The alternative investor in Africa has the upside from a 1% growth in the African middle-class. Fraym (a data consulting firm) in its analysis indicated that Africa has an estimated middle-class population of 330 million people that are unevenly distributed across the continent. Egypt, Nigeria, South Africa, Algeria and Morocco are the largest contributors to the middleclass population. Fraym defines Africa’s consumer class based on asset ownership and educational levels since these measures are less vulnerable to seasonal income fluctuations. An increase in the middle-class population by 1% means an additional 3.3 million people will require more advanced services together with basic services.
Private equity and alternative market firms need to allocate capital to African opportunities in order to generate sufficient returns for investors as this level of rise in the consumer base is large enough to contribute to a new group of market leaders. Just 10% of this new middle class population has the ability to create a large local company that can generate strong returns for an alternative investor. The best part is that, the companies that can gain from such a rise in the middle-class population already exist today. PEafrinsights provides a pipeline for alternative investors interested in high return assets in Africa.