Tuesday, February 7, 2012

Black Diamonds

Millions of Africans are trapped in poverty. However, due to an abundance of natural resources, minerals and oil, sub-Saharan economies are flourishing. The region is among the fastest growing economies in the world. Regardless, wealth is concentrated in the hands of a few, people known as “Black Diamonds.”

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For decades the African elite made their shopping rounds in far off places like Paris, London and New York City. Now, according to a report from Merrill Lynch and Capgemini, Africa exhibited the fastest growing population of high-net-worth individuals in the world between 2009 and 2010. In recognition of the sudden rise in disposable incomes, malls featuring luxury brands began sprouting up – Sandton City in Johannesburg, The Palms in Lagos Nigeria, Sea Plaza in Dakar Senegal, etc. Luxury brands like Louis Vuitton, Hugo Boss and Herm├ęs to just name a few are now ramping up their presence in Africa and targeting the growing number of affluent professionals. They label their target market “Black Diamonds.”

Africa is also witnessing the emergence of “Black Diamond Wannabes,” consumers that are buying luxury goods as a status symbol despite the fact they cannot afford these items. Consequently, debt levels in South Africa have gone through the roof. Despite the country having the continent’s number one economy, the South African central bank just reported that household debt stands at 75 percent of disposable income. Note: South Africans spend on average 7 percent of their disposable income just servicing their debts.

“Black Diamonds” and overwhelming poverty make for a flawed continent.

Share your thoughts.


  1. The overwhelming market for "status labels" also drives fashion counterfeiting, a huge problem for the copyright labels and goods. Shoddy knock-off goods feed the status issues you outline, and skew personal priorities for poor countries. This issue is also quite prevalent in Middle Eastern and South Asian countries where the ultra-rich enjoy Ferraris, and louis Vuitton leathers, while the poor live in squaller. It is a strange world today...

  2. Jimmy,

    Aren't we seeing the same thing in other parts of the world, i.e., India, China, Russia, etc., where wealth is being concentrated in the hands of a few people and millions or hundreds of millions live in abject poverty?

    To me what is interesting is that we find this surprising. This has been a pattern of behavior for the past 3,000 years. Why do we think that today is any different from the Middle Ages or ancient Rome?


  3. I woked in Nigeria, and saw the disparity between haves and have nots as a huge negative in that country. Nigeria is the sixth largest oil exporting country, but the oil and mineral wealth has not made a difference for the mass of people. Buying power of the few rich people does not convert to buying power growth for consumer goods. The Gucci crowd can afford to go to Paris, London, Milan, or New York. Although Conservatives in the US might disagree, that country is a perfect example of need for redistribution of wealth. There is a very small middle class, and a huge number of poor. So I didn't see luxury goods shops or notice people with buying ability who could afford them.