When trying to point out common characteristics of these middle income groups (besides their income range), it is helpful to look at their consumption patterns. Using net income as a definition for middle class categorization has several shortcomings, as has been pointed out before in chapter 2.2 and measuring consumption can be one way to overcome them. Chinganya et al.
(2015) consider measuring consumption to be the most reliable welfare indicator. They compared the consumption of the fourth to ninth decile of the population, in 19 different countries over a period of ten years, using the PovCalNet Database from the World Bank. For Uganda, the data reveal a positive trend in consumption over the last years. Using expenditure data, however, still runs the risk of high measurement error, due to misreporting and, especially in African countries, unreliable and infrequent data (Jerven, 2016; Johnston & Abreu, 2016, p. 401). Asset indexes have the capacity to draw a more nuanced picture of inclusive growth (Johnston & Abreu, 2016).
According to Johnston & Abreu asset indexes already revealed a growth of wealth in Africa at the beginning of the 1990s, when the common narrative on the continent was one of doom (Johnston
& Abreu, 2016, p. 400). Using assets derived from the Demographic Health Surveys in several African countries, Sahn & Stifel conclude that poverty has been declining in the 1990s, particularly in rural areas (Sahn & Stifel, 2000, p. 2152). And Young, equally working with the Demographic Health Surveys observes that “real household consumption in Africa is growing between 3.4 to 3.7 percent per annum [1990-2006] i.e. three and a half to four times the 0.9 to 1.1 percent reported in international data sources.” (Young, 2012, p. 698) All authors suggest that the reliability of data in Africa is a problem and believe that asset indexes can paint a more accurate picture. These observations underline our assumptions that we indeed witness a slow decline of poverty over time. However, this does not in itself allow to conclude that a middle class is emerging. With these suggestions in mind, our analysis of economic stratification will, therefore, triangulate our qualitative findings with data from the most recent National Household Surveys and various asset indexes. By doing so, we hope to provide a nuanced picture of consumption and expenditure behavior. We use the subgroups proposed by the AfDB to highlight changes in consumption behavior that are related to changing income.
In the 2012 dataset, we asked respondents what their household main expenditure was, in the 2014 dataset we deduced the principal expenditures from the budget overview given. Since we assume that most people have an accurate estimation of their most significant spendings, we imagine that the answers would have been similar to our calculated output in 2014. When treated as equal, the 2012 and 2014 results show that by far the biggest perceived spending is still on food (indicated by 55% of the respondents), followed by education (27% of answers). Other significant budget items are transport and housing; health, business, and other items yielded only very few responses.
When looking at income classes, the picture gets somewhat refined. The percentage of people who would call food their main expenditure decreases within the middle classes (FC to UMC). At the same time, the number of people stating rent and housing as their main expenditure increases,
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and transport, not having been named by the poor and FC becomes a relevant expenditure item for the LMC to UC. This increase is probably due to more people owning a car and thus spending more money on gas and maintenance than those using public transport or even walking. Thus, with increasing income the willingness increases as well to spend on items that are beyond mere (felt) necessities, such as comfortable housing (discussed in chapter 8.3) or personal transport (see chapter 8.4). However, one of the primary concerns in spending habits remains education, which is in line with our observations made earlier (see chapter 7.3). This focus becomes possible, once the burden to spend money on food decreases, as we shall see.
8.1 Food Expenditure25
Food expenditure is a necessity for everyone, but it can also become a marker of wealth, a possibility of distinction through consumption. However, with increasing budgets, the percentage of money spent on food will decrease. Thus, while it may remain the main expenditure (depending on the percentage spent on other items), we see that, nevertheless, in the smaller sample of the 2014 interviews, the percentage of income spend on food tends towards zero (see Figure 21).
The figure above shows data from 17 households of all income groups collected in 2014. On the
25 This sub-chapter is a revised version of an analysis made for l’Institut français des relations internationals (IFRI) in 2016 and reused with permission from the IFRI. For the original text see Fichtmüller (2016).
in ´000 UGX
Figure 20: Food Expenditure and Total Income per Household
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horizontal axis, each number represents one household of the sample. The purple squares describe the households’ expenditure on food, varying roughly around 300 000 UGX (approximately $130), while total incomes – represented by the orange diamonds – differ significantly from one household to another. It is striking how little the expenditure on food varies, despite the higher amount of money at disposal.
Figure 21 uses the same data but depicts the food expenses as a percentage of the total household income. It illustrates, as stated before, that whereas the households with less income spend a substantial share on food, those of the UMC and UC use only a fraction of their income – showing that a surplus in money is not necessarily invested in food consumption.
Albeit the percentage of income spent on food decreases, it is still widely considered to be the primary household expenditure among all strata. Because food is still perceived to be the most significant financial burden for the majority of the respondents, conscious choices are made to cut down on food expenditure to alleviate budget strains and to be able to invest the surplus somewhere else. Similarly, the upbringing and acquired tastes affect their food expenditure decisions. Hence, the middle income groups do not spend more on food simply because they earn more. Through the interviews the following reasons could be found:
a) Nutrition habits only change slowly
When asked about their diet, most interviewees responded to rely mainly on local food, such as rice, maize, plantains, beans, cabbage, or tomatoes. Even though imported food like pizza, cheese or ice cream can be bought in the big supermarkets, they do not constitute an essential part of the daily menu. For those of the lower end of the middle income groups, they remain too expensive.
