Buying Patterns Reflect Our Economic History

Article excerpt

BYLINE: Sihaam Nieftagodien

and Servaas van der Berg

The African middle class, initially very small, has expanded tremendously since the political transition and has become a social force to be reckoned with.

The growing income of this group has made it increasingly visible and economically influential, as higher incomes allow higher spending.

As a result, the African middle class forms a growing part of the overall market. Speak to retailers or property agents, and they'll tell you that the presence of a growing African middle class is an important aspect of the economic boom we are experiencing.

By our estimates, the number of members of this class has increased threefold, from about 400 000 people to 1.2 million, taking an income of R40 000 per household member as the middle-class threshold.

In the past nine years, car ownership among Africans increased from about one in every 20 households (5.1%) to one in every six households (16.2%). In cities, almost a quarter of African households now own a car.

The researcher and political commentator Lawrence Schlemmer has found that though the African middle class is still relatively small, it has been growing spectacularly at over 20% per year over the past decade.

He also argues that it has a very important social role, for "Social organisation and a self-confident middle class are the underpinnings of the socioeconomic and political pluralism that gives society the flexibility to adapt to economic challenges."

But this middle class is "not yet consolidated and secure in terms of assets, status, and self-image", which leaves it economically vulnerable. This, we believe, is one factor behind the efforts of members of the African middle class to consolidate their status, among other things, by acquiring assets.

Our research starts from the idea that those entering the middle class, whatever their origin, have very similar aspirations and are subject to very similar circumstances and pressures.

It is in the same tradition of research as that on Engel's Law, which shows that as consumers grow richer, their consumption typically changes in relatively predictable ways.

The middle class, for instance, spend a smaller proportion of their income on food than do the poor, and more on other goods.

Africans in the middle class may travel less or spend less on holidays than members of other groups, but their aspirations in this regard are often not all that different.

But meeting these middle-class aspirations may first require that they acquire some other things: A good house, car, durable goods, and so on. Assets, in other words, and perhaps also financial assets. But spending on assets leaves less for spending on other middle-class goods and services.

If the African middle class is so important economically, socially and politically, its rise deserves special attention. Our research at Stellenbosch University compared the spending patterns of the budding African middle class to the middle class of other population groups. The results are surprising, and worth reporting.

Research that showed that spending patterns of the African middle class were quite different from those of other groups with similar income levels provided the impetus for our own investigation. Why do different groups with similar income levels show drastically different spending patterns?

Marketing researchers (for instance, in the so-called Black Diamond study) often emphasise that differences in tastes between groups exist for cultural reasons. In contrast to the view that cultural factors or taste preferences explain why middle-class Africans consume less of certain typically "middle-class" goods and services (such as travel, or eating out), we take a different view.

Our research finds that African spending patterns are quite similar to those of other race groups, once we take into account historical deficits in assets that continue to limit and shape black consumption. …