adminCAPE TOWN — South African foreign investment confidence will suffer as a result of the xenophobic attacks in Durban, according to an economist. Xenophobic attacks on African immigrants have escalated over the past week in the KwaZulu-Natal city, with the country’s security cluster announcing measures to bring the situation under control.
Foreign investors took the stability of a country very seriously, macro-economist Harold Ngalawa told Fin24 on Tuesday.
“An economy characterised by violence and lawlessness isn’t good for investment,” said the University of KwaZulu-Natal academic. “Xenophobia is typically both violent and lawless.”
“As an economy, we benefit from foreign investment,” he said. “Foreign investors sit down and do an analysis of a country they want to invest in and stability is one of the factors they consider. If you put yourself in the shoes of an investor, you would sit back and wait to see where this is going to.”
Township economy will also suffer as the micro economy of townships in Durban will see prices climbing due to the eradication of “elements” of competition, said Ngalawa. Most of the foreigners being attacked own spaza shops and have been forced to flee with whatever they can take with them.
“People who had similar businesses can now trade with less competition,” he said. “That presents problems to consumers as they will become less well-off.
“Increases in prices happen for different reasons,” he said.
“Traders could justify it on the increasing electricity tariffs for example, and with weakened competition, the likelihood of prices going up in the townships is high.”
He felt xenophobia won’t affect SA relations in Africa.Ngalawa said the xenophobic violence, which focuses directly on African immigrants, won’t affect South Africa’s relationship on the continent.
“South Africa is a giant economically and African countries respect this government,” he said. “It’s seen as a country that can be relied upon.
“These attacks will have little impact on this relationship,” he said.
South Africa can learn from its neighbours. Ngalawa said he has travelled to many African countries, including Uganda, where South African anti-apartheid fighters were protected before democracy. — Fin24
Bongani Moyo
Online Reporter