, a poverty alleviation expert, says Uganda hardly has a middle class to speak of. “Uganda has a 68% subsistence economy and the other 32% is what constitutes a monetary economy. But even of those 32%, some 90% live in Kampala. Outside Wakiso, there is nothing really,” he says. He adds that Uganda is a highly peasant economy although it is growth rate is very impressive and that with entrepreneurship and business, Uganda can grow its middle class. “We are still a very small economy but people are always starting up businesses. This high level of business start-ups is important because it is the driver of a g middle class formation,” he adds. Gideon Badagawa, the executive director of the Private Sector Foundation Uganda (PSFU), an umbrella organisation for the business community, appears to share Nuwagaba’s view.

He says in spite of these strides made, Uganda is still in the “economic dark ages.” He says with a tax GDP ratio of 11%, even by East African standards, Uganda is below average. “For anyone to qualify to be a member of the middle class, they should be able to purchase with their income, save some and even be able to invest. Even the number of people who are able to purchase and to consume goods and services is way too low.”

Badagawa explained that of the population of 35 million Ugandans, there is just a labour force of 14 million people and the private sector has not more than four million. “How many people earn Shs 1 million net in a month? They are very few,” he says.

He says any talk of a middle class society in Uganda is premature because a lot of people cannot even afford the bare minimum such as access to clinics, safe water and school fees – a category that comprises 60-70% of the population. He stresses that a member of the middle class is someone with access to a certain quality of life – basically someone with the power to purchase.

Badagawa says for a middle class worth the description to evolve, the government has to create many more employment opportunities, provide a g regulatory framework and a conducive climate for investment, which is not about to happen – not even in the next ten years. “Over 80% of the Ugandan population live on $5 a day. Does that mean all these people are in the middle class?” He asks. “We are not yet there.”

Source : The Independent

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