Sihle is 32 years old and Neo is 29. They have university educations and decent jobs at a retailer in Cape Town. They earn middle class salaries (middle class is broadly defined as earning between R16 000 and R50 000pm). Their frustrations stem from the fact that, despite this apparent success, they are not managing to save towards a small apartment and a car, respectively.
What they find difficult to manage are the many community obligations. “Young, working people like me are expected to fund so many things – big funerals for instance. Often this is only achieved by incurring credit card debt or taking out a personal loan,” Sihle says. “A year later we must return home to put up a tombstone.”
There are other expectations too; Sihle is paying for her siblings’ university education, to take pressure off her parents who are eyeing retirement. “When you get a job, one of your first responsibilities is to repair the family home,” she says. “This could include furniture, a fence, a coat of paint and the installation of actual bathrooms.”
Thanksgiving ceremonies are also expected after graduation or the first job placement.
And then there is the extended family that sees you as the default option for a non-repayable loan.
Owen Nkomo, executive partner of investment management company Inkunzi Investments, agreed this is a common challenge. “It’s this thing that we have exported called Ubuntu. We don’t like to see anyone struggling. So we look after our siblings, extended families and our grandmother’s child born out of wedlock that we only met when we were 20. If there are problems or if anyone dies, we have to step in and help out.”
Debt in the black middle class is a structural problem that could well take several generations to resolve. “The first and second generation to go to school or university will shoulder a burden when it comes to looking after a family or community.”
Difficulties arise because financial planning and wealth management is a stranger to the majority of the black community, which means that some people over-commit and find themselves in debt, he says.
“We need to reach a point of responsible or flexible Ubuntu which would not lead us to perpetual self-destruction. Everyone expects the guy who is working to pay – but there are other savings mechanisms, like stokvels, like funeral policies.”
Sihle adds that she and her friends assist out of tradition, out of gratitude for their blessings and out of guilt. “People ask me why I don’t leave the past behind. They don’t understand that the past is our daily present. That we have no choice but to try to take our communities with us,” says Neo.
“Many people in the black middle class have not had the benefit of a financial education,” says Owen. “Many cannot turn to parents for advice. This is not to say they are financially illiterate; far from it. They are trying to be careful and prudent with their money. We are trying to educate, but to many people using a financial planner is still a foreign concept.”
There are no easy answers. Not for Sihle and Neo, and not for society as a whole. Change will take generations. The pragmatic answer lies of course in Owen’s solution. “Learn to work with what you have, and don’t feel overwhelmed because you can’t do more.”