Black vs white household spending in South Africa

Publication: BusinessTech

Recent data from the Institute of Race Relations shows just how much the legacy of apartheid lives on at a house-hold level. According to the research report, almost two-thirds of white households fall into the “highest level of monthly expenditure” at over R 10,000. In comparison, only 8% of black households, 20% of coloured and 43% of Asian households are in this bracket. Instead, 60% of black African households spend under R2,500 a month, over ten times as many as white households, at only 6%. The obvious inequality in these statistics show how the wealth in South Africa is still concentrated amongst white people, a minority of the population, trickling down to the individual level, leaving a majority of the black population with a much smaller income with which they can feed their family. 

 

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While tough economic conditions have put pressure on all households across all races and income groups, data from the Institute or Race Relations shows that white households compared to black are by far still the best off in the country.

The data is contained in a research report from the IRR in 2015, showing consumer expenditure trends among South Africans, broken down by expenditure level and race.

The breakdown reveals massive levels of inequality, where almost two-thirds (61%) of white households fall into the highest level of monthly expenditure (R10,000+), compared to only 8% of black households, and 20% of coloured and 43% of Asian/Indian households.

Conversely, the majority of black African households (60%) are spending under R2,500 a month, compared to just 6% of white households, 32% of coloured households and 10% of Asian/Indian households.

 

Expenditure Black African Coloured Indian/African White
R0 – R399 626 000 21 000 * *
R400 – R799 1 244 000 40 000 * *
R800 – R1 199 1 815 000 64 000 6 000 27 000
R1 200 – R1 799 2 013 000 92 000 13 000 34 000
R1 800 – R2 499 1 851 000 137 000 17 000 37 000
R2 500 – R4 999 2 299 000 273 000 52 000 128 000
R5 000 – R9 999 1 315 000 245 000 83 000 302 000
R10 000+ 1 012 000 222 000 154 000 988 000
Unspecified 330 000 21 000 34 000 93 000
Total housholds 12 506 000 1 116 000 361 000  1 619 000

* Numbers under 10,000 are too small to provide estimates

 

The following graphs show the differences between the lower (<R2,500), middle (R2,500-R10,000) and upper (R10,000+) levels of monthly spending among South Africa’s 15.6 million households, across race groups.

 

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According to the Pietermaritzburg Agency for Community Social Action (Pacsa), the average household in South Africa comprises 5 family members (a mix of children, adults and the elderly), shooting up to 7 members in black households.

To feed a family of 5 the bare minimum in August 2016, it costs R1,942 – in August 2015 (aligning with the IRR’s data), the amount was R1,624.

To feed a family of 5 a nutritionally complete basket of food (the minimum recommended for healthy living), it would cost R3,126 – and R4,325 for a family of 7.

However, in terms of South Africa’s rising black middle class, updated figures showed that this segment has more than trebled over the past 12 years, while the country’s white middle class has shrunk over the same period.

City Press reported that the black middle class is up to 5.81 million, citing University of Cape Town marketing professor, John Simpson.

According to Simpson, factors driving the surge include greater access to credit, improved education levels, BEE and improved economic growth until recently. He noted that since 2004, the number of black middle class members with a tertiary qualification has grown by more than 2 million.

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