Even for the UMC such items are “special treats” and are rarely consumed. Sophie Chevalier points out that even though eating is a way to express lifestyle, it is also part of more persistent identities, usually formed in early stages in life and “this changes more slowly than our willingness to
Figure 21: Food Expenditure as Percentage of Total Household Income
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experiment with fast foods imported from around the globe.” (Chevalier, 2015, p. 119) Eating imported food becomes hence a form of conspicuous consumption for the Ugandan UMC – a deliberate choice made because one can afford it but remains far from being integrated into the regular menu. Local markets are, therefore, the principal food shopping places for all the respondents. Small grocery stores are used to supplement the basics bought on the market by everyday items like sugar, bread or margarine. Big supermarkets or shopping malls are mostly avoided. Even someone who can afford to shop in the supermarket is not necessarily interested in doing so because the imported foods do not correspond to their eating habits. The pattern changes, however, depending on the type of product bought. Especially for electronic equipment people will more likely buy them in supermarkets or abroad if they can afford to do so and have the necessary contacts.
b) “Health consciousness” among the higher income range
The Uganda National Household Survey establishes a correlation: the number of meals taken per day goes up in accordance with the rise in income (Uganda Bureau of Statistics, 2014). In our sample, the relation is not as straightforward since the respondents who declared to take only one meal per day are evenly distributed among the income classes. Money can be an explanation, but this can also be attributed to a lack of time due to a stressful working day or for health reasons, such as the desire to control weight or blood pressure. The “healthy” choice often seems to consist of skipping an unhealthy meal instead of replacing it by a healthy one. Most interviewees eat meat only rarely, in general once a week. Some because they lack the means to do so, others because they choose to do so due to its reputation of being unhealthy. With rising income and education, awareness of the risk of unhealthy eating rises as well, making meat consumption, therefore, not a proportional indicator of wealth. Besides, among the younger members of the middle income groups, other lifestyle choices have to be taken into account: for example, the redefinition of beauty norms, corresponding to an accrued interest in weight loss. As a result, nearly half of university graduates take only two meals per day, and one-third eats meat only once per week.
Regarding gender, however, there are no significant differences in the number of meals and the amount of meat consumed.
c) The availability of agricultural exploitation
Thirdly, many of the individuals with higher income have access to arable land, usually possessing it and letting someone exploit it on their behalf. The harvest may be used for resale, but it is equally a mean to supplement individual needs, therefore, cutting the budget considerably lower.
Particularly if the land available for agriculture is small, food supplementing is preferred over agriculture for resale.
d) Seeking ways to save on food expenditure
Related to the aforementioned point is the search for ways to cut on food expenditure. This involves, as pointed out before, buying on local markets, buying in bulk or sometimes buying in the villages. In the case of Arthur, this search turned into a sophisticated system. Arthur, a representative of the LMC, sends money via mobile money to the village, where someone in return puts the food on a bus and sends it to Kampala, without anyone having to go to the village to get
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the food. Other ways to cut back on food expenditure involve limiting the amount of fish, or meat consumed, or of bread, margarine, and other non-vital food commodities. In the same vein, if people are eating out regularly, they do so in local restaurants; hotel restaurants or fast food chains are only visited occasionally as a “special treat”. However, eating in restaurants remains a privilege of unmarried men and UMC. Because the priority to mitigate vulnerability goes up to the UMC, the tendency to save on food expenditure, or at least to shop parsimoniously is widespread among the entire income stratum. Big supermarkets, like Shoprite or Nakumatt, are mostly avoided because they are perceived as too expensive, regardless of the income of most respondents. Knowing that supposedly cheaper alternatives exist nearby, it seems unwise to
“waste” money in such a place. The surplus is instead saved and invested somewhere else.
Innocent, who is among the best-earning interviewees, responds to the question of the shopping place:
“Usually, I buy my groceries / depends on where I am currently oscillating [income wise, between poor and middle class]. But, you know, if you have an economic sense, these are things you look at. We have different grades of markets, where the poor shop, where another group of poor shop, where poor of my character shop and then there are these shopping malls. You look at where you get the things in an economic sense. When I need groceries, I cannot go to the shopping malls, no.” (Innocent)
Studies from IFRI (2012) and CFAO (2015) come to similar conclusions concerning the reticence of all but the highest income groups to go for shopping in big supermarkets. The CFAO observes that supermarkets are
“[…] a place that one plans to go to rather than a store well-suited to everyday shopping needs. […] Nevertheless, supermarkets are visited less frequently due to their less central location, the added time needed to do one’s shopping and the (sometimes mistaken) idea that their products are more expensive than those in small shops.” (CFAO, 2015, p. 27)
And Quénot-Suarez (2012) adds as an additional explanation the difficulty of payment, a reason equally evoked by our respondents, particularly those of the lower echelons: whereas prices are negotiable in small shops and items can be bought on credit, these options are not available in supermarkets, making them again less attractive. Those who do shop there belong to the upper end and would do so out of convenience: because all the products needed can be found in one place, and parking is available. This makes them attractive to car owners. On the other hand, for those not having a car shopping in a shopping mall turns out to be more hassle, as they are usually not located in residential areas, but rather at big streets, contrary to local markets which can often be found within walking distance. Bearing in mind, that the density of car owners still is quite low, shopping in the big supermarkets often represents a more impractical choice for most people.
