How The Rich Spend Their Money vs The Poor In South Africa

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Consumption is vital to South Africa’s economy, with household consumption expenditure as a share of GDP at around 60%.

The South African Institute of Race Relations (SAIRR) has published a ‘Fast Facts’ report which highlights consumer behaviour and spending power in the country, and how much the economy depends on consumption expenditure.

“If consumer confidence continues to dwindle, the economy will grind to a halt,” it warned.

The report shows differences in spending patterns between higher- and lower-income groups.

Date from 2014 shows that the single biggest item of household expenditure is food, beverages, and tobacco, followed by transport and then housing.

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South Africans spent 25.3% of their money on Food, beverages, and tobacco, with transport at 18.8%, while Housing, water, electricity, gas, and other fuels took up 14.6% of household expenditure.

Other notable expenditure:

  • Health: 7.8%
  • Recreation, entertainment, and culture: 4.2%
  • Furnishings, household equipment, and routine maintenance: 6%
  • Hotels, cafés, and restaurants: 2.6%
  • Education: 3.4%
  • Clothing and footwear: 4.8%

Spending on Housing, water, electricity, gas, and other fuels is up 10.6% since 2000, with transport spending up 16% over the same period. Spending on going out meanwhile, has dropped 16.1%, with furnishings, household equipment, and routine maintenance, down 25.9%.

Lower income households were likely to allocate 21.4% of expenditure on housing, versus 33.1% for higher income earners.

  • Food: 33.5% vs 10.8%
  • Miscellaneous 9.2% vs 15.2%
  • Other 25.8% vs 23.0%
  • Transport 10.2% vs 17.8%

The SAIRR said that poor households devote more of their expenditure to goods such as food and alcohol than rich households.

“As households become richer, they are more likely to spend on items such as insurance, savings, and medical care. It is striking that 25.4% of the expenditure of the richest category of households goes to income tax as opposed to 0.8% of that of the poorest households.”

The following table shows expenditure by income group:

Household expenditureWhen a provincial analysis of expenditure is done it becomes clear that the great majority of households spending more than R10,000 per month (1.51 million of 2.38 million such households) reside in the Western Cape and Gauteng.

Household expenditure by province

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