People gather around to board a bus headed to Zimbabwe at a repatriation centre in Musina, South Africa, near the Beitbridge border crossing, on July 9.EMMANUEL CROSET/AFP/Getty Images
More than 160,000 migrants have fled South Africa after months of violence and threats by vigilante mobs, raising fears of labour shortages and trade disruptions in an economy already struggling with stagnant growth.
Business leaders are worried that anti-foreigner violence could weaken South Africa’s links to the broader African market, causing the same economic damage that Britain suffered after it left the European Union.
Anti-migrant groups have marched door-to-door in some of South Africa’s poorest communities, ordering the expulsion of foreigners from countries such as Zimbabwe, Mozambique, Malawi and Nigeria. They accuse migrants of taking jobs away from local workers – despite statistical evidence that immigrants have boosted the economy.
Immigrants make up about 5 per cent of South Africa’s population of about 63.5 million, but studies estimate they contribute about 9 per cent to the economy.
There are already reports that the forced departure of African migrants has caused labour shortages in the agricultural and textile industries, endangered the tourism and small-business sectors, disrupted trucking routes and threatened the exports and investments of South African companies in the continental market.
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At least four people have been killed by vigilante mobs in South Africa this year and many others have been assaulted or threatened, triggering a political backlash in other African countries, including threats of boycotts of South African companies.
“Not a single economy in Africa can survive on its own,” said Wamkele Mene, a South African who is secretary-general of the African Continental Free Trade Area Secretariat, the organization that oversees the agreement signed by most African countries to reduce or eliminate tariffs across the continent.
“I am deeply embarrassed by the xenophobic vigilantism that is taking place in South Africa,” he told African broadcaster Arise TV last month. “It is abhorrent to the entire construction of a single market that we are trying to undertake. The displacement of foreign nationals from South Africa is antithetical to the entire project.”
South Africa is the most industrialized country on the continent, but its economy – hampered by corruption and electricity shortages – has grown by an annual average of less than 1 per cent for more than a decade, causing a drop in per-capita income. Its unemployment rate has been above 30 per cent for the past five years.
Many of South Africa’s biggest corporations have expanded into markets across the continent in recent years, investing billions of dollars in a quest for new consumers. But those markets could now be in jeopardy, business leaders say.
“If citizens and policymakers in other African countries come to see South African firms as the commercial face of a society that is hostile to other Africans, then those firms will bear costs – formally through regulatory pressure, and informally through reputational damage, consumer hostility and political suspicion,” said Sim Tshabalala, chief executive officer of Standard Bank Group, one of South Africa’s biggest companies.
Farmworkers work in vineyards close to the town of Robertson, South Africa, on July 9. Immigrants make up about 5 per cent of South Africa’s population, but studies estimate they contribute about 9 per cent to the economy.RODGER BOSCH/AFP/Getty Images
“Xenophobia damages economies more broadly, slowing growth and job creation,” he said in a July 23 speech in Johannesburg.
“As we have all seen over the past month, xenophobia does this by reducing business and consumer confidence and by increasing the costs of doing business. It also – justifiably – worsens country risk perceptions and therefore increases the cost of capital. In plain language, more xenophobia means higher interest rates, less investment, and fewer jobs.”
Mr. Tshabalala said there were parallels with Britain, where Brexit led to years of slower growth. “While a desire to detach one’s country from its neighbours and to slow down migration may have emotional and political appeal in some contexts, it doesn’t make economic sense.”
The impact of the anti-migrant marches has rippled through the South African economy in recent weeks. A single day of widespread protests, June 30, inflicted up to $430-million in economic losses when businesses shut down and workers stayed home, according to Chris Hattingh, executive director of the Centre for Risk Analysis, a South African advisory group.
The exodus of migrants has damaged production at sugar-cane farms, citrus orchards and clothing factories. Many foreign-owned shops have closed, causing a loss of income for landlords and forcing consumers to travel further for basic goods. Cross-border trucking has been disrupted, and the tourism sector is bracing for losses.
Former cabinet minister Nkosazana Dlamini-Zuma ridiculed the anti-migrant groups for their claim that the expulsion of migrants will create jobs.
“Do you think there will be no unemployment now that they have chased the Africans?” she asked on a local podcast this week. “In fact, it will increase. If we continue on this trajectory, South Africa will be the biggest loser.”