At a time when many developed economies are struggling to get their GDP above a flat line, African markets are playing catch-up, fast. GDP on the continent is forecast by McKinsey to rise by 4.5% a year until 2015, boosting African consumer spending power by 35%, and while much of the spending will come from the vast bottom end of the wealth spectrum, the rise of private enterprise is fuelling growth of a newly emergent middle class.

“People have it wrong if they think it’s all mud huts in Africa,” says Vivien Marles, pan-Africa research director for market research company Synovate. “These people send their kids to private schools. They’re highly aspirational and have the means to fulfil those aspirations. They’re going on foreign holidays, they have private medical insurance and drive nice cars. They’re beginning to look like the middle class we’re used to seeing in Europe and the US.”

In South Africa, where positive discrimination has helped black people gain access to education and higher-paid jobs, these newly affluent Africans have been dubbed “Black Diamonds” by the University of Cape Town Unilever Institute of Strategic Marketing. Professor John Simpson says black diamonds now make up about 12% of the country’s black population, and probably grew 10% in the past year, despite the recession. Their spending power is about R300bn (€30bn) a year – with the growth in their income far exceeding the growth in the number of individuals, indicating rising salaries.

According to Synovate’s recent EMS Africa study that looked at the lifestyles of the top 15% of adults based on income or living standards in Kenya, South Africa, Nigeria, Cameroon and Morocco, 22% of those surveyed earn €40,000 or more, and 2.3% have personal income of €100,000- plus. They’re already spending, investing and travelling in significant numbers. Almost a quarter hold a membership for a private members’ club, nearly 40% have joined a fitness centre, 27% own unit trusts or mutual funds, and a third regularly use a mobile phone for online banking. Two thirds own at least two cars, and in the past year, 7% have bought a luxury watch and 26% have bought designer footwear. But Africa, of course, is not a single market, and nor is its new middle class.

Doug de Villiers, Group CEO of Interbrand Sampson Group, says in South Africa, there’s a focus on what you wear, what you drink and what you drive. “The middle-class take on luxury is very strong,” he says: BMWs are de rigueur; brand-name shoes and suits are a big focus for spending, as is eating out and being seen in the right clubs. “Johnnie Walker Black is the middle-class minimum, and if you’re a guy that drinks Johnnie Walker Blue, then you’ve made it a step higher,” he adds

Black property ownership in South Africa is reported to have risen by 700% in the past five years, while the Virgin Active fitness chain, part of Richard Branson’s Virgin Group, is expanding rapidly, now running 91 clubs in the country, with plans to open 10 to 15 more in the next five years, including what it calls a “new club concept designed to cater for the fast-growing middle-income market”. Simpson says that while it was important to black diamonds to display the trappings of middle class consumption, a maturity is entering the market, with a greater focus on saving and long-term investment and education.

In Nigeria, small businessman and market researcher Michael Umogun, of Realedge Research Options in Lagos, says there’s a lag between people becoming wealthy on paper and having real spending power in the shops. “People are not as empowered financially as should be because they’re forced by the ineptitude of the system to do things for themselves,” he says; paying for a more reliable electricity and gas supply, and buying fresh water at black-market prices, is the first priority of consumers coming into money. After sorting their own basics, there’s a strong familial obligation to ensure relatives are similarly looked after. Then money is put aside for children’s education and then, probably, a good mobile phone, as it’s a business tool. Luxury perfume is a long way down the priority list, Umogun says.

In Kenya, wealth also tends to be understated, with more focus on education and the role an individual holds in their company and society; the beer someone drinks sends a strong signal about having arrived, says De Villiers. Trading up from Tusker beer to White Cap comes with joining management; drinking Tusker at a Kenyan “Benzy” bars would be seen as a bit blue-collar.

In parts of Nigeria bling is also tempered by a religious sense of discretion with wealth; affluence is signalled to other people by your choice of school for your children, and by travelling to European and American universities, even for short courses. In a market full of copycat jewellery, everyone has a “Rolex”, but heads of companies will be wearing the real thing and drive – or be driven in – a Mercedes or Range Rover.

The spending power of black diamonds is expected to grow rapidly in the next couple of years. Euromonitor data shows that between 2008 and this year, consumer spending in Nigeria on cars and other vehicles grew 19%; it’s forecast to rise a further 47% between now and 2014, and by 43% in that time in South Africa. Personal investment in insurance products is set to rise by about 45% in both markets by 2014, and spending on package holidays will rise 16% in Nigeria in the next four years. Synovate’s EMS Africa survey found that 14% already spend 11 or more nights a year in hotels on holiday; 13% plan to holiday in western Europe in the next year, and 12% expect to make a leisure trip the US in the coming 12 months.

