Meeting Charles Robertson, ‘RENCAP Man’, in Lagos

By Tolu Ogunlesi

 

Charles Robertson (@RencapMan on Twitter) is Renaissance Capital’s Global Chief Economist and Head of Macro-strategy Unit. He was in Lagos recently for Rencap’s 4th Annual 1:1 Pan-Africa Investor Conference in Lagos, from February 11 to 13, 2013. I didn’t attend the conference itself, but got a chance to meet Mr. Robertson at a cocktail that Rencap hosted on the evening of Day 1, at Avenue Suites in Victoria Island.

It was my first time meeting him – in person. We’d previously exchanged a couple of emails in the past, and engaged in Twitter debate.

So it was a pleasure to finally meet the lead author of THE FASTEST BILLION: The Story Behind Africa’s Economic Revolution, launched November 2012, and with foreword written by Ngozi Okonjo-Iweala, Nigeria’s Minister of Finance and Coordinating Minister of the Economy. (I’m going to be reading and reviewing it in March – watch this space).

The week before Lagos he’d attended a UK-Nigeria Bilateral Banking, Finance and Investment Development Conference in London, at which the Nigerian junior Minister of Finance, Dr. Yerima Lawan Ngama, had spoken. 

Over wine and Chapman we talked about Arsenal, Twitter, and Nigeria – reforms, agriculture, and the Middle Class Question.

Robertson is an Arsenal fan, but he didn’t sound as angry and frustrated as Arsenal fans tend to (especially on Twitter). He spoke excitedly about the bliss of living close to Arsenal’s Emirates Stadium. 

We talked about Nigerian data, the ease of accessing it. He was impressed by the quality of statistics available online from Nigeria’s Central Bank (CBN) and the National Bureau of Statistics (NBS). According to him it’s much better than the data he had access to when he covered Greece as an analyst in the late 1990s.

Minister Akin Adesina came up in our conversation – I consider him one of the few inspiring, optimism-sustaining faces in the Goodluck Jonathan cabinet. [In my opinion it’s a tragedy that the phones-for-farmers scheme played out the way  it did. My feeling is that the Minister needs to pay as much attention to his communication strategy as to his reform agenda]. 

We also discussed the Nigerian government’s reform programme – originating of course in Obasanjo’s 1st term as President; clearly Nigeria is in a better place today – in terms of creditworthiness and investor perception – than ever before. Robertson pointed out that the fact that international markets will today lend to Nigeria at 4% interest rates is “remarkable.” 

He said something quite interesting about the “penalty of success” that tends to accompany reform programmes: that a time comes when “the  people creating success are [no longer] seen as necessary to sustain it.” Food for thought, definitely!

The African Middle Class

The question I most wanted to ask Robertson about was to do with Rencap’s report on the Nigerian Middle Class. I’ve always thought it unrealistic, saccharine. Rencap’s benchmark is of course much more realistic – and Robertson made sure to point it out in his response to me – than the ones put forward by the African Development Bank’s report, which considers $2 per day disposable income as the baseline for measuring the African Middle Class.

In that report, The Middle of the Pyramid: Dynamics of the Middle Class in Africa, the AfDB defines the African Middle Class  as individuals with “per capita daily consumption of $2-$20 in 2005 PPP US dollars.”

The study classifies that middle-class into 3:

  1. a ‘“floating class” with per capita consumption levels of between $2-$4 per day…’
  2. a ‘“lower-middle” class with per capita consumption levels of $4-$10 per day…’
  3. an ‘“uppermiddle class” with per capita consumption levels of $10-$20 per day’…

Do you, like me, find that ridiculous? A Lagos or Nairobi upper middle class surviving on $20 a day? 

Rencap is more realistic, but even then, I still have issues with their assumptions. [Now, as a disclaimer, I’m not an economist, and not the most comfortable person in the presence of numbers. I did however enjoy, and if I recall correctly, excel in, secondary school Economics].

Rencap’s Middle Class report is based on a survey of only 1,004 Nigerians, in Lagos, Abuja and Port Harcourt.

