A new report by the UCT Institute of Strategic Marketing casts new light on South Africa’s richest million households – households with a net income of more than R40 000 a month.
With a combined spending power of over R700bn, these million households – only 5% of SA’s population – account for nearly 40% of all consumer spend and half of personal income tax.
Some 58% of the top million households are new entrants: they weren’t in this group ten years ago. Almost three-quarters of the new entrants are black.
Interestingly, while half of the new black entrants were previously in the middle income group – the other half (more than 200 000 households, or half a million people) came from poorer communities, below the middle class. This includes the ultra poor (the lowest income group) and the so-called "skilled strugglers" (which could include factory workers, some teachers and police officers).
This "fast-tracking" from low income into wealth (bypassing the middle class) happened despite the slowing economy, says Dr. James Lappeman, head of projects at the UCT Institute of Strategic Marketing.
This was in part due to many of these South Africans getting an education and taking skilled jobs - which saw higher wage hikes over recent years. Also "partnering up" (moving in with a partner) has helped, with half of the top million households only making it into the group because they have more than one earner in the household, says Lappeman.
The institute’s report was based on various sources, including the government-sponsored National Income Dynamics Survey, which has been gathering data from households since 2008.
These were some of the findings about the top million most affluent households in SA:
- More than half of the households are white, a third are black (up from 25% in 2008), 8% are coloured and 6% are Indian;
- A fifth of the households earn more than R75 000 a month;
- 35% of the group speak English at home, followed by Afrikaans (32%), Setswana (8%) and isiZulu (8%);
- 44% of the households are in Gauteng, followed by Western Cape (16%) and KZN (14%);
- 70% have not used public transport in the last year;
- 75% think their children will have a better future outside South Africa – but 80% say they are optimistic about what the future holds;
- 22% say they often argue their partner about money;
- 74% are on Facebook, followed by Instagram (47%), LinkedIn (45%) and Twitter (44%).
Lappeman says that while many of the top million households continue to see their incomes grow, they are being hit by big increases in "private tax”: medical schemes (Discovery, the biggest scheme, has just announced a 9.2% increase), private or previously Model C schools (estimated 8% price hikes this year), cars (14% increase in the cost of running a car over the past year), as well as security costs, data and communication.
They are cutting back on their spending and scrutinising the value of purchases, Lappeman says.
Compiled by Helena Wasserman.