Want To Invest In A Billion Rand Industry? Then Look To the...

Want To Invest In A Billion Rand Industry? Then Look To the Funeral Business

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Death is inescapable, and its inevitability has generated a funeral industry in South Africa worth over R5 billion annually.

Basic funerals cost around R7 500, the average funeral R12 000, with extravagant ones racking up in excess of R60 000.

The high cost of funerals and the importance of the burial ceremony in many cultures also means that funeral cover comprises 90% of all risk cover in the country. In other words, more people in South Africa have funeral cover of some form (44%), than medical aid (10%) and life cover (12%).

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South Africans’ mind-set on savings and funeral cover

The FinScope Consumer Survey South Africa 2012 also revealed people’s mind-set regarding savings for emergencies and funeral expenses: 58% of adults cite their reason for saving is for emergencies, 47% save to provide for the family in the event of death, 41% save for their own or someone else’s funeral, and 37% and 34% for retirement and school fees respectively.

The need for burial space in Johannesburg

The Avalon Cemetery in Soweto was opened in 1972 and is the largest in South Africa. By 2011 the cemetery, spanning 172 hectares and containing 300 000 graves, had reached full capacity for first burials.

 

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To help alleviate the shortage of burial space in the area as a result of over 200 burials in Avalon every weekend, the R11 million 20 hectare Avalon Extension Cemetery was opened, giving space for a further 25 000 burials, with plans for the future development of a further 125 hectares.

Of Johannesburg’s 35 cemeteries, by 2011, 27 had already reached their full capacity for first burials, leaving nine with capacity for 552 000 new graves. This meant second and third burials (more than one casket per grave site) would need to come into practice. 

Operating in the funeral industry

With the sheer numbers associated with death and costs involved for funerals, and the waiting period of up to two years for necessary local government permission to run a funeral home, the number of fly-by-night funeral services as a way to make easy money has increased by the thousands.

In 2013, the National Funeral Directors Association, SA Funeral Practitioners Association, and the Independent Crematoriums of SA joined forces to lobby government to regulate the sector.

Fly-by-night undertakers do not provide proper services and are in the business purely to make money. Fly-by-nights operate without a licence and do not comply with the industry’s rules. People are buried in the wrong graves and health requirements are not met.

Some smaller private funeral homes make use of government crematoriums and store bodies at private and government mortuaries until it is time for the burial or cremation.

It’s the responsibility of local municipalities to ensure the proper management of cemeteries, crematoria and funeral undertakers within their areas of jurisdiction.

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Tracy Lee Nicol
Tracy-Lee Nicol is an experienced business writer and magazine editor. She was awarded a Masters degree with distinction from Rhodes university in 2010, and in the time since has honed her business acumen and writing skills profiling some of South Africa's most successful entrepreneurs, CEOs, franchisees and franchisors.Find her on Google+.