HomeNewsSadc economy is bleeding post South Africa violence

Sadc economy is bleeding post South Africa violence


At a time when the global economy is grappling with Covid-19, a considerable number of firms are counting their losses in South Africa’s two provinces of KwaZulu Natal (KZN) and Gauteng following a wave of violent protests that erupted a fortnight ago.

The widespread looting and civil unrest will have a knock-on effect not only to South Africa, but to the whole Sadc region.

In the midst of Covid-19 effects, insurgency in Mozambique, and protests in Eswatini, the Sadc region has been plagued by yet another monster that has diverted governments’ attention to inoculate people against the virus.

Initially believed to have been started by former president Jacob Zuma’s supporters in his home province of KZN, who were angered by his incarceration for contempt of court, the protests  spread across the country and  took the form of indiscriminate vandalism of property and looting.

The extent of the ruin is already staggering as evidenced by videos and images circulating on the internet.

Lives have been lost due to stampede during protests and looting and officials have confirmed over 300 deaths as a result.

The impact of Covid-19 has changed the economic landscape around the world, including Sadc region.

As the pressure mounts, industries are moving swiftly to build resilience, while governments are mobilising to safeguard citizens and manage the social and economic fallout.

Combining these factors with the ongoing lockdowns, protests and looting in South Africa, the platform to trade fairly is slowly being skewed.

Though the arrest of Zuma does not justify the looting and vandalism of shops and malls, high youth unemployment estimated to be around 46% coupled with the extension of Covid-19-induced lockdown restrictions without government’s proper plan and suspension of Covid-19 social relief grant are the main contributory factors to the mayhem in this African giant.

Political systems normally fail when youth unemployment rates reach these unprecedented levels.

South Africa is sitting on a time bomb as its government is failing to come up with long-term solutions to circumvent rising youth unemployment.

The major reason why South African youths fail to be absorbed into the labour market is lack of educational skills coupled with low productivity.

Social inequalities between the native South Africans and other races frustrate the young South Africans.

By Tuesday afternoon of last week, the rand dropped by 3% to R14.66/$ as rioting and violence continued.

The violent protests shuttered businesses and disrupted transport networks in the nation’s two richest provinces, Gauteng and KZN.

“It is difficult to tell which is the greater emergency in South Africa right now: the riots, which have resulted in significant property damage, looting and affected the movements of goods along an important trade corridor, or the continued spread of Covid-19,” Siobhan Redford, an analyst at Rand Merchant Bank in Johannesburg said.

Negative foreign sentiment toward South African stocks was evident in the large outflows recorded on Tuesday, with non-residents selling R4 billion of local equities, the most since November last year.

Retailers, which were forced to stop trading due to the looting, saw sharp losses on Tuesday, with Massmart down almost 8%, and Mr Price, Pepkor and Truworths more than 5% weaker.

Perhaps one wonders if Zimbabwe can be affected by this. the simple answer is that Zimbabwe is a retail of South Africa’s manufacturers and most imported raw materials come via South Africa.

It will be folly and ignorant to believe that the looting and protests will not affect SA’s neighbours.

South Africa is our major trading partner and without any doubt the effects will cascade down to its trading partners.

Imports from China and other Asian countries come via Durban port and the major road N3 that links sub-Saharan African biggest port in Durban to the economic hub of Johannesburg was  shut due to violent protests.

Trucks were torched in KZN leading to the closure of high way N3 and this disrupted the transport network.

This is also the same road that trucks that go to as far as Democratic Republic of Congo use.

More than 200 shopping malls were looted and some were razed and billions worth of rands lost in these past few days of barbaric acts.

This obviously will impact on business confidence of most investors in Sadc.

One of the major fuel refineries in KZN SAFRES was shut down amid fears of these violent protests and civil unrest.

One big clothing and textile manufacturer, Kingspark, was set alight after it was looted.

This means that the distribution channel of goods will be significantly affected even in Zimbabwe.

Though the effects in causing price surge attributed to shortages is debatable as this will depend on a number of factors and how businesses in KZN and Gauteng will bounce back after these setbacks.

In the past decade, Sadc member states’ businesses in the private sector have been facing impediments on its borders mainly due to poor systems and inefficient customs procedures among other barriers and these protests will exacerbate the situation.

The shutting down of many clearing and logistics companies in Durban means the region will lose a significant amount of money due to either delays or failure to meet targets and deadlines.

There has been a rapid surge in demand for Africa’s commodities mainly from India and China and this has created important business opportunities for the continent and one of the doors to the global economy was in flames.

There won’t be any reasons for Zimbabwean consumers to panic and start hoarding commodities; retailers normally maintain huge stocks of goods to curtail unforeseeable demand in cases like this.

However, if this persists then we should expect some shortages of most foodstuffs in our local  shops and perhaps a rise in prices as post hoc effects.

There was clearly a lot of uncertainty over how the protests would  develop and probably local producers and retailers will be exposed.

This justifies the need to capacitate local manufacturers in order to be able absorb such shocks in the industry.

It is so unfortunate that African politics takes a centre stage and because of that its fragile economies suffer.

Though this is not new in South Africa, acts like these have been witnessed through xenophobic attacks and similar looting and protests.

It is because of this reason that South Africa has been dubbed “the protest capital of the world”.

South Africa’s economy was already buckling under other pressures such as load-shedding and, most recently, lock down extension measures in response to the spread of the doubly infectious Covid-19 Delta variant.Most retailers will adopt a wait-and-see attitude as they are unsure of whether to open or not, what amount to reinvest, how many people to employ and also what quantities to stock.

Economists in the region have castigated the violence and vandalism of property as it is anti-progress and retrogressive for the Sadc region.

We urge our government to closely monitor the situation as the economic consequences might spill over to Zimbabwe.

It’s distressing to see an African looting and razing other fellow African’s businesses in the name of protests which are politically-motivated.

Perhaps I should conclude by citing a quote from Martin Luther King Junior, “We must live together as brothers or we will perish together as fools.”

Martin Luther King Jnr was right, the person who vandalised a supermarket today expects to buy bread from the same supermarket tomorrow.

l Kenneth Mareya is an economic analyst. He can be reached on email: sirkenmar@gmail.com

*These weekly articles are coordinated by Lovemore Kadenge, independent consultant, past president of the Zimbabwe Economics Society and past president of the Institute of Chartered Secretaries & Administrators in Zimbabwe. Email: kadenge.zes@gmail.com and Mobile No. +263 772 382 852


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