University of Cape Town: Unprecedented first wave of black middle class retirees in 20 years

In the next 20 years, South Africa’s first major wave of black middle class retirees will hit the country – a situation with no precedent. Attitudes among this group vary between those who believe in retirement planning and those who don’t envisage retirement. “If I can work, I will,” said one 37-year-old male, respondent in a University of Cape Town (UCT) report on the black middle class.

The 2022 Black Middle Class Report was launched by the UCT Liberty Institute of Strategic Marketing on 20 September. The institute is widely regarded as one of South Africa’s foremost marketing think tanks, producing reports based on robust market research and widely used by leading companies to inform strategy. The institute is supported by Liberty, one of Africa’s leading financial services companies.

The report corrals over a year of collaborative research and work and reflects the economic size and shape of this critical South African market sector. The study was first published 15 years ago; the first into South Africa’s fastest growing consumer segment.


Dr Siphiwe Dlamini, head of UCT’s School of Management Studies. Photo Lerato Maduna.
Growth and clout

At the time, the term “Black Diamonds” encapsulated the emergence of a black middle class that was unprecedented after centuries of economic discrimination and exclusion.

The 2022 updated report reflects dramatic growth in the black middle class, eclipsing that of the white middle class. It reflects on the segment’s significant and continued rise, the nuanced changes over the years and trends likely to influence and entrench the sector as the foremost consumer market into the future.



“The middle classes are really the bulwark for full economic development and success.”

The preoccupation with the middle class, black or white, as an economic sector is simply that a strong middle class equals a strong economy, said Martin Neethling, the chief marketing officer of PepsiCo sub-Saharan Africa.

“Perhaps we lose sight of the fact that the middle classes are really the bulwark for full economic development and success. It’s fundamental to growth,” Neethling said during his introduction to the launch. “The spending power and influence they have heavily shaped the economy.”

And interestingly, the black middle class has also outstripped the white middle class in material growth.

Retirement in view

In the first 20 years of democracy, the black middle class showed a massive “asset catch-up”. According to the report, there is now a tangible shift from asset catch-up to retirement readiness.

In terms of retirement, while some respondents were already planning for the future, others feared not having enough.

“I’m really afraid of being 65 and tired and not being able to retire because I can’t afford to,” said a 30-year-old female respondent.

“What this [retirement wave] will look like is open to interpretation as research into black middle class retirement is still limited,” said Dr James Lappeman, the head of projects at the institute and the co-author of the report.

However, Dr Lappeman said the study researchers noted that major shifts in this regard should be anticipated and cautioned companies against “copy-and-paste strategies from the past”.


Martin Neethling, chief marketing officer of PepsiCo sub-Saharan Africa at the 20 September launch. Photo Lerato Maduna.
Experience shaped

It’s also a sector that’s hard to define.

South Africa’s high inequality levels make it difficult to gauge the defining parameters of the black middle class. However, the report pegs this sector at 3.4 million people, or 7% of South Africa’s black African population. They represent a spending power of R400 billion per year.

In terms of income, the report considers households with an income of R22 000 per month and above.

The study surveyed over 1 700 middle class households and conducted 140 interviews. The research was “infused” by input from marketing experts and research from black middle class champions Kaya FM. Participants from the initial Black Diamond studies were reinterviewed to share how their middle-class experience had been shaped in the past decade.

Locating a single-minded point of view

Lappeman said one of the challenges was establishing a single narrative about this sector.

“There isn’t one. If you look at the news headlines, it’s either a case of ‘the middle class struggling with debt’ or ‘middle class thriving’. One of the reasons for this report is that we haven’t seen enough nuance in the media about this segment. One of our main findings was this idea of a paradox of struggling but thriving within the black middle class.”



“If you’ve got skills, you’re going to improve your circumstances.”

“The middle class is self-defined,” said Neethling. “The mistake people make is that we assume that income levels [and] social behaviour are similar for the middle class. But that’s not completely true.”

The report shows unequivocally that skills represent the middle class’s calling card, particularly the black middle class.

“If you’ve got skills, you’re going to improve your circumstances,” said Neethling. “If you have skills, you’re going to get a better job; you’re going to have a higher household income, even though on the supply side, the [necessary] schooling isn’t being created.”

COVID-19 and slipping back

However, the effects of the COVID-19 pandemic haven’t yet fully washed through the system.

Lappeman said the black middle class had shown incredible resilience during the pandemic. However, it was the poorer market sector that had borne the brunt of joblessness. A multi-university National Income Dynamics CRAM Study in 2021 during the COVID-19 pandemic showed that 85% of wage and job losses happened in households falling below the R22 000 income bracket.

“And while there were fears of slipping back, the black middle class sector is different to when we first studied it 15 years ago. The impact on their finances during the COVID-19 pandemic was seemingly limited. Seventy percent of the black middle class said that they were not worse off financially as a result.

But this resilience was also tested, said Lappeman. Finances were a major source of stress with many households reporting challenges with mental health.


The UCT Liberty Institute of Strategic Marketing’s “2022 Black Middle Class Report” is an invaluable guide to this economy-driving sector. Photo Lerato Maduna.
“Other areas of concern included their health, crime, their children’s future and not being able to support dependants financially. The pandemic did create a bit of fear about slipping back into a place of uncertainty.”

Building blocks of wealth creation

The report also found that the sector has matured over the past 15 years and there is a new, concerted focus on creating generational wealth.

“There is now access to better education and the benefit of more time spent in the middle class. This has strengthened financial decision making and created a stronger long-term financial outlook,” said Lappeman.

Paul Egan, the managing consultant at the UCT Liberty Institute and report co-author, said that education – particularly tertiary education – emerged as a catalyst for better economic outcomes in the black middle class.

“The correlation between economic outcomes and education is very strong in terms of breaking into the black middle class. Completing a tertiary qualification enhances outcomes significantly. There will always be unemployed university graduates, but as a proportion of the unemployed, they are relatively small.”

Owning the narrative

Lappeman continued, “We are now seeing more and more second-generation black middle class families emerging, more children are being born middle class. So, the parenting experience is also different. There are also changes in identity.”



That narrative has now shifted to wanting to create generational wealth.”

The term used 10 years ago to characterise the spending power and habits of this then-emerging class, was “asset catch-up”. This was built on a notion that once financially resourced, black people in post-apartheid South Africa still needed to buy the car or house as they didn’t have the privilege of inheriting assets as did their white counterparts.

“That narrative has now shifted to wanting to create generational wealth – which wasn’t seen 10 to 15 years ago,” Lappeman said.

Travel wasn’t a strong part of the narrative then either, but the researchers say this is where the sector is directing their money.

Another notable trend is the rise of women as the core of these households, helping to create generational wealth, which is likely to become a bigger and bigger topic.

Looking into the future, the study’s researchers said they see the continued growth of the black middle class, not only growing in confidence but “owning their narrative”.