A toast to South Africa’s growing black middle class

In the summer of 2005, South Africa-based entrepreneur Marilyn Cooper decided to give her neighbours in a suburb of the capital Pretoria a barbecue treat. Alluding to the inscription on her drinking glasses – Soweto Beer Festival – she asked her guests: “Why can’t we have a Soweto wine festival?” The economic situation was just right for such a celebration, she felt, as many residents of Soweto, a predominantly black township in Johannesburg, were already showing flashes of middle class life: buying new cars, modern electronics, mobile phones, designer dresses and houses. And they appeared to love a good wine.

South Africa has a growing black middle class with increasing spending power.

South Africa has a growing black middle class with increasing spending power.

Within a year Cooper had found a partner, Mnikelo Mangciphu, with whom she organised the first-ever Soweto Wine Festival. The festival has now become a popular annual event. She also owns a winery and business is booming, but she believes that better days are still ahead as she targets a rising black middle class market.

Cooper is not the only one excited about the steady growth of the South African black middle class. Speaking at the Forbes Africa Forum in the Republic of the Congo in July, South African President Jacob Zuma enthusiastically lauded current progress. “The [black middle class] growth demonstrates that we are making progress in improving the quality of life and extending opportunities to those who were oppressed only 19 years ago before the dawn of freedom.”

Growing demographic

But who exactly is in the middle class in South Africa? Although the African Development Bank describes as middle class in a developing economy anyone earning more than US$2 per day, a study by John Simpson, director of the University of Cape Town’s Unilever Institute of Strategic Marketing, defines middle class South Africans as those who earn between $1,550 and $4,800 per month or who meet certain criteria, for instance, having a white-collar job and owning a car.

In a recent study, 4 Million and Rising, Simpson agrees with Zuma’s upbeat assessment and provides backup data. For example, currently 40% of black professionals work in the civil service, compared to 13% of whites. This has led to the rise of income levels in black families, which in turn has led to increased consumption. The study found that between 2004 and 2012, the number of black middle class families who owned a DVD player increased from 30% to 63%; the number with computers at home increased from 19% to 45%; and of those owning microwaves from 60% to 92%.

Nicholas Nkosi, a manager with South Africa’s Standard Bank, adds his voice to the excitement about a new and financially empowered black middle class. More blacks are buying homes than before, he told Africa Renewal. In addition, his bank’s 2013 report shows that car sales to blacks increased 19% between 2011 and 2012, compared to an increase of 7% for white customers during the same period.

Lyn Foxcroft, a business consultant who studied wine consumption among emerging consumers in South Africa, writes: “Of the 8.3m adults classified as middle class in 2012, 51% are black, 34% white… This is a dramatic shift from the 2004 proportions: white 52%, black 32%.” South Africa’s middle class generally spends a whopping $40bn annually. Its 4.2m black middle class citizens represent a chunk of this amount, with nearly half having a post-secondary degree and more than 50% of families sending their children to private schools. Finance Minister Pravin Gordhan adds that generally since 1994, per capita national income is up 40%, while up to four in five people are now connected to the electric power grid.

Economy’s engine

Available data, says Simpson, indicates an expansion of the black middle class, and he sees this demographic as the engine of the South African economy because of its strong purchasing power and contribution to the national coffers through taxes.