• Consumer Insights on The Emerging Middle Class and Increasing Consumer Demands in Ghana

    This article was culled from Doing Business in Ghana 2015.
    Ghana’s Middle Class
    Ghana gets ranked among those countries which are estimated to have the strongest middle classes in Sub-Sahara Africa. (AfDB 2011, 22)
    For 2020 it predicts a rise of that number up to 6.5%. Projections are made until 2030 where 11% of the population should be within the category of middle class. The estimates are based on household earning or spending between US$10 and US$100 per person per day. Data accessible via PovcalNet leads to similar results for 2008. Approximately 97.29% of the Ghanaian population lives below a consumption or income line of US$10.8. 24.64% under the US$1.25 poverty line and 46.81% under the US$2 poverty line. As a result, 50.48% of the Ghanaian population live between US$2 and US$10.
    There is a wide gap between 1.48% and 50.48% of the population which both would count as middle class in different concepts. Applying the definitions for middle classes in the developing world to a country example demonstrates the already criticized arbitrariness and exaggeration concerning definitions and estimates of middle classes.
    According to the definition of Ravallion (2010), nearly half the population would be in Ghana’s middle class while the other half would live below the poverty line. In these definitions, there is no distinction between middle classes and people who are not poor.
    Since 2006, unemployment rate has been on the rise and was at 4.2 per cent in 2012. The ILO is expecting a further rise to over 5% from 2015. Youth employment was at 7.6% in 2012.  In addition, more than 86% of total employment in Ghana was part of the informal economy. (UNDP/NDPC 2012). Therefore most of the people who live above the poverty line are not formally employed and therefore potentially do not have economic security. Together with the constantly high vulnerable employment, the security which can be seen as a precondition to define middle classes is missing. As implied above, structural change is missing in the economy of Ghana.
    Increasing Consumer Demands
    The increasing demand for shopping malls and luxury goods in Ghana has made the average Ghanaian consumer increase love for foreign products and their taste for fine things. The lifestyle, culture, and tradition of Ghanaian consumers influence their purchase decisions. Ghanaians are also very adaptive to new products but proud of their traditions. This attributes in essence shape and distinguish the Ghanaian consumer’s perception of foreign goods from others.
    Ghanaians have a unique lifestyle and culture that has evidently contributed to a heightened willingness to trade their patronage for locally produced goods; commonly referred to as “Made-In-Ghana goods,” for foreign goods. In Ghana, the appreciation for the cultural diversity is relentlessly promoted in every sphere of the economy. Coupled with the local, traditional efforts are the benefits of open borders, immigration, globalization, ethnic diversification and the influx of foreign goods; Ghanaians therefore tend to be well informed about foreign goods and are likely to patronize them. Thus, contrary to popular belief, Ghanaians are relatively more open-minded with respect to import.
    Analysis on the specifics of lifestyles is essential in developing marketing strategies in Ghana. Consumer specific information such as; geographical distribution, economic condition and age etc. must be included in order to understand these consumer behavior which is of immense importance for the success of a business in Ghana.
    A rise in purchasing power and a shift towards formal retail space in Ghana is also helping burnish a positive outlook for retailers in Ghana. Mall retailing is still in its infancy, particularly outside the capital, but international brands and developers are increasingly enthusiastic about the country.
    Ghana has been attracting growing interest from foreign investors, due to oil-fuelled economic growth in excess of 8%, along with rising incomes, political stability and – crucially for retailers – low level of modern retail penetration. Ghana’s bona fide malls, West Hills Mall, Accra Mall, A&C Mall, have proved very popular, boasting occupancy rates near 100%, and a waiting list for retailers keen to open outlets. With a growing population of 2.5million plus in Accra, the city has capacity for more retail centers to augment the current 30,000 sq. metres of formal retail space.
    Ghana’s modern retail potential is therefore very huge. There is “huge opportunities” for modern shopping centre development in Ghana’s growing regional centres, particularly Takoradi, the heart of the country’s oil industry, and Kumasi, the second city and capital of the Ashanti region.

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