‘Meteoric’ growth of black middle class

Shoppers walk past a Truworths shop with Sale advertisements on its windows at the Sandton shopping mall in Johannesburg January 30, 2012. REUTERS/Siphiwe Sibeko (SOUTH AFRICA - Tags: FASHION BUSINESS TEXTILE)

Shoppers walk past a Truworths shop with Sale advertisements on its windows at the Sandton shopping mall in Johannesburg January 30, 2012. REUTERS/Siphiwe Sibeko (SOUTH AFRICA - Tags: FASHION BUSINESS TEXTILE)

Published May 10, 2013

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Cape Town - South Africa’s black middle class is showing “meteoric” growth, and its combined spending power of more than R400 billion a year is indispensable to the economy, a study by UCT’s Unilever Institute of Strategic Marketing has found.

But while the black middle class had increased in size from 1.7 million in 2004 to 4.2 million today, numbers in the Western Cape remained low, the institute’s director, Professor John Simpson, said on Thursday.

Simpson was presenting the findings of the institute’s study on the black middle class to an audience of 260 marketing agents, bankers, retailers and academics at a seminar in Rondebosch.

Only 3 percent, or about 120 000 black middle class South Africans lived in the Western Cape, mainly in Cape Town, said Simpson.

Gauteng, meanwhile, had 46 percent, or about 2 million black South Africans who fell into this group.

The main reason was the Western Cape’s historically small black population.

This had given the province a smaller base to grow off, said Simpson.

He said the Western Cape could expect to see higher growth.

The seminar dealt mainly with the question of how to tap into the lucrative black middle class market as the spending power of black middle class South Africans surpassed that of the white middle class.

According to the institute’s study, the black middle class spends more than R400bn.

This is more than the R380bn spent by the 2.8 million white middle class adults.

While the white middle class has “stagnated” since 2004, the black middle class has more than doubled in size, despite the recession that struck in 2008.

The study defined middle class as a black adult, older than 16, and living in a household with a combined monthly income of between R16 000 and R50 000.

But Simpson said the importance of a growing middle class resonated far beyond new marketing opportunities.

Internationally, stable and growing countries had a thriving middle class, he said.

“It’s crucial to the well-being of the country… it’s probably the biggest deal in South Africa today,” Simpson said.

For its study, the institute analysed AMPS (All Media and Product Survey) databases, the replies of 6 000 questionaires, held video interviews and organised focus groups.

Simpson said the spending power of the black middle class had become an indispensable contributor to growth.

“In South Africa, unlike China, we have to spend to grow the economy,” Simpson said.

This was because the country manufactured relatively few products.

Simpson said four main factors had contributed to the growth, which had shown no signs of slowing.

The first was easy credit, especially before the recession. The second was the growing number of black people completing tertiary education.

Simpson said BEE had also contributed, as had the high growth rate before the 2008 recession.

But he emphasised that the aspiration to have a better and financially secure life was the main thing driving the growth of the middle class.

[email protected]

Cape Town

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