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The economics of xenophobia

Apr 15 2015 06:19
* Andrew Layman

SINCE A lot of the businesses affected are operating within the informal sector, I don’t believe that the consequences of the xenophobic violence in Durban will be that severe as far as the economy is concerned.  

However, people overseas who read about the xenophobic events probably don’t understand the particular nuances of this in the South African context.

It might appear to them that foreign investors are not welcome. Also, anarchy is not likely to give confidence to investors.

It is a complex matter, which requires long-overdue government attention. It is interesting that our community and local economies should offer sufficient opportunities to immigrants, but are thought by local people to be moribund.

The foreigners are often much better at entrepreneurship – which I think is very problematic in itself – but they are not all micro business owners. Some, perhaps more than we think, are employees of well-established syndicates and trading companies, which import goods in large quantities and pose as informal traders. I don’t know if we know how many fall into this category.  

They are exploiting the concessions inherent in the informal economy, such as taxation and VAT exemptions, cheap rentals and complete avoidance of the Consumer Protection Act.

Government needs to re-define the informal economy, considering the extent to which it has been exploited by some foreigners.

Where immigrants are here legally and are simple, self-employed entrepreneurs, they are just better at trading than our own people, apparently because they are more willing to work together in buying consortia, for example.

To my mind, local reactions are somewhat rooted in resentment that they have lost the competition, but I think we also have to recognise poor service delivery, power outages, lack of leadership and rampant unemployment for the restlessness and violence.

Perhaps they have bought into the propaganda that somebody has to carry blame for people’s inability to sustain themselves.

* Andrew Layman recently retired from the Durban Chamber of Commerce and Industry having been its CEO since the beginning of 2011. Prior to that, he held a similar position in the Pietermaritzburg Chamber of Business for 13 years. That followed 30 years in school education. He is now fully employed as a consultant.

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durban  |  sa economy  |  xenophobia
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