read more - NWU Potchefstroom Business School - North



read more - NWU Potchefstroom Business School - North
The seriousness with which the political leadership across the board is now taking the worrying
outbreak of xenophobia in SA is welcome. There needs to be decisive and principled action to deal
with the problem from all key stakeholders in the economy, bearing in mind that it occurred
previously in 2008.
Whatever the multi-faceted reasons for xenophobia in SA, we should not underestimate the
potential economic damage that could result from these destabilizing developments if they are not
effectively addressed. Investor confidence in particular is already vulnerable in SA and should not be
put at further risk by these developments.
If the situation is not remedied soon and economic retaliation and sanctions from other countries to
xenophobic violence in SA escalate, it will impose serious costs on the SA economy at a time when
other red lights are already flashing. It could potentially undermine the economic and trade
relationships that underpin the SA businesses which operate in the rest of Africa. As a major player
in the economy, business must therefore be an important part of the solution in dealing with the
xenophobia problem in SA, and it should engage with government as soon as possible.
Foreign nationals as a whole make a positive contribution to economic activity in SA, but the
outbreak of xenophobia again emphasises why a sluggish and weakly performing economy
aggravates social conflict, because it limits the development of economic opportunities for all.
High unemployment in SA remains a major contributory factor to social tension. Economic growth is
obviously not a panacea, but higher job-rich growth helps to ensure that the economic 'cake' is
expanding fast enough to promise everyone a bigger share. It softens the need for a 'you win-I lose'
attitude, which appears to drive much of the xenophobia in SA.
Above all, an official reaffirmation to effectively and speedily implement the programmes and
projects required under the overall umbrella of the National Development Plan is an essential
message which SA now needs if the economy is to give many more people a stake in it. Unless SA
can build an economy which is bigger, stronger and better in future, it will remain susceptible to
social tensions of which the outbreak of xenophobia is the latest phenomenon.
Raymond Parsons is a professor of economics at North West University Potchefstroom Business
School and former Deputy CEO of Business Unity South Africa
Prof Raymond Parsons: 083 2256 642