Opinion:Xenophobia threatens South African economic interests in the African continent
In the last four weeks or so, Durban and Johannesburg came under the grip of xenophobic violence. These attacks were more pronounced in inner city places as well as the townships. The attacks on foreign nationals, in the main; affected residential districts characterised by social and economic marginalisation. In the wake of the violence 7 souls were lost; three of these were South Africans. Many commentators seem to agree that these attacks on foreign Africans are the result of tough competition for jobs and other economic opportunities between South Africans and foreign born Africans. In South Africa there are those who say that Africans who are born elsewhere in the continent should not be allowed to operate businesses in South Africa because they stifle the development of locally owned small enterprises owned by South Africans.
This raises two questions namely; does South Africa have business interests in Africa? And what is the extent of those business interests in the African continent? In 2012, 28% of South Africa’s exports were destined for African markets. In other words, almost a third of our manufactured products were consumed by Africans outside South Africa. In the same year of 2012, 12% of South Africa’s dividend earnings were from the African markets. South African companies who do their business in the African continent use their resources to bolster economic and social development in South Africa, since most of the profits earned in the African continent are returned or repatriated back to South Africa.
Let us illustrate our point even further, by focusing on two of South Africa’s biggest mobile phone operators namely Vodacom and MTN. Vodacom has 31.4 million subscribers in South Africa. MTN on the other hand, commands a subscriber base of 28 million in South Africa. Vodacom does business in over 25 African countries and its total number of subscribers stands at over 60 million worldwide (Business Tech, 23 April 2015). Clearly if Vodacom was to be barred from doing business in the African continent this would have devastating effects on its profit margins.
MTN on the other hand, has 210 million subscribers worldwide. In Nigeria alone MTN has 57 million subscribers. MTN commands 49% of the mobile phone market in Nigeria. In Nigeria alone MTN has got more subscribers than the entire population of South Africa. for example, Statistics SA estimated South African population figures to be 54 million (Statistics SA, P0302, 2014: 2). In 2014 MTN had 13.1 million subscribers in Ghana. In the same period, the company had 9.2 million subscribers in Cameroon, whilst the figures for Ivory Coast and Uganda were 9.2 million and 9.5 respectively (IT News Africa, 24 April, 2014).
Whilst the earnings of South African companies are declining in the domestic market, business is growing in leaps and bounds elsewhere in the African continent. South African companies are doing well in Africa and the profits are returning to Johannesburg helping in job creation, bankrolling social development initiatives and thus contributing to the economic viability of South Africa. Thus it makes business sense to say even if there are challenges, South Africa’s economic destiny is tied with that of the continent. Indeed in the last two decades it stands to reason to say South Africa benefited the most from its business relations with the Africa continent. The recent xenophobic attacks on African nationals have the potential to jeopardise South Africa economic interests in the African continent.