12/07/2017 12:37 SAST | Updated 14/07/2017 14:43 SAST

Special Report: Black Tax

HuffPost SA explores what it means to navigate your finances and relationships when supporting members of your extended family.

Revealed: The Pain of Black Tax

"Sometimes you feel like there is this anger when you tell them you don't have money. It has even made me scared to say 'no' or say, 'I can't this month'."

Ntozinhle Nkosi* is a 30-year-old administration manager from the North West who has been supporting family members financially since she started working six years ago. "Half of my stresses come from black tax," she tells HuffPost SA.

Half of my stresses come from black tax.

Extended-family financial obligations and/or ad-hoc requests for financial support are among the top sources of financial stress for professional middle-class South Africans, according to the 2017 Sanlam Benchmark Survey.

Read more here.

*Not her real name.

Sebabatso Mosamo
Winny Dubazane (24) supports a number of family members including her 13-year-old brother and her grandmother (79).

My Life With Black Tax: Breaking The Cycle

Twenty-four-year-old Winny Dubazane's black tax journey started long before she graduated with a Bachelor of Arts degree from the University of Cape Town in 2013.

At 19, she worked part-time jobs while studying and would send money home to Siyabuswa in Mpumalanga. Dubazane, who now works as a client services lead in a Johannesburg-based public relations agency, remembers that period as being particularly rough.

She knew without a doubt then that her first salary and other salaries to come would have to help support her unemployed grandmother, siblings and cousins.

Read more here.

'Only a few pay cheques away from poverty'

Dipuo Ngobe* (28) sometimes wonders how her life would have turned out if her parents had been well educated, had good jobs and were able to build a house or save some money for their children.

The Johannesburg-based nurse is the first college graduate in her family. She has been supporting her parents and siblings since 2014. "I do sometimes have these like bad feelings and even jealousy and anger when I look at white people -- they are sorted and we have to work very hard," she admits.

Bandile Ngidi, the co-founder of NGO Rethink Africa**, argues that the financial pressures that constitute black tax include an "initial asset deficit". This means that young black South Africans often start out their careers at a disadvantage compared with their peers -- with student debt and without the financial boost of wealth or assets like a car from their parents.

"This asset deficit means that black South Africans have a more precarious place in the middle class: they are only a few pay cheques away from poverty given their debt, lack of savings and generational wealth," says Bandile.

This asset deficit means that black South Africans have a more precarious place in the middle class.

Mphumeleli Ngidi, a history lecturer at the University of KwaZulu-Natal, says it is not surprising that first-generation graduates are supporting their families financially given our history. "South Africa becomes a union in 1910 and all Africans are excluded. There is the Natives Land Act in 1913, which does not favour African indigenous people, then apartheid whose policies left many generations of black people destitute.

"They [first-generation graduates] are catching up. How would their parents have saved money or built houses when they were not educated and were cheap labour?"

The acting CEO of the South African Savings Institute, Gerald Mwandiambira, says millennials will likely be supported by their children, unless there is radical change. "Unfortunately BEE was supposed to be that but it failed because it favoured a few individuals."

*Not her real name.

**Rethink Africa researched black tax and related themes in association with Alexander Forbes in 2016.

Don't Become The Family ATM

Black tax may hamper the financial goals of many South Africans but it is not solely to blame for their financial difficulties, says the head of financial education at Old Mutual, John Manyike.

"Materialism, consumerism, instant gratification and over-reliance on credit are real issues affecting our people," he tells HuffPost SA.

Watch our live discussion about black tax with Mpho Raborife, deputy editor of News24, and Gerald Mwandiambira from the SA Savings Institute.

Read more here.

Black tax FAQs

1. How much do you spend?

In a HuffPost snap survey, we asked what proportion of their income (after deductions) respondents spend on looking after members of their family, excluding their own minor children. These are the results:

2. Why do you support your family financially?

We also asked participants in the snap survey why they spend a portion of their income on black tax.

These are some of the responses:


3. An obligation or a choice?

In 2015, youth marketing company Student Village, surveyed 1 275 students and graduates in metropolitan areas. They found that these young people feel a responsibility to help their families financially.

