A new report from the South African Institute of Race Relations (IRR) warns that, while the black middle class in South Africa has expanded quickly, it may now slow because of the fragility of the local economy.
The IRR report comes amid growing unemployment, stagnant economic activity, and rising interest rates.
The IRR said its report relied on indicators ranging from household spending levels to workplace seniority, educational levels, medical insurance cover, internet usage, property ownership, banking patterns, and appliance ownership.
It concluded, based on different definitions that might be adopted, that at most two in 10 South Africans could lay claim to a middle class standard of living – although the IRR said it is more comfortable with the estimate that one in 10 South Africans lived a middle class standard of living.
“Despite the small size of this middle class, there has been considerable growth in the black middle class, which has approached the size of the white middle class,” it said.
A report published by the African Development Bank (AfDB) in the last quarter of 2014, found that South Africa’s black middle class had surpassed the white middle class, due mainly to government’s affirmative action policy.
A United Nations (UN) article put the country’s black middle class at 4.2 million citizens in 2012, just over 50%.
The UN’s figures were in accordance with research conducted by the UCT Unilever Insitute of Strategic Marketing which found that the country’s black middle class had more than doubled, from 1.7-million in 2004, to an estimated 4.2-million in 2012.
A study published by Stellenbosch University in October 2013, had previously stated that the black middle class had grown from 350,000 individuals in 1993 to almost 3 million individuals in 2012.
It must be mentioned that all the reports used varying criteria of what it means to be ‘middle class’.
The IRR warned that as a first generation middle class, the black middle class was very vulnerable to losing their status as a result of developments such as a sharp economic downturn or a period of rapidly rising interest rates.
The report also warned that the depressed domestic economic environment would put the brakes of any significant future middle class expansion.
The IRR also cautioned that an economic turnaround is unlikely in the current domestic policy climate.
The IRR’s CEO, Dr. Frans Cronjé, said: “creating a policy environment in which any child born in South Africa might realistically aspire to reach a middle class standard of living should be the single most important priority for a South African government. The apartheid era government denied such aspirations to a majority of the country’s people.”
“The post-1994 government has done better but too many areas of policy still undermine the educational outcomes, entrepreneurship, and investment-driven growth that is so important to unlocking access to the middle classes.”