INDEPENDENT NEWSPAPERS
File photo: Chris Collingridge
Durban – There is a rapidly growing group of determined, ambitious, confident spenders driving consumption and growth in our pedestrian economy. In just eight years, the black middle class has grown from 1.6 million to 4.2 million adults. That’s the “good news” from the UCT Unilever Institute of Strategic Marketing study, Four Million… and Rising.
Are we heading towards a “raceless” middle class with millions of South Africans chasing a better life and trying not to lose grip on what they have?
Maybe heading – but we are far from there. Thanks to our disparate histories, racial differences are just too deep-rooted. A growing black middle class earning good salaries has not resulted in a cohesive, homogenous “raceless” middle class. The study shows that even the black middle class is far from homogenous. Those who landed there thanks to their parents are different from those who recently arrived by their own means. Personal aspirations, motivations and social circumstances fuel different consumer behaviour and brand choices.
Defining middle class in South Africa takes some home-grown ingenuity. In the institute’s classification, an adult must live in a household with an income of between R16 000 and R50 000 a month, or meet at least two alternative criteria. Of the 8.3 million adults classified middle class in 2012, 51 percent are black, 34 percent white, 9 percent coloured and 6 percent Indian. This is a dramatic shift from the 2004 proportions: white 52 percent, black 32 percent, coloured 10 percent and Indian 6 percent.
There are doubters. Institute director Professor John Simpson was involved with the first black middle class study in the early 2000s and recalls how he was criticised for proclaiming the value of this market – which, he was warned, was “one account away from disaster”.
At the time, business leader Saki Macozoma was reported to have said that the black middle class only existed as a conceptual construct. Eight years later, with R400 billion to spend, 160 percent growth and owning 1.1 million more cars, this segment is difficult to ignore.
Sceptics question the segment’s sustainability and point to an over-reliance on government patronage and credit. There is no doubt that government spending is a strong driver. Consumer data specialist Ilana Meltzer of Eighty80 showed that public sector employment had grown by 270 000 since 2008, while compensation had increased by more than R130bn a year.
It is hoped that the private sector will be able to bridge the gap if government spend slows.
Of the employed, 57 percent of the black middle class work in the public sector, many in teaching. But about 60 percent send their children to former Model C or private schools and 70 percent are not happy with the standard of education in government schools. Access to credit helps to fund the lifestyle, but the study found a growing reluctance to use credit. The market has developed a clear understanding of “good” and “bad” debt. This group has come through the recession having learnt some hard lessons, with 36 percent saying they use less credit and more than 90 percent that they are more cautious with their spending.
The black middle class has limited access to bond finance and a smaller proportion of household expenditure goes to housing.
There are also demographic and structural differences between black and white middle-class households. Black households tend to be larger – averaging more than four – and 47 percent include extended families and non-relatives. White households with couples and no kids total 29 percent. Similar black households total only 6 percent.
For more info, go to www.unilever institute.uct.ac.za
* Maggie Wittstock is the marketing services manager of Independent Newspapers.
The Mercury