Yet, the convenience of parking does not in itself guarantee that car owners will buy there. Most affluent people, instead of going to the supermarket would adopt grocery buying strategies to their needs. One prominent example are the street vendors, selling necessities, fruits, vegetables, or other food to those stuck in the traffic jam (see also Quénot-Suarez, 2012, p. 19). John, an entrepreneur from the UMC, explained how he perfected this system with one of the vendors at
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the local markets: he would send him his grocery list in advance and transfer the money via mobile money. In the evening when passing by at the market, the vendor would hand him the bags through his car window.
The difference in food expenditure of the middle income groups interviewed and the average Ugandan (9% of the budget vs. 34%) confirms the observations of Chinganya et al.: food becomes an increasingly smaller item of the overall budget. This trend is well documented among different nations and different periods. Already in 1887, the economist Ernst Engel undertook a study among Belgian households and concluded that for those with the lowest income, the highest share is spent on physical needs, such as food and shelter and with rising income the expenditures for luxury, religious and intellectual items increase (Engel, 1887). The interpretations brought forward in this section give some reasons why people do not necessarily spend a higher percentage of money on food if they have a higher income. Even though more money might be available, household budgets are still tight. Because they still consider themselves struggling, they will deploy various techniques to keep their food expenditure as low as possible. In her work on the South African middle class, Sophie Chevalier observed that especially the lower middle classes still feel precarious and that this is equally reflected in their food buying habits (Chevalier, 2015, p. 120). Hence, to counter these feelings of economic vulnerability, consumers will go to great lengths to save on food expenditure, through the various ways mentioned here. In our sample, it is striking that the efforts to limit the food budget do not seem restricted to the lower echelons of our respondents, but even present among the upper middle and upper class. Instead, the techniques of saving change. The poorest, for example, are not able to buy in bulk because they do not have sufficient daily disposable income. This is equally reflected by the possibility to buy everything in small units, such as single cigarettes, single rolls of toilet paper, single diapers, small size packages of laundry detergent, or small units of telephone credit. An entire market is focused on people with only very little disposable daily income and adapted to cater for their needs according to their means. In the same vein, buying in bulk or hunting for bargains requires a car, to facilitate transport. Again, this option is only available to those better off. The lowest strata can mainly limit their budget by cutting off all items not deemed vital and reducing the food intake.
But, as already outlined before, these indicators are not straightforward, as even those who can afford to have several meals a day or eat meat on a regular basis do not necessarily do so, but for different reasons. This places the Ugandan middle income groups somewhere “in between”. They are on the cusp between their humble backgrounds, that will contribute to the consumption choices they make, and the possibility to afford new lifestyles. They also find themselves between the vulnerability of falling back into poverty and new opportunities and aspirations that have come with the rising disposable income. As a result, choices for surplus spending concentrate on advancement, either their own or that of their children. It indicates also that the middle income groups may not be the promising new market, at least not for comestible goods, and at least not for now (see also CFAO, 2015, p. 39).
8.2 Education
Instead of food, most of the surplus income is invested into education: among our 2014 sample, the average household will allocate nearly 20% of the budget to education. Education is one of the most robust indicators of future income (Kunene et al., 2015, p. 140) and Ugandans are well-aware
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of this fact. The middle income groups are putting much effort into securing good education: either through continuing their education, in forms of higher or different courses, or through investing in their children’s education. Even though more expensive, the middle income groups prefer private instead of public schools. Also, when asked, most respondents name education as priority for their children. However, especially in tertiary education, school fees are rising while the possibilities to obtain government scholarships are declining. Gathering the funds to pay is still a challenge for many. Therefore, education will most likely remain a preoccupation even for the less vulnerable.
Among the 23 interviewees of 2014, five recorded their highest expenditures on school fees, in some cases for themselves, but mostly for their children and other dependents. Most of them would come from the upper middle and upper class. The average figure compiled to 700 000 UGX ($280) on education expenditure, representing one-fifth of the monthly budget. When taking into account the dataset of 2012 as well, the figure lowers to an average spending of 540 000 UGX
Among the 23 interviewees of 2014, five recorded their highest expenditures on school fees, in some cases for themselves, but mostly for their children and other dependents. Most of them would come from the upper middle and upper class. The average figure compiled to 700 000 UGX ($280) on education expenditure, representing one-fifth of the monthly budget. When taking into account the dataset of 2012 as well, the figure lowers to an average spending of 540 000 UGX