But it’s not just manufacturers of big-ticket items that stand to gain from the growth in disposable income on the continent. Indian telecommunications company Bharti Airtel is planning to launch in 15 African countries this October, claiming there are more middle-class households (which it defines as those earning $20,000 a year or more) in Africa than in India, and continued urbanisation and improvement in living standards will provide a rich market to tap. Coca-Cola plans to double its annual investment in Africa to $1bn (€775m) with a focus on non-carbonated soft drinks pitched at the middle classes; fizzy drinks are already big sellers, but as in the West, bottled water and juice-based drinks are coming to be seen as little luxuries. Nestlé, meanwhile, is investing €110m in Equatorial Africa over the next three years to expand existing factories and increase distribution. Announcing the news in Kenya, CEO Paul Bulcke said: “With 400 million people and an emerging middle-class with rising purchasing power, this region has major potential for Nestlé.”

For international brands looking to capitalise on the black diamond market, one big plus is that affluent Africans in the wealthiest cities generally speak English (almost 90%, according to EMS Africa). The survey also found that 64% say they’re usually among the first people to buy technologically innovative products, 79% say they prefer to buy well-known brands and nearly 91% say they don’t mind paying extra for quality. Unlike other emerging markets, such as China or even Eastern Europe, there isn’t the same hunger for foreign brands simply because they’re foreign, given that many brands have been available – if not affordable – in parts of Africa for years. There was no iron curtain or bamboo barrier keeping consumers from seemingly exotic Levi jeans and MTV. Names like Omo and Ponds are so familiar they’re largely thought of as local brands.

Local brands therefore mix with international names; fashion brands born on the continent, such as Stoned Cherrie and Sowearto, are worn alongside Diesel jeans, according to Neo Makhele, head of strategic planning with advertising group Ogilvy in Johannesburg. She says that to reach affluent Africans means understanding their desire to be seen as having moved up in the world, without having abandoned their heritage. “They see themselves as part of the first world but also African,” she says. “There’s a tension there, they think ‘I want you to see that I’ve made it, I want you to see it in my car and the fact my lifestyle has improved, but I haven’t forgotten my roots’.”

Currently, very little advertising is pitched only at the middle classes, and in markets outside South Africa particularly, a consumer is as likely to be influenced in their decision making by what their CEO is wearing or driving as by what they see advertised. Umogun says advertising on the continent tends to be aspirational anyway – the entry-level model of a product isn’t usually the one that’s marketed. “No one targets the bottom of the economic ladder. They say look at the good life and enjoy it.”

Makhele echoes this view. Brands aiming for black diamonds should be positive; there should be a focus on hope, happiness and humour. “Africans are inspired by the positive, and when they’re happy, they spend more,” Makhele says. “They see possibilities, there’s a tenacity here, and a belief that things can get better. You might say ‘how can people be positive in Nigeria?’ But there used to be civil war, and now there’s rebuilding. That’s positive. You can’t afford to be negative in Africa.”

CHALLENGE AFRICA

The emergent middle class in Africa is not just producing a ready market for imports; it is driving successful domestic and multi-market businesses that look set for success beyond African shores.

Boston Consulting Group has identified 40 “Challenger” companies – successful fast-growing businesses with global aspirations – born of the so-called lion economies of Africa. These markets – Algeria, Botswana, Egypt, Libya, Mauritius, Morocco, South Africa and Tunisia – have higher GDP per capita than the BRIC markets, and they enjoy steady political systems, rule of law, a cheap labour pool and a positive business environment.

Togo bank Ecobank is a strong regional player serving western and central Africa, Maroc Telecom is successful in its home market of Morocco but also Mauritania, Burkina Faso, Mali and Gabon. Nigerian conglomerate Dangote Group – which deals in everything from property and cement to pasta – is already a strong exporter, as is Cairo-based steel company Al Ezz Group.

Others set for global success include Groupe Elloumi from Tunisia, though the vast majority of BCG’s challengers come from South Africa. Among them is the already well-known SABMiller brewing group, drug maker Aspen Pharmacare and telecoms provider MTN Group, which is already operating across Africa, the Middle East and as far away as Cyprus and Afghanistan.