28 June 2002Facts about the South African Economy
...Doom and Gloom?
Final Comsumption Expenditure (FCE) grew by 8% last year to R51.1 billion out of which shopkeepers got 48% in 1985 compared to 42% in 1999
The biggest competitors for the retail industry:
Cellphones (mobiles) - By March 2001 approx. 7.5 million cellphone users in South Africa will consist of 2.1 million contract and 5.4 million pre-paid subscribers. Annual spending will be R13.2 billion which is a 45% increase in spend compared to March 2000.
Vodacom (one of three providers) estimated that 50% of the population will own a cellphone in the next 5 years which translates into 21 million users by 2006.
Casinos - Estimates are that
around R6.7 billion was spent in casinos during 2001. The majority of gamblers
were black adults (2 666 people surveyed). Of these the majority were in
the lower income group (earning less than R2 500 per month or less). Almost
a quarter admitted using household money for gambling.
Lottery - During 2000/2001, ticket sales reached R2.3 billion. This equates to 0.4% of total household expenditure. The R3 billion per year horse racing business lost 10% to the lottery. South Africans spend on average R52 million per week on a "maybe" win. It is estimated that 80% of smaller winnings will go back into consumer spending but overall, 60% of lottery sales are lost to the consumer sector (over R1 billion)
And if the retail sector thought that they had it tough, there is still the petrol price, hikes in municipal services, higher medical and educational costs, lower household incomes, rising unemployment and informal traders. We won't even venture into the collapsing Rand and it's implications.
Then of course there was September 11.
Another major factor is HIV/AIDS
and the negative influence this have on the population. 11% of all South
Africans have HIV/AIDS (4.7 million) with the infection rate sitting at
24%. 53% are female, 46.8% male and 0.2% babies.
The implications of AIDS
include the loss of wage earners, wage earners spending more on medical
care taking care of infected family members as well as an extra financial
burden on those opening their hearts and homes to AIDS orphans. Then of
course there's still the funeral costs.
30% of South African households earn more than R2 500 per month. Only 7% earn more than R10 000. Income has grown by R54 billion since 1991 of which the richest 10% received 61% of this income. In spite of this annual savings has come down from 6% in 1993 to less than half a percent in 2000. On average 56% of disposable income goes to paying off debt.
Since the 1994 elections black consumer spending has increased to 56,6% in 2002. Whites are on 30% with Coloureds on 9% and Indians on 5%. 71,3% of sales goes to household furniture and 21,6% to sporting and recreational goods.
Is there an upside? Of course
there is. With the current depression (dare I call it that?) South Africa
is recovering well. But more of that later.
Sources :Fleming Martin Research South Africa, AC Nielsen and The South African National Lottery Board
Stephen Rule and Chris Sibanyoni’s “The social impact of gambling in South Africa: an initial assessment for the National Gambling Board” (HSRC, 2001), AC Nielsen, HSRC, Unisa
(Bereau for Economic Research) South African Institute of Race Relations, Business Day 19 March 2001, FutureFact, AC Nielsen, Institute for Future Research, The Economist South Africa Survey, February 24th – March 2nd 2001
AMPS 1998, Sunday Times 11/02/2001, Business Day 7/11/2001, BER Retail Report, Q4, 2000