The true cost of Xenophobia

When James Abram Garfield said, battles are never the end of wars, for the dead must be buried and the cost of conflict must be paid,” little did he know that it will be applicable in Africa. Especially in the latest outbreak of xenophobic attacks in South Africa and the counter-reactions of some other African countries. Although there is no ongoing war between South Africa and other countries, the cost of these xenophobic attacks in South Africa has far-reaching impacts on the continent.

In the latest xenophobic attack, South Africans looted, damaged and burned shops belonging to other country nationals as they chanted, “foreigners must go back to where they came from.” Following the spate of xenophobic attacks in South Africa, South African businesses that operate across Africa have been attacked in reprisals for xenophobic violence in Nigeria, Zambia and the Democratic Republic of Congo (DRC).

The cost of these attacks have gone beyond deaths and might cost South Africa a lot more than the idea they have that foreigners are taking their jobs.

Here are a few things that South Africa can lose to Xenophobia.

1. Relationshi

In the 70s and 80s during the apartheid in South Africa, Nigeria led the international effort to stop the apartheid. The West African country threatened economic actions against the West and other countries supporting the national liberation movements in Southern Africa with millions of dollars annually.

This singular action solidified the friendship between both nations and given the recent attacks, Nigeria might not want to be involved in helping South Africa again. The same goes for other African nations who may react, as an act of solidarity, to South Africa’s previous crimes against their fellow African brothers.

The friendship is already smeared as seen when Nigeria and some other African countries pulled out of the World Economic Forum which held early September in South Africa. What began as friendly banter, escalated to insults and racial slurs between Nigerian and South African entertainers. So far, over 640 Nigerians registered for government evacuation which includes entertainers. As of today, September 17, no fewer than 320 Nigerians have abandoned South Africa for Nigeria due to xenophobic attacks.

2. Financial implications on businesses

This September alone, MTN CEO Rob Shuter stated that a total of four MTN outlets in Nigeria were damaged in retaliatory attacks. MTN is 20 percent owned by Nigerian investors and xenophobic attacks against Nigerians or any other country’s national is not good for business.

However, MTN is not the only business affected. In South Africa alone, over 50 shops owned by nationals of other African countries including Nigerians were broken into and looted by South Africans in a spate of attacks. More than 50 businesses were also looted in other African countries and the goods are worth millions of dollars. Nigeria is a very important business partner that South Africa cannot afford to lose, vice versa.

Nigeria’s imports from over $4.58 billion from South Africa. According to the United Nations COMTRADE database on international trade, in 2018, Nigeria imported from $514.3 million from South Africa. The Nigeria-based Dangote Group has invested a record $378 million in South Africa’s cement industry.

If the business relationship between both nations goes sour due to xenophobic attacks, both countries would lose.

3. Investor confidence

The Rand Merchant Bank and the University of Stellenbosch’s Bureau of Economic Research (RMB/BER) business confidence index in South Africa plunged to 21 in Q3 2019, its lowest level since Q2 1999, from 28 in the prior period. Investor confidence declined in five sectors, with the retail and wholesale trade declining the most. Between 1975 and 2019, business confidence in South Africa averaged 43.53 Index Points.

Xenophobia among other things has largely impacted the deteriorating investor confidence. Even MTN CEO Rob Shuter noted that “I think the most significant negative implication is more around the investor sentiment.

According to South Africa’s business chamber, “the current state of fiscal deficiencies, social injustices and unemployment necessitates an urgent adjustment in how their impact is viewed, no longer as just economic terms that must be studied and converted into action, but as the likely cause of crime violence, looting and anti-foreigner sentiments that are currently dominating news headlines. It is denting the status of South Africa as a favoured investment destination and affecting lives and businesses of ordinary South Africans.”

With the closure of business and the loss of investor confidence, the inflow of money is also going to drop.

4. Economic Implication

In 2018,  the Global Sourcing Association named South Africa the Global Destination of the Year by and according to the international research firm Everest Group, stated that the global services market in South Africa has grown twice the overall global rate at 22 percent annually over the past four years. 

The country’s mineral and precious metal reserves as well as its proximity to the ocean, the wildlife and the savanna makes the country an attractive tourist destination and has created wealth for the country. 

With the unfolding of yet another xenophobic attack in the country, the South African tourism sector and other major sectors will suffer a major blow which will, in turn, affect the revenue of the country. From the latest Economic Freedom of the World (EFW) 2019 Report released on Friday, September 13, the country’s economy has already started suffering a big blow. South Africa’s economic freedom has dropped 54 places, ranking 101 out of 162 countries and this coupled with the attacks have predictable consequences.

Currently, South Africa’s unemployment rate is among the highest in the world, poverty and hardship have significantly increased human and capital flight. These attacks have a further impact on capital flight and will adversely affect the economy.

5. Human cost

In the past weeks, xenophobic attacks have increased human flight in South Africa and while Nigerians returning back to their country has been the main focus, many have not considered the human cost of these attacks. Many African nationals went to South Africa in search of greener pastures and these attacks have cost them a lot ⁠— their shops, their money and for many, their lives figuratively.

In the case of the Nigerian returnees, many left their country in search of greener pastures and never thought of returning to their country, at least not the way they did. After witnessing such loss, it may be difficult for them to integrate especially if they have nothing to return to or with.

The fate of these returnees remains unknown and the question remains, would they turn to miscreants in the society and what are the chances of them rebuilding their lives back?