Who owns what by race
Credit-Suisse’s Global Wealth Report, published in October, shows that South Africa is a leader in the wealth stakes, having quadrupled the wealth (assets less debt) of households from $8 400 in 2000 to $34 000 at mid-year this year.
But wealth, the report finds, is a highly unequal thing globally, with just 1% of people owning 44% of total wealth.
It says that wealth distribution in South Africa is not dissimilar to the international picture, except that there are noticeably fewer richer South Africans in the top wealth bracket, which Credit-Suisse sets at above $100 000.
The taxman has noticed this too. As reported by the Mail & Guardian last month, the South African Revenue Service estimates that there are 2 600 high-net-worth individuals in the country (with assets above R75-million), but only 360 of these individuals are registered to pay tax.
But even if Credit-Suisse is right and South Africa is not out of synch with global trends in the distribution of wealth, that does not mean that it is a sustainable society if wealth distribution remains racially skewed.
Democratic South Africa has been an ambitious experiment in social engineering, implementing a set of policies aimed at empowering people previously disadvantaged under apartheid.
But at the same time the country has tried to move away from racial labelling, meaning that it is not always easy to work out who owns what on a racial basis.
When you buy shares on the JSE, for instance, you do not disclose your race when you buy, nor would you want to.
But this lack of disclosure has meant that determining share ownership can be inexact, not to mention controversial.
Anecdotally, there has been a dramatic redistribution of wealth, so much so that Woolworths chief executive Ian Moir lists demand from the black middle class as a key profit driver for Woolies. Moir said in an interview with Media24 that exciting times lay ahead not only for Woolworths but also for the entire South African consumer environment.
“The living standards measure [LSM] group five to eight is growing in leaps and bounds. It is younger, blacker and spends more. The expectation is that within the next five years this category will account for about 47% of spending on clothing and 43% of that on food,” he said.
“Woolworths is grooming itself for the buying power of the growing black middle class,” Moir said. “The market is coming to us. It’s in very few global markets that retailers see this degree of growth.”
It may be hard to work out asset ownership by race but economist Mike Schussler has done this by marrying available data sets with some educated guesswork.
He acknowledged that his results were indicative rather than absolute but saw them as providing the best available picture.
His research, published late last year, showed that, although the assets belonging to South Africans were dominated by financial assets and by white people, there had been shifts in the ownership of assets, particularly homes.
According to Schussler, financial assets such as listed shares, bonds and money-market investments made up 54% of the total, whereas 42% of South African assets were homes, and foreign assets made up the final 4%.
Using data gathered from the All Media and Products Survey (Amps) and Stats SA’s labour force and general household surveys, Schussler found positive shifts taking place in regard to who owned these assets, particularly in regard to homes.
White South Africans held 41% of total assets, with 27% belonging to black South Africans, 5% to coloureds and 4% to Indians. Foreigners and the state, viewed as neither black nor white, accounted for the rest at 13% and 10% respectively.
Using department of trade and industry definitions for black South Africans, which includes black, coloured and Indian people, Schussler found that black people owned 34% of listed [JSE] shares. They also owned 56.7% of housing assets, 55% of money-market investments, 37.2% of bonds and 41.7% of foreign assets.
Using data from the Stats SA general household survey, Schussler found that property ownership by value, at 57%, was dominated by black South Africans. White South Africans owned 43% of residential property by value.
Of the total 57% of black property ownership, coloured people accounted for 9%, Indians 7% and blacks 41%.
Schussler said that the definition of a house incorporated structures such as shacks, traditional dwellings and formal structures or brick homes.
He found that 70% of South Africans lived in formal homes, 16% in traditional dwellings and 14% in informal structures such as shacks. The majority of homes and dwellings were fully paid off.
Using data from the household survey, he pointed out that one in three blacks had a second home, compared to one in 10 white households. The expansion of government’s housing build programme was a factor, he noted, as people could have RDP homes with a second home in a former homeland. By the end of the year, the state would have built three million homes.
Blacks had “done relatively well in housing” although they still had less assets on average than white people. The picture of financial assets was also slowly changing, as seen in the division of financial assets.
Schussler said the outlook for many black South Africans was improving.
Home owners rate
Examining figures from other countries, South Africa’s home-ownership rate was high compared with other countries at more than 70%. This was well above other countries such as Australia, the United Kingdom and the United States.
“We may be an income-poor country but we are asset-rich,” he said.
One asset Schussler did not include was unlisted business, as this was particularly difficult to value. These were run by entrepreneurs, 53% of which were white, 38% black, with the other 9% more or less split between Indian and coloureds. Although the value of these businesses was difficult to determine, by examining employee numbers, Schussler calculated an estimated value using labour costs.
South Africa’s asset make-up included unlisted business at 16%, primary property at 28%, listed shares at 30%, individual bank assets at 9% and bonds at 8%.
The JSE reported in early October that 17% of the stock exchange was owned by black South Africans. Excluding shares such as those held by foreigners, the state and treasury shares, the researchers determined that the percentage of shares available to South Africans to invest in was 60%.
Based on this, black South Africans, owned 28% of available shares.
Of the JSE’s reported 17% ownership, 8% was held directly through vehicles such as empowerment trusts, whereas the other 9% was owned through vehicles such as retirement funds and unit trusts.
But not all available shares have been measured. Significantly, about 18% of mandated investments such as retirement funds are yet to be examined, along with 14% retail ownership of shares.
With 32% of available shares still to be measured, the likelihood is that proven ownership levels are going to rise.
At a level of 28%, the market was already above the level of the department’s generic empowerment target of 26% black ownership by 2017.