South Africa’s black middle class is booming
Written by Yazeed Kamaldien
South Africa has a booming black middle class with an annual consumer power worth R400-billion, confirmed a research think-tank this week.
The Unilever Institute of Strategic Marketing, based at the University of Cape Town, said yesterday that its recent research project ‘4 Million and Rising’ would reveal other facts about this sector when it launches next month.
Its study “charts the development of South Africa’s black middle class.”
Unilever first conducted research on the country’s black middle class in 2004. It said since then this “market has more than doubled in size, growing by 250% from 1.7 million in 2004, to an estimated 4.2 million last year.”
“The latest research shows black middle class spending began pulling ahead of the white middle class in 2008. It has since skyrocketed to over R400-billion per annum,” said the institute.
It said the “white middle class has remained fairly stagnant over same period, with its adult population growing from 2.8-million in 2004 to 3-million in 2012.”
Unilever director, Professor John Simpson, said the recession has not held back the black middle class.
“It continues to rapidly expand and is more influential and powerful than ever before,” he said.
Simpson led the study and said this research would assist businesses and industry to improve services and goods to meet the market’s needs.
“That this market continues to grow and prosper is crucial to the health and future of the economy. The black middle class is helping create a vibrant and stable society by increasing South Africa’s skills base, deepening employment, and widening the tax net,” said Simpson.
“As this market has matured, it has become much more complex than marketers and advertisers have assumed. Marketers are not adjusting fast enough to meet the needs of this rapidly transforming market segment. This new order demands new strategic thinking from businesses and manufacturers; from how they both create and sell products, to the way they distribute and market.”
Researchers found that an estimated 95% of the black middle class own cell phones, compared to 64% in 2004. But 66% of those surveyed said it was getting a job has become harder, due in part to the global recession.
Simpson said this meant a new view among the black middle class that “it is no longer ‘bling’ at all costs.”
Unilever statistics indicate the survey respondents “reported curbing their spending and only using credit when something was absolutely essential.”
“Of those surveyed 80% reported they were now more cautious about spending, while 22% admitted they were struggling to manage their debt,” it said.
Simpson added though: “For many in the black middle class, cars still embody status and are perceived as ‘shorthand’ for social standing.” Brands remained an extension of identity for the black middle class.
Xolani Qubeka, national chief executive of the Black Business Council, said yesterday “it would make sense” that the black middle class was growing.
“The private and public sector is pushing for employment equity so there are more jobs for blacks. We see more and more young black people buying new cars. They also spend money on the retail sector,” he said.
Qubeka said businesses would take note of this growth because “they need to know who their customers are.” But he said the country needed to grow black entrepreneurs and not only black consumers.
“That is fundamental. Businesses will create employment,” said Qubeka.
The full research report will be released early next month.