Black Middle Class Muscle: 4 Million and Rising
You’re no one without a DSTV dish. According to a Unilever Institute presentation at a recent conference our team attended, that satellite dish attached to the side of your house is the status symbol of the black middle class, which is larger, stronger and healthier than ever.
That dish may be a standard fixture to you or me, but it’s also a telling symbol of South Africa’s new economic powerhouse, which spends R400bn per year. The purchasing power of the black middle class has, in fact, now surpassed that of the stagnant white middle class, which spends R380bn annually. This, in spite of the fact that South Africa still has one of the greatest GINI coefficients (used worldwide to measure the gap between the rich and the poor), with an enormous divide between the haves and the have-nots.
Unilever’s 2012 study on the South African middle class surveyed 6000 people who earned between R16 000 and R50 000 per month, had tertiary education, owned cars, worked in white collar or professional jobs and lived in metropolitan areas. The study’s relevance is contextual – compared to the same study conducted in 2004, the black middle class has risen from 1,6 million to a massive 4,2 million today (from 590 000 to 1,62 million households), while the white middle class is virtually the same.
If you live in Johannesburg, this may not surprise you, with 46% of the black middle class in Gauteng, but for the rest of us suburban dwellers who are fed a diet of doom-and-gloom news; it’s far less obvious, particularly in the Western Cape, where only 3% of the black middle class resides. As for the rest of the country, 18% of the black middle class live in KwaZulu-Natal and 8% in the Eastern Cape.
How did this dramatic growth take place in just 10 years? It has been a direct by-product of the unprecedented 100-month economic boom South Africa experienced from 2000 to 2008. To put things into perspective, a typical economic boom lasts for 36 months!
During our 100 bullish months, banks and financial institutions lent money like never before. With solid salaries increasing by 8% per annum on average, the new middle class saw interest rates coming down and access to credit easing. They began closing the material gap on their white counterparts, buying goods for their homes, cars and clothing. And of course, DSTV satellite dishes.
This economic surge catapulted hundreds of thousands of South Africans into the middle class. Like everyone else in the world though, they got caught out in 2008, when the financial crisis of reckless lending came back to haunt everyone across the globe. Many have learnt some valuable, if not expensive lessons, and like the rest of us, have come to an understanding that they will now need to live their lives in more recession-proof ways. They are paying off debts, own homes in the suburbs, send their kids to good schools, are connected on the internet, and are financially stable. And the fridges, TVs and DVD players they bought during the boom years — they will not need to replace them for years to come.
Yet while the black middle class now makes up 16% of our population, 73% of South Africans live on R 5000 per month or less. They are responsible for R225bn per annum in spending; and they are our potential future. Some will move up and some will stay down, and it is certain that the future tensions we face will come from this group.