The economic problems with xenophobia

Sindile Vabaza, an aspiring economist and an avid writer, is a contributing author for the Free Market Foundation.  

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This article was first published by Mail & Guardian on
22 August 2022.

The economic problems with xenophobia

On 21 June, members of an anti-migrant group named Operation Dudula showed up at Park Station in Johannesburg vowing to shut down the station. They believed vendors operating there were not South African and therefore are taking away space from South Africans who cannot make ends meet.
Much has been rightly said about Dudula’s activities from an ethical and moral perspective, especially as the group’s vigilante activities have been linked to some unsavory attacks on foreign nationals and even led to the death of a Zimbabwean man in Diepsloot in April. What has not been highlighted are the economic problems with pursuing a stringently and violently anti-immigrant posture in South Africa.
It is important here to pause and acknowledge that it is instructive that people are willing to shut down a station simply to access a survivalist position like vendorship. It speaks to the desperation and economic isolation that many poor South Africans face with the attendant despair and psycho-social distending happening within people and communities because there seemingly is not a solution in hand.
Operation Dudula is popular precisely because it gives a face (scapegoat) to the deep psycho-social distending in many people and communities in the country. It is not a coincidence that much of Dudula’s activities happen in townships and inner cities where people often live in squalor and are barely surviving. This pressure cooker has been turned up to 11 by Covid-19, lockdowns, Eskom’s failures, and the tectonic shifts happening in the global economy.
Yet it is important to counter this ever-increasing violent nationalism with a remedy that addresses the actual problems of economic isolation (joblessness) and the attendant psycho-social distending happening in our communities. The problems are fundamentally economic and so the solutions must be fundamentally economic.
Johannesburg CBD and townships as drivers of growth
While these problems are national, much of Dudula’s activities are in Gauteng and in particular in Johannesburg. In a 2017 study conducted by Dr Tanya Zack into cross-border shopping in the Johannesburg CBD, Dr Zack and her team found that cross-border shoppers were (conservatively) spending around R10 billion on cheap clothing, shoes, household wares, and accessories. This informal network of trading was yielding four times the turnover of an average sized regional shopping mall.
But retailers and shoppers face enormous risks. The dependence on cash poses a big risk in an area rife with crime and corruption, and where law enforcement agencies appear to be complicit in illegal activities.
Over 60% of retailers interviewed said they had been physically attacked or assaulted, and 38% had regularly “gifted” police officers.
For shoppers the risk is also extreme. A third of shoppers interviewed had been exposed to violent crime. They travel in groups and hide their money. They depend heavily on the security and storage facilities of hotels and bus depots for safety.
These levels of crime are a major blight on Johannesburg’s ability to maximize the benefits of these shopping trips. Shoppers are spending an average of 2.5 days on each trip. But they spend comparatively little on accommodation and almost nothing on entertainment. And they are too fearful to spend more time in Johannesburg than their shopping requires.
This inability to capitalize on this burgeoning informal behemoth in Johannesburg will only be exacerbated if Dudula members haphazardly attack foreigners and promote a culture of abuse and violence towards foreign nationals conducting their business. This will dampen potential job creation for low-skilled South Africans who could benefit from cross-border shoppers becoming tourists and spending money on entertainment, accommodation, and other trinkets.
It will also potentially hamper townships in capitalizing on the same economic activity.
It is my belief that Johannesburg’s townships ought to have industrial areas carved out of them and made into centers for job-intensive manufacturing for cross-border shoppers and other markets further north who need cheap clothing, accessories, and household wares. It would be a boon for job creation for low-skilled workers if the many China malls and other retailers of cheap goods were supplied by factories in Johannesburg’s townships and this was prioritized in policy.
Artificial wage constraints like the national minimum wage are an employment dampener and so policies that encourage employer flexibility and encourage employment creation should be embraced. An expansion of the employment tax incentive to include more than just young job seekers is something that should also be looked at.
The knock-on effects for food vendors and other potential township entrepreneurs are also worth considering. It further ameliorates the problem of job opportunities being very far from those who most need them.
Communities need young people and especially young military-aged men to be employed. Part of the persistent problem with petty and violent crime in our townships is the endemic joblessness of young men who must stew in their poverty, despair, and psycho-social distending while having their manhood (ability to provide) consistently mocked and derided as they are regarded as “broke and useless”.
This is fundamentally an economic problem to do with job-intensive growth. Scapegoating other poor and desperate people misses the real problem and will ultimately lead to “remedies” that do not fix, and might exacerbate, the real problem. The market, allowed to flourish and create jobs, is the solution, not violent xenophobic nationalism.

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