Now, here are some highlights of Rencap’s “findings”: 

  • Their average monthly income is in the range NGN75,000-100,000 ($480-645, or roughly $6,000-7,000 pa).
  • Educating their children well is a top priority, and over half send their children abroad to complete their education.
  • A sizeable 76% of our sample work in the public sector; of those working in the private sector, 38% run their own businesses.

Put those two together, and you’ll be forgiven for being confused. How do you send a child abroad on an annual salary of $7,000 (less than N1.2  million per annum) – in LAGOS or ABUJA? Where’s the rest of the money coming from, o thou civil servant?

The findings above raise a lot of questions. $7,000 in salaries is Lagos is less than what a young entry-level employee in banking or telecoms or oil & gas will earn. It’s barely enough to pay for BOTH an apartment (minimum rent one year, Lagos-style, two in many cases) AND a car (which is a necessity for the Lagos middle-class, in the absence of mass transport services targeted at the middle-class). How does a middle-class male Lagosian afford accommodation, a car(s), fuel a generator, pay school fees (including at least one denominated in dollars or sterling), on N100,000 per month? Obviously we’re not getting the real picture. 

Robertson acknowledged the fact that the Rencap survey is not flawless – assembling data / statistics in a country like Nigeria is a tough and thankless job, and usually happens with minimal or no support from the government bureaucracy. But it is at least is a starting point in the direction we need to be heading. 

I have a couple of thoughts on the Middle Class.

1. No doubt there is a growing middle class in many African countries. The evidence is all around us. Compared to the late 1990s, when dictator Sani Abacha was in power. Civil service salaries have since risen appreciably (credit for this goes to President Obasanjo’s government), the country is awash with more money, on the back of rising oil prices, and over the last decade the explosive growth in sectors like telecommunications and entertainment (music, Nollywood) and ecommerce have helped create wealth. Nigeria is today a significant (sometimes the ‘leading’) growth market for a good number of consumer companies, from PZ Cussons to Diageo to Unilever, and for luxury brands like Hennessy and Porsche. [Robertson told me about an Economist Africa conference at which he spoke in January, in London, alongside Strive Masiyiwa, Founder and Chairman of Econet Wireless Holdings and President Diageo Africa, Nick Blazquez, on a panel focusing on the African Middle Class. There is clearly a lot of excitement about a “rising” African Middle Class and consumer spending.]

2. One of the oft-told stories about China and Brazil is one to do with how their governments have managed to lift millions of people out of poverty, into the middle class. Brazil’s happened under the watch of President Lula (2002 – 2010). I’m fascinated by these stories, and wonder why a country like Nigeria is failing to replicate that, despite the proliferation of schemes like NAPEP and PAP. (I’m assuming those were aimed at nudging people out of absolute poverty into a post-poverty-but-not-yet-middle-class class). Why is Nigeria spectacularly failing to achieve a mass uplift of its citizens into the middle-class, the way China and Brazil have done / are still doing?

Which leads me to my next point:

All the optimistic reports and the excitement aside I do not think  – and I may be mistaken – Nigeria is creating a statistically-significant new cadre of middle-classers. Emphasis on statistically-significant and new. No doubt there’s a growing middle class in Nigeria, but I suspect that this growth can be attributed mainly to 2 classes of individuals:

1. Ex-members of a once-thriving middle-class that was decimated by the mismanagement, Structural Adjustment Programme (SAP), and all-out military repression of the 1980s and 1990s; and who are now being readmitted into the M-club (this would include civil servants ie school-teachers, University staff, Government health professionals; and Entrepreneurs/businesspersons/service-professionals ie tailors/fashion designers, shop-owners,  private-practice lawyers, accountants, architects, doctors, etc).

2. Young people who are leaving University and finding jobs in banking and telecoms and technology and construction and e-commerce and oil & gas, and earning salaries decent enough to sustain a comfortable life in Lagos: a car, an apartment, regular clubbing, summer holidays, etc. These people move from their student budgets to expenditure levels that are several multiples of the student budgets. I wish we had numbers for this class – I estimate it’ll be something in the region of the tens of thousands annually (no more than that), a negligible number placed against the size of the unemployed youth market. 

