South Africa’s black middle class, which makes up 7% of the black population, has grown in confidence and focuses on creating financial security for future generations and readiness for retirement.
This was stated by The Black Middle-Class Report 2022 published by the University of Cape Town Liberty Institute of Strategic Marketing, which conducted the study for a year, with surveys of over 1,900 middle-class families and more than 300 interviews.
He found that 57% of the black middle class earn R22,000 a month in family income, while 31% earn R40,000.
Despite the onset of the Covid-19 pandemic, he found that the black middle class, with a spending power of Rand 400 billion a year, remained resilient, with 70% of respondents saying they were no worse off. financially due to the pandemic.
This despite the consequent increase in the decline in unemployment, inflation, uncertainty and demand in various sectors.
“The term used 10 years ago to characterize the spending power and habits of this then emerging class was ‘wealth recovery’, based on the idea that once blacks had financial resources in post-apartheid South Africa they still had need to buy the car or home because they didn’t have the privilege of inheriting assets, like their white counterparts did, ”says Dr. James Lappeman, the institute’s head of projects.
“That narrative has now shifted to wanting to create generational wealth, which was not seen 10 to 15 years ago.”
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However, the report also notes that only 10% of respondents reported having savings of over Rs 100,000 to cover unforeseen emergencies; 8% said they saved between R50 000 and R100 000; 16% between R10.000 and R20.000; and 21% between R5 000 and R10 000.
Most respondents (32%) indicated that they had savings of less than R5,000.
Multiple streams of income
The report indicates that the idea of having multiple streams of income, including owning a business, has been on the rise since 2014, when 75% of the black middle class said they wanted to start their own business.
He says the “secondary work” culture, strengthened by the Covid-19 pandemic and remote working, is also driven by a desire to pursue a passion, diversify income streams, increase wealth and protect others.
As a 28-year-old interviewee put it: “Covid opened many doors to the middle class because our qualifications could be used internationally as the work was done online.”
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Black respondents were about 30 percent more likely to pay monthly financial contributions to their parents, siblings, and other family members – the so-called “black tax” – than their white respondents.
“Growing, evolving” segment
Thabang Ramogase, Liberty’s chief marketing officer, says it’s encouraging to see the black middle-class consumer segment growing and evolving.
“What was true of the black middle class in 1994 changed in the 2000s and changed further in 2022, which is why understanding this market holistically and what drives it is vital,” he adds.
“A deep understanding of the nuances that drive the ‘why’ of these consumers will better inform our product designers and actuaries, to produce more compelling proposals that solve real problems.”
Lappeman adds that the first major wave of black middle-class voters will retire in the next 20 years.
“What this will look like is still open to interpretation, as research on black middle-class retirement is still limited.”
He points out that the study researchers note that major changes in this regard should still be expected and warn that companies should only be careful about copying and pasting strategies from the past.
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This article originally appeared on Moneyweb and has been republished with permission.
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