The racial profile of South Africa’s more wealthy has been changing faster on a number of fronts in favour of blacks in recent year than is generally perceived. The latest indicator, produced by the University of Cape Town’s Unilever Institute of Strategic Marketing (UISM), found that the spending power of the black middle class surpassed that of their white counterparts by R80 billion last year.
The latest findings of the UISM’s “4 Million and Rising” project comes on the heels of a report by the South African Institute of Race Relations (SAIRR) in February this year that the emerging African middle class is catching up to the white middle class in terms of home ownership and a report in December of last year from the Johannesburg Stock Exchange (JSA) that black investors hold similar stakes in listed companies as white investors.
The UISM project, which has been conducting research on the country’s black middle class since 2004, said last week that South Africa’s black middle class has shown strong growth in the 19 years since the transition to full democracy in 1994. It has now reached an annual consumer power worth R400 billion compared to the R320 billion from the white middle class.
The institute states on its website, “We could never have predicted that black middle class spending would have skyrocketed to a staggering R420 billion per annum – substantially outstripping white middle class spending power."
Since 2004 the black middle class market has more than doubled in size, growing by 250% from 1.7 million in to 4.2 million last year. The research shows that black middle class spending began pulling ahead of the whites in 2008 and has skyrocketed since.
By contrast, the white middle class remained stagnant over the same period as its adult population grew from 2.8 million in 2004 to 3 million in 2012.
The study exposes a vastly transformed consumer segment.
“There’s a huge commitment to go to university. This group sees education as the stepping stone to everything,” Unilever Institute director, Professor John Simpson was quoted by Business Day.
In February the SAIRR reported that “data, obtained from Statistics SA, showed that in 2011 there were 363 000 African homeowners paying bonds on their properties", compared to 386 000 white homeowners.
"Because this African middle class was previously unable to own property as a result of racial ideology, what we are seeing in the data is encouraging," institute researcher Georgina Alexander said.
Bonded home ownership was an important indicator of the middle class - of people with sufficient wealth and income stability to borrow money from a lending institution, to invest in a lasting and expensive asset, she said.
Research on behalf of the JSE and released in December, which focused on ownership of the top 100 listed companies on the JSE, found a similar participation level among domestic black and white South African investors - 21% and 22% of the Top 100 by value respectively.
This calculation is based on the 24% of shares held directly by South African individuals and excludes the 34% held by foreign investors and 2% by government. Institutional investors such as pension funds and life insurance companies owned 40% of the share holding, according to the research.
JSE CEO Nicky Newton-King said at the time: "We also think one can assume that the black economic interest will continue to climb in future, and that this research provides a base for future measurement."
These three key indicators seem to indicate that some of the traditional racial constructs placed on the South African economy need to be revised.
At the African National Congress policy conference in Johannesburg last year President Zuma for instance claimed that South Africa’s economy is still mostly under the control of whites who held power under apartheid and the government needs to take more drastic steps to make sure the black majority can benefit from its wealth.
If his assessment is stripped of its racial connotations he was however, probably not far off the mark when he, at the same occasion, stated that the challenges of poverty, unemployment and inequality posed long-term risks for Africa's richest country 18 years after the end of apartheid.
The SAIRR’s Alexander warned at the time of the release of the report on home ownership that the "collective middle class" remains a small minority in South African society. "Therefore, what we see in the growth of the African middle class is more the expansion of an elite minority, rather than the rise of a prosperous majority."
To add a racial connotation to this problem probably only serves to throw a dangerously dividing and highly emotional factor into what is already a socially explosive mix.