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GIGA Focus Afrika

Rise of the "African Mittelstand"

Number: 5 | 11/2016 | ISSN: 1862-3603

On the African continent, a few powerful large companies dominate, and there is an overwhelming number of mostly informal micro- and small businesses; however, African entrepreneurship is diverse and increasing urbanisation has been accompanied by the emergence of modern enterprises, which constitute an “African Mittelstand.”

  • The rise of an entrepreneurial Mittelstand in Africa is being fuelled by the growing income of the middle classes in Africa’s cities, where industrial clusters are developing. Many Mittelstand enterprises have even managed to integrate themselves into global or regional value chains.

  • Engineers and skilled workers are particularly important for industrial innovation processes and for the development of an “African Mittelstand.” In the urban centres, companies can draw on a growing pool of skilled workers.

  • Both Uganda and Nigeria have a rather small middle classes and low numbers of Mittelstand enterprises, whereas Tunisia has a very large middle class. Nevertheless, large export-oriented enterprises are prevalent in Tunisia, and its Mittelstand is extremely small.

  • Due to numerous obstacles, a Mittelstand cannot develop optimally in Africa. These hindrances include inadequate financial and legal systems, a lack of electricity and water supply, and a system of “favouritism,” whereby large enterprises receive government contracts, while small and medium-sized enterprises are usually awarded nothing.

Policy Implications

In Africa the expansion of modern entrepreneurship in its growing urban centres and the increasing purchasing power of its middle classes could initiate growth momentum, which would also lead to higher employment. However, this will require that governments promote the development of industrial clusters and eliminate the numerous obstacles facing small and medium-sized enterprises.


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The German Institute for Global and Area Studies (GIGA) – Leibniz-Institut für Globale und Regionale Studien in Hamburg publishes the Focus series on Africa, Asia, Latin America, the Middle East and global issues. The GIGA Focus is edited and published by the GIGA. The views and opinions expressed are solely those of the authors and do not necessarily reflect those of the institute. Authors alone are responsible for the content of their articles. GIGA and the authors cannot be held liable for any errors and omissions, or for any consequences arising from the use of the information provided.

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