'Black Diamonds' driving South African economy

JOHANNASBURG:Once barred from the mainstream economy, South Africa's black population is on a spending spree - driving the demand for consumer goods, especially mobile phones, cars and clothes - to a record level. Joe Humphriesreports

That is according to a new survey on the spending patterns of "Black Diamonds", or middle-class Africans who are flourishing in the post-apartheid economy. The study, published this month, highlighted the huge disparities of wealth that persist in South Africa, a country in which half the population remains under the poverty line.

On the positive side, it said the black middle-class grew by 30 per cent over the past year, pumping an extra 50 billion rand ( €5.3 billion) into the economy.

This was despite four interest rate increases that were meant to dampen credit-led consumer spending. The survey also identified distinct consumption patterns among Black Diamonds.

"At first, they would buy goods that showed they belonged to the middle class: houses, cars, clothes and phones," the report said.

Next on the list came investment properties, laptops, satellite TV decoders and subscriptions and plasma-screen TVs.

"For those established in the middle class, the next big purchases are medical aid, life insurance and long-term investments," it added. "Black Diamonds believe what you own shows where you are on the social ladder."

Prof John Simpson, head of University of Cape Town Unilever Institute, which conducted the study along with TNS Research Surveys, said: "There is an overwhelming desire among black South Africans to have access to a lifestyle they believe is their right. Growth will continue in the immediate future because so many desire the middle-class lifestyle."

He noted the black middle class was primarily responsible for fuelling growth in South Africa in recent years, pointing out that spending by the white population has been stagnant. It has come at the cost, however, of greater indebtedness. "The black middle class are conscious that they're very indebted, but it's the price they are paying for catching up," he said.