Black South Africans are earning more green

I have never met Jocelyn Newmarch. I have no idea what she looks like. I do know that she writes with an easy-to-read, uncluttered style, and her Mail & Guardian piece on 31 October filled me with optimism for 2008.

Her story included several references to research undertaken by highly credible organisations and reports all the way from AMPS, the University of Cape Town’s Unilever Institute of Strategic Marketing through to the Department of Manpower. It was her opening paragraph that had me hooked: “South Africans are earning more. Much more. Total income has more than doubled in the past seven years. This phenomenal growth is eclipsed only by the growth of the black middle class, which has grown at an even faster rate"

Now we all know that 2007 has been challenging on several fronts. Not least for short-term insurers haemorrhaging cash in an effort to meet motor book claims, as thousands of newly-licensed drivers took to our roads or had their cars hijacked. Crime also continued to keep luxury goods retailers raking in money as they battled to resupply the insured victims of stolen TVs, cellphones and other highly targeted goodies. Then there was the spate of interest rate hikes as the Reserve Bank battled to reign in inflation – the knock-on effect of which we have not yet fully experienced. So what is the reason for my sudden optimism? Well, it was when I got two thirds of the way through the article that I read that according to the AMPS survey quoted;

“23.7% of people had insurance two years ago, now 26,4% do, an increase of 12%”. The survey didn’t indicate which demographic was responsible for the 12% increase, but I’m guessing that our growing black middle class had an impact. Of course, the AMPS survey, while certainly scientific in its approach, is not so much of an audited guarantee of the growth in the market; rather, it should be seen as a more subjective indicator of trends amongst the target canvassed.

What all this means is that the insurance cake is growing larger. 12% larger per year, if you believe the research quoted. Now, if my assumption is correct, and the driver is largely our growing emerging market, then it means that there are massive opportunities for intermediaries. Not all intermediaries mind, only those who have the foresight to practice sound marketing skills – the first rule of which is to understand your market.This may be something of a challenge if your home language is Afrikaans. Or English. Even more of a challenge if every person in your office is lily white.

To really understand the lucrative new market that is growing by 12% every year, you are going to have to learn. And, the first thing you are going to have to learn is how to share. Actively recruiting a partner from the demographic you wish to target is probably the easiest way to get inside your market’s headspace. Not a token partner but someone with street smarts, drive and the ambition to achieve. If you are serious about doing business in South Africa, then you need to be looking for (or training) your own rugby giants like Akona Ndungane or Gcobani Bobo. These are not ‘token’ players contracted to make up numbers, and neither should your new broker partner be on your team simply to fulfil your BEE-quota obligations.

There is certainly a lot of quality black talent graduating at universities around the country every year. You have the knowledge in your practice; they have the drive and the understanding of the market you want to play in. Does it really matter if you have to give away some of your profits or even a share in your business? In the evolving world in which we operate, this kind of unforced empowerment is the only real empowerment that will benefit all stakeholders. But hurry; financial institutions have already cottoned on to the idea, and top black financial talent is indeed going to be a valuable commodity over the next few years.