South Africa’s image at home and abroad took a battering yesterday as violence targeting foreign nationals spread, and the country’s embattled power utility Eskom scrambled to stave off a total blackout.
An alleged assassination of a top union official in Johannesburg also heightened concerns about labour instability.
Television footage showed chaotic scenes in and around the coastal city of Durban, where locals have forced hundreds of foreign nationals to flee from two of the country’s biggest townships as violence that started about two weeks ago continued.
Although police have arrested at least 48 suspects since Saturday, there appeared to be no let up yesterday in the chaos.
The city centre of Durban, a town renowned for its appeal among many African tourists, resembled a no-go area, and several streets were strewn with litter as mobs of locals protested the presence of immigrants. Some among the protesters could be seen on TV wielding machetes and sticks.
The attacks have sent shockwaves through the diplomatic, business and human rights circles. Although the government has condemned the violence, there remains no clear strategy to contain it.
“Any lawlessness will not be tolerated,” Defence Minister Nosiviwe Mapisa-Nqakula told reporters at a briefing of the security ministerial cluster, where government promised to deploy more security personnel to hot spots.
Besides casting a negative spotlight on South Africa – Africa’s most advanced economy – the latest violence has exposed the simmering socio-economic tensions that continue to dog the country 21 years since the demise of apartheid.
Millions of black South Africans remain unemployed, and about half of the country’s population lives below the poverty line.
The violence has seen spaza shops and street stalls owned mostly by Somalis, Ethopians, Malawians, Zimbabweans and other foreign nationalities from Africa looted. Businesses in central Durban were forced to close at noon yesterday as precaution against looting.
“We have had a lot of questions and queries as to whether the violence is anywhere near our hotel. Some people even cancelled their bookings at the last minute,” a senior manager at one of Durban’s leading hotels on the beachfront told Business Report.
Three camps have been established to house foreign nationals displaced by the violence, according to a city of Durban spokeswoman.
Smith and West Streets – two of the city’s busiest roads – came to a standstill yesterday as protesters set on foreigners.
Meanwhile, about 20km north of Durban, police battled supporters of EFF, who were attempting to mount a land grab near the picturesque seaside town of Ballito.
Worrying time
Analysts and business commentators said the latest developments pointed to a worrying state of affairs in the country.
“This is a sad day for the country and its economic outlook. These people tried to revive ailing economies in most townships and now they are being attacked,” Vusi Khumalo, the president of the SA Chamber of Commerce and Industry (Sacci) told Business Report.
He said: “The economic pressures that are currently facing a lot of South Africans because of the rise in the fuel price and electricity hikes are severe. They make them want to find the nearest scapegoat and unfortunately foreign-owned businesses become the first line of venting their frustrations.”
Human Rights Watch yesterday described the unfolding scenes as damaging to South Africa’s image as a centre of reconciliation.
Dewa Mavhinga, the organisation’s senior researcher for Zimbabwe and southern Africa, said authorities were not doing enough to curb the spread of xenophobia in South Africa. “This is a serious blow to South Africa’s image as a country that brought hope to the world. Its identity as the cradle of ubuntu and African humanity now stands to be forgotten as a thing of the past.”
The violence adds a dangerous dimension to the challenges currently confronting President Jacob Zuma’s administration, according to analysts.
That Eskom was again forced to implement massive power cuts yesterday to save the grid from total collapse pointed to the severity of the challenges. The power utility cut 4 000 megawatts from the grid, its biggest reduction since February as labour unrest forced contractors to halt construction at the Medupi power plant in Limpopo.
The construction of Medupi and that of Kusile power plant in Mpumalanga has been dogged by delays that have now put South Africa on course to struggle with power shortages until at least 2019. Eskom is beset with aging infrastructure and a cash crunch that has forced the government to make a commitment to pump as much as R23 billion of liquidity into the utility.
Economic attack
Economist Richard Downing said if investors sensed that nothing or very little was being done to save Eskom they would take their business elsewhere.
Downing said South Africa needed to have a national response to all its crises from attacks on foreign nationals to the energy crisis. “We cannot survive in a situation where we look like we do not know what we are doing.”
“We need to speak with a united voice and show the world that we are on top of the situation,” he said.
On xenophobic attacks, Downing said: “An attack on foreign nationals is an attack on the economy because they add to our economic value chain of the country. Once they leave under the current circumstance they will certainly not have much good to tell about South Africa.”
Traders said the markets remained oblivious to the latest developments as the rand had traded broadly firmer against the US dollar. They said the news had not yet filtered through into the market. In yesterday’s trade the rand hit an intra-day low of R12.16 against the US dollar but clawed back some of the losses in late trade to hover around R12.
Nic Borain, a political and investment analyst at BNP Paribas Securities South Africa, said: “The xenophobic attacks in Durban won’t have a direct impact on investor confidence. However, the attacks point to social instability.”
“The attacks could be interpreted negatively as they indicate discontent about South Africa’s poor people. Investors typically have a quite sophisticated view of the long-term stability of South Africa.”
He said “while the poor are expressing their discontent, the market believes that this is containable”. But for small investors, like the Somalis, they would not be interested in investing in the current environment, he added.
Land grab
Regarding the debate about the country’s symbols, a development that has also raised emotions, Borain said this would not drive investment but it did show that South Africa was an unsettled country. However, Borain did say that colonial statues being pulled down were not a ‘huge issue’ for investors.
“Eskom’s woes were a hugely influential issue for investors,” he added.
Turning to the topic of the move by EFF supporters to invade and grab private land in Ballito, Borain said there had been no reaction to this.
“The EFF, in their creative way, is riding popular discontent. It is part of the EFF’s clever marketing campaign. The EFF is effectively jumping on the bandwagon.”
Turning to overall investor confidence toward South Africa, Borain said one of the key concerns for investors was the local labour environment. The collapse of Cosatu was seen as a possible catalyst for more labour unrest.
Late on Monday, Chris Nkosi, the general secretary of the SA Transport and Allied Workers Union (Satawu) in Gauteng, was gunned down on a highway in Johannesburg in what a Satawu spokesman said could have been an assassination. His murder comes amid tensions within Satawu’s parent federation, Cosatu.
On the political front, there also appeared to be simmering tensions after Business Report’s sister publication, The Star newspaper reported yesterday that ANC chairwoman Baleka Mbete believed that there was an internal plot to topple Zuma before he completed his second term.
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