Soweto beats suburbia at own game

Survey shows business boom in black townships

Consumer culture survey shows that there is huge spending power in black urban areas.
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The consumer culture gets credit for booming business in historically black urban residential areas.

This is the finding of the Roots 2013 survey, recently released by the Advertising Bureau newspaper. 

Soweto, the most populous of the historically black urban residential areas and an iconic place, rich in political history, appears to be a town steeped in consumer culture.

Malls have sprung up in every suburb and housing prices have boomed over the years.

The Roots 2013 survey, the largest survey to look at communities in terms of the urban landscape, gathered consumer information from 115 of these communities.

More than 40% of Johannesburg's residents live in the 10 Soweto suburbs surveyed.

Most of the Roots subjects frequent shopping malls, own cellphones and said they had bought a takeaway meal at least once in the past month.

The Roots 2013 data revealed that monthly household income in the Soweto suburbs ranges from R6 000 in Jabavu to R8 900 in Orlando and is topped only by R11 400 in Protea.

Between 36% and 61% of the community in the suburbs are employed; and between 21% and 39% own a car.

Property prices in the area are increasing, which is an indication of the growing middle class in Soweto.

According to Lightstone, a provider of comprehensive data, analytics and systems on property, automotive and business assets, the number of property transactions in Soweto has fluctuated over recent years, but the transaction value has increased significantly.

In 2002 Lightstone recorded close to 16 000 transactions to the value of R167 million. In 2012, fewer than 4 500 transactions were recorded, but with a transaction value of almost R700 million.

Mike Schüssler of economists.co.za said many older townships could be defined as middle class.

"There are eight million cars in South Africa, but worldwide only one in four adults has a car. So that is middle class in some way."  

Furthermore, South Africans are rich in assets with 70% of families own their homes.

Experts classify the classes in South Africa as: low income, lower-emerging middle class, realised middle class (which would generally earn between R350 000 and R750 000 a year) and the affluent.

Certain parts of Soweto have many affluent people, but the bulk of Soweto falls in the emerging middle class – the working-class grouping – and some are in the realised middle-class group.

The real low-income group is still there but has not grown much in recent years. 

Schüssler told economists.co.za that townships are becoming more like suburbia, and suburbia – with shebeens and taxis moving in – is becoming a little bit more like townships.

These different segments have always been there in areas like Soweto, but there is so much more now since the end of apartheid.

The proliferation of shopping malls in the area has brought both good and bad.

According to Churchill Mrasi, chairperson of Greater Soweto Business Forum, the proliferation of shopping malls in the area has brought both good and bad and small businesses had suffered as a result of these developments.

In 2011 the Bureau of Market Research released findings that only two out of five informal businesses started in Soweto were still in operation five years later – more than 60% of small businesses closed their doors between 2007 and 2011 and fewer new businesses opened.

Schussler said a balance was needed.

"Those who will create more jobs are the smaller guys who get squeezed out of malls because of high rent … But we need economies of scale … bulk buying keeps prices lower," he said.

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