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The large majority of South Africa’s black middle class emerged from the Covid-19 national lockdown unscarred financially. The pandemic, however, had a profound impact on other areas of this demographic’s lives.
This is according to the latest instalment of the Black Middle Class research report, which was released by the University of Cape Town Liberty Institute of Strategic Marketing on Thursday. It has been 15 years since the first study of its kind was conducted.
The study was conducted over a year with a survey of more than 1 900 middle class households along with more than 300 interviews. Around 70% of the participants, considered middle class because they earn a monthly income of R22 000 or more, said they were not worse off financially as a result of the pandemic.
However, their finances remained this consumer segment’s main stressor, followed by health. Moreover, 42% of the participants said their mental wellness has deteriorated, amid widespread anxiety about being able to maintain middle class status.
According to the report, there are now 3.4 million people who fall into the black middle class, making up 7% of South Africa’s black population. The consumer segment has a spending power of R400-billion per year.
The country’s white middle class is smaller, at 2.4 million. However, on average, members of the black middle class earn considerably lower incomes than their white counterparts. The average net worth of white middle class households (R4.5-million) also dwarfs that of black middle class households (R1.7-million).
The black middle class, the research found, is also financially precarious, with only 10% of participants saying that they have over R100 000 in savings. The majority (32%) have less than R5 000 in their savings account.
The report also found that, compared to 15 years ago, the black middle class now has a more concerted focus on creating generational wealth.
Despite the country’s low economic growth and Covid-19’s onslaught, 95% of the participants expect to be in a better financial position within five years.
James Lappeman, the report’s co-author, noted that in the next 20 years, the first major wave of black middle class South Africans will be retiring.
“What this will look like is still open to interpretation as research into black middle class retirement is still limited. However, the study’s researchers noted that major shifts in this regard should be anticipated and cautioned that companies should be careful to just copy and paste strategies from the past,” Lapperman said.
From a marketing perspective, industry veteran Sello Leshope noted that the pandemic seems to have shifted the focus away from the middle class. “I think the middle class conversation has died among marketers,” he said.
“I think a lot of categories are still in recovery. Everybody’s trying to play catch-up because of the change in the consumer landscape, in terms of consumer habits of digitalisation and convenience. And I think we are all really just trying to define the role that we play in consumers’ lives in a meaningful way.”