However, the fact that their money "isn't all theirs", causes distress because it might mean delaying their financial independence.

Research by the University of Cape Town's Unilever Institute of Strategic Marketing found that respondents who support family members financially felt that it was both "a free will offering" and "forced upon them," says the institute's head of projects, James Lappeman.

The 18-month long examination, looked into the aspirations of at least 3 800 South Africans from all income segments. A lack of opportunities, coupled with increasing financial pressures including black tax, adds to the frustration of many South Africans, Lappeman says.

"The South African economy, pre-2008, was exuberant. There was income growth and access to opportunities. The 2008 recession created a handbrake on the achievement of aspirations for many, and that's where a lot of anger and frustration comes from. People feel stuck."

4. Do some hide their income to avoid black tax?

Unpublished research by his students has shown that some employed young people "go to great lengths" to protect their earnings from claims made by family members, says Professor Jeremy Seekings, former director of the Centre for Social Science Research at the University of Cape Town.

"Even when they themselves have been supported whilst unemployed, when they have work and an income they refuse to hand over much if any to anyone else."

In a HuffPost SA Twitter poll*, we asked if users had ever hidden their income from their families to avoid supporting them financially. Close to half of the 87 people who voted said that they had done so.

*This is not a scientific survey.

5. How have patterns of support changed?

Professor Jeremy Seekings, former director of the Centre for Social Science Research at the University of Cape Town, has noted shifts in the way in which black South Africans support members of their families financially over the last 20 years.

The first is that the total value of financial support to other households has declined. This trend coincided with the introduction of social grants but, says Seekings, "we don't know that there was any link".

​The second is that black South Africans have become less likely to support more distant kin. "Black South Africans used to acknowledge obligations to a wider range of kin than they do now. In practice, families are no longer as 'extended' as they were in the past," he says.

These observations are based on quantitative and qualitative research done in the early 2000s (see an example here) as well as more recent unpublished research.

What is not apparent from the data, Seekings says, is why black South Africans are less likely to support family members outside their immediate households. "It might be linked to cultural and social change but we don't have data on norms."

​According to Seekings, black tax is paid "selectively"**. "Some (black) people have many dependents; many (black) people have none."

  • According to the World Bank's 2014 Global Financial Inclusion (Global Findex) database, about seven in ten South African adults reported having given/sent or received domestic remittances in a 12-month period. Domestic remittances in this survey referred to "any money" given or sent to or received from a family member or friend within the country's borders within a year. Seekings says because the definition of domestic remittances in this study is very broad and the figure includes people on both sides of the transaction, the result does not surprise him entirely. "It is not clear whether these remittances are occasional and small, or regular and big."

**Seekings says this observation is based on different survey data sets.

Note: We are updating this special report with content and links as we add pieces to the package.

'Ubuntu can be abused'

Supporting your family financially is an act of ubuntu, grounded in virtues such as kindness, caring and compassion, says Dr Motsamai Molefe, a lecturer in African ethics at the University of KwaZulu-Natal.

The SA Savings Institute's Gerald Mwandiambira agrees. "Giving back to the community that helped raise you is not black tax, it is one's moral responsibility and goes with our values as Africans."

Molefe cautions, however, that ubuntu can be abused. He tells HuffPost SA: "Compromising yourself would be giving and giving, yet ending up in a worse place." He believes you should be smart about how you assist others in the name of ubuntu.

Nongcebo Nzimande (28), a budding fashion designer from KwaZulu-Natal tells HuffPost SA that black tax, especially where there is great need, is a good thing. But it can become burdensome if families view it as a form of "pay-me-back-for-raising-you".

"You must decide how far you can go in assisting them, not the other way around," Nzimande says.

Actress and comedian Celeste Ntuli.

Celeste Ntuli's Black Tax Advice

If there's one thing actress and comedian Celeste Ntuli has learnt about black tax, it's the importance of being able to say "no".

Ntuli told HuffPost SA's Duenna Mambana that her comedy show, 'Black Tax', was inspired by her own experiences.

She said black tax was the only way to survive. "I'm from a family of eight siblings, so helping each other financially is normal ... I've received black tax as much as I have paid it. Christmas and holidays are the days when we pay it most."

Read more here.