These young people are not a NEW middle-class, as far as I’m concerned. They are tertiary institution graduates already set up to belong to the middle-class. The new middle-class I’m looking for – and which I fear does not exist to any appreciable extent – is the one in which people are rising – in large numbers – out of poverty into middle-class wealth without the benefit of middle-class upbringings or a tertiary education starting point. I’m thinking of examples like the following:

a. A subsistence farmer in a rural area who graduates into mechanized farming, and sees a significant rise in his income (this is very important considering that agriculture is the largest employer of labour in Nigeria).

b. A young Nigerian with limited formal education who succeeds at a vocational entrepreneurial venture — plumbing, carpentry, welding, trading (succeeds enough to rise into middle-class and have the opportunity to give his children a life far better than the one he enjoyed). I’m thinking of a street-hawker who somehow graduates into owning a proper shop in a proper market. I’m thinking for example of all the young traders in Alaba International Market who go on to gain their “freedom” after years of apprenticeship and then set up thriving businesses of their own.

I did try to explain the POV above to Mr. Robertson (he told me he came out of a working-class English background), and he seemed to agree with me. 

I’d like to know what readers think of this African Middle Class concept. The AfDB report. The Rencap report. The unbridled optimism regarding the growth of an African Middle Class. Is this for real, or are there serious cognitive biases at play here? Do you agree with my argument – or have a different one? 

OXFAM’S BOOK OF LAMENTATIONS

By Tolu Ogunlesi

Oxfam, the UK charity, recently released an updated version of the Book of Lamentations. Something about how “the relentless focus on ongoing problems at the expense of a more nuanced portrait of [Africa], is obscuring the progress that is being made towards a more secure and prosperous future.”

That’s Chief Executive Barbara Stocking, as quoted by the BBC. Apparently the charity’s been doing some polling recently (in the UK), and coming up with interesting results. In one poll half of the respondents confessed that Africa conjured for them images of hunger, famine and poverty. In another poll, almost half of the 2,000 respondents thought Africa’s biggest challenge was hunger. Three out of four were suffering from ‘Africa-fatigue’ – that debilitating condition that afflicts well-meaning foreign philanthropists exposed to an endless stream of images of suffering and torment originating from the dark continent.

A distressed Oxfam has since gone ahead to launch its latest Africa campaign, in a desperate bid to shift the world’s attention from African Hunger, to African-Hunger-Backdropped-By-Stunning-African-Landscapes.

That’s, in a nutshell, the story.

It left me a tad puzzled. A w-t-f puzzlement. As in: is Oxfam for real?

Let’s even forget, for a moment, the unforgettable fact that Oxfam has probably done far more than any other organisation in propagating these images.

Let’s focus on something else that struck me about the story: the way blame is being placed squarely on the shoulders of The Images.

Oxfam appears to be saying: Put All The Blame On The Images. Not the people hanging on stubbornly to those images in the face of alternative evidence.

Am I alone in thinking Oxfam’s lamentations suggest a British public that is at the mercy of what they are fed.

Helpless Brits who somehow cannot — despite all their efforts — rise beyond the bombardment of pity-evoking images of Africa,

One might as well rephrase Dame Stocking as follows:

Oh poor helpless people of Britain, all they’re being fed is harrowing, unhelpful images of Africa. We need to stop that. We need to feed them something different. We need to change their diet.

That’s the summary of the Oxfam Lamentation. It’s

In whose interest?

The whole set-up suggests that Britain is now guilty of the sort of intellectual laziness once associated (almost solely) with America (er, sorry). Clearly the surveys say far more about the British mind than they do about the African condition. Now we know, courtesy of Oxfam, that all along we’ve been depending on a bunch of wallet-opening puppets to deliver us from ourselves.

Now the puppets are growing weary, the strings fraying, the wallet-opening mechanisms aging. Now we have to refurbish the puppets, oil the creaking joints with a new, more positive type of ‘communication’. Landscapes, not Hunger!

A mindset that elevates what the British public thinks of Africa, over and above contemporary reality, and that suggests that it is in Africa’s interest for that thinking to change, is not only faulty but dangerous as well.

To put it less mildly, who — apart from Oxfam, obviously — really cares, in 2012, what the British public thinks about a continent from which they fled in varying stages of undress a half-century ago? What’s that proverb about crying more than the bereaved?

In the 21st century are people still allowed to be zombies gobbling up everything they’re fed by a collaboration of powerful media and NGOs?

I seriously doubt that it is in Africa’s interest for Brits to change their perception of Africa. Instead I think it is totally in Britain’s interests to change its perceptions of Africa. That problem, is Britain’s, and no one else’s. If the Brits insists on seeing Africa primarily through the lens of philanthropic intervention, in 2012, good for them.

Let them stay thinking that way; let Oxfam, with its its Africa-emblazoned super-hero capes, stay convincing itself that it has a duty to alter global perceptions of Africa, while the Russians and Chineseand diaspora Africans, who must have once assumed they’d left the continent for good — boldly head out to the continent to engage in potentially more useful ways.

Alternative images

Granted that those starving-children-and-dying-mothers images form a sizable part of African exports to the West. There may be little we can do about that, as long as we have a West obsessed with delivering Africa from itself. But what about the the tens of thousands of kwashiorkor-free, English-speaking, pocket-money-receiving African students who flock to the UK annually, to study (with a good number actually returning, to continue with the lives they left behind in Lagos and Nairobi and Accra and Freetown and Johannesburg etc).

How the British public fails to permit these alternative images to displace some of the “old stereotypes” (quoting Dame Stocking) should alarm many right-thinking people, and perhaps inspire an industry of academic theses on national delusions and epidemics of ostrich-in-sand-syndromes.

If those flesh-and-blood representations of contemporary Africa somehow don’t succeed in serving as a useful counterbalance to the stereotypes, then nothing will.

“We want to make sure people have a really better balanced picture of what’s happening in Africa. Of course we have to show what the reality is in the situations in those countries. But we also need to show the other places where things are actually changing, where things are different,” Dame Stocking says.

I wish her and Oxfam the very best. Must be awful to have to take on that job of saving people from self-inflicted ignorance. In an age in which Google, Twitter and the news media lie at most fingertips, delivering, alongside stories of African suffering, narratives of determined recovery from tragedy and technology-driven change and emboldened youth and rising political awareness and growing intolerance for tyranny — is there still room for getting way with blaming with fixating on photos of begging bowls and the oxfamished children attached to them?

Kudos where due. But still…

I might also add that this is not to disparage the useful work that Oxfam has done and is still doing across the continent. The effects of aid, like AIDS, are real, no doubt. George W. Bush’s PEPFAR saved, and continues to save, millions of Africans lives.

But stories also abound of the startling stupidities and failures of aid projects whose origins lie in a mentality belonging to a world that appears to have vanished. Misguided Messiahs and their T-shirt donation and Shoe donation schemes, money-grabbing consultants, corrupt practices, high-profile-nil-value baby adoptions, etc etc.

It’s important that the Oxfams of this world do not allow themselves to get overly caught up in the myth of their impact. In the larger scheme of things, perhaps they’ve been overestimating their messianic abilities. Consider this: In his posthumously published collection of essays pan-Africanist Tajudeen Abdul-Raheem says, of Nigeria’s 2006 debt relief deal: “What kind of success is debt relief that sees Nigeria paying back over three billion dollars to Britain alone, a figure more than the total aid budget of Britain in the same year?”

You could of course argue that that is oil-rich Nigeria, and choose instead to focus on the Rwandas and Malawis where close to half the national budgets are donor-funded. And I could remind you of what the late Malawian President did with chunks of his country’s money. Or the mystery of the vanishing dollars in the Ugandan Prime Minister’s office.

I’m also somewhat surprised we’re still having this ‘African aid’ argument at the end of 2012, after the eloquent arguments of books like Dead Aid and The Fastest Billion. And after the Economist already publicly regretted its silliness.

Shame.

Is Oxfam stuck on a planet that no longer exists?

Oxfam Capital, anyone?

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Watch out for Part 2 of this piece, focusing on how Oxfam can shift its focus from cajoling donation-weary Westerners and tap into African wealth to fund its Africa-transformation drive (not kidding).