Wednesday, 04 March 2015 11:07

Looting of foreign shops: Root causes and solutions

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Foreign Shops looted at SowetoThe increasing dangers faced by foreign nationals involved in the South African informal trade sector have been highlighted by the current incidents of anti-foreigner violence that have engulfed the country and captured the attention of the world at large. Some term these incidents as xenophobia, while others believe that it is all as a result of some criminal elements in the communities where these disturbances are taking place, that we have the perpetration of these illegal and evil acts.

What transpired in Bellville and Philippi both located in Cape Town and at Secunda in Mpumalanga can exactly be likened to what went on in Soweto a couple of weeks ago. All the aforementioned incidents can be likened to a singular trend. All involved the looting of foreign-owned retail shops (christened “spaza shops” in the South African lingo).

It is even more threatening and frightening when one refers to the alleged statement attributed to the South African Minister of Small Business Development Lindiwe Zulu. The Minister stated that” “foreigners” had certain underhand “trade secrets” that they should be made to share with their South African competitors”.

It is indeed very confusing to even suggest or justify that the atrocities committed by these looters. Should we now allude to the insinuation that these foreign nationals who are conducting their business in South Africa deserved the evil that was meted to them? .What is really the truth in all these misfortunes? Is there any justification whatsoever to negate the fact that what took place in this townships is criminal and against the law? A lot of pertinent questions that require convincing answers.

In order to give answers to this worrying phenomenon going on in South Africa, a group of researchers from the International Migration Research Centre, Southern African Migration Project, the University of the Witwatersrand and the University of Cape Town decided to embark on an important root-cause analysis.

The researchers have returned with their findings. They have raised lots of very important factors that fuels these goings-on.

Below is the articulated summary of what they were able to discover so far:

• Foreign migrants create jobs. The Johannesburg study found that foreign informal operators were twice as likely as South Africans to employ people. Four in every 10 employees in foreign-owned businesses interviewed in Cape Town and Johannesburg were South Africans;

• Foreign migrants pay rents to South Africans. Six in every 10 of those interviewed in Cape Town and four in every 10 in Johannesburg paid rent to either a South African landowner or the municipality. Together, the 500 migrants interviewed in Cape Town paid just under R10m a year in rent; and

• Foreign migrants source most of their goods from South African formal shops and contribute to the tax base. The vast majority of Johannesburg and Cape Town interviewees obtained their supplies from formal economy wholesalers, supermarkets and South African factories. They are paying VAT on these goods.

• Have long opening hours. Most migrants and refugees work extremely long hours, and their spazas, for example, often open at 5am and close at 11pm;

• Take care with sourcing goods. While some buy collectively from wholesalers, the importance of bulk buying is often exaggerated. Rather, most foreigner shopkeepers carefully compare prices of wholesalers and often share transport costs;

• Have a loss leader, which involves selling a key commodity such as bread below its market cost to stimulate sales of more profitable goods; and

• Rely on high turnover and a low mark-up on goods for profits. Even then the profitability of the foreign-owned business is often overestimated: the majority of Johannesburg migrant business owners, for example, reported profits of R5,000 or less a month.

The results of this very important research have once again focused the spotlight on the inability of the government either intentionally or unintentionally refusing to acknowledge the contributions of these foreign owned shops and its owners to the South African economy.

In other societies of the world, the activities and contributions of these small businesses and its owners have been hailed as major sources of job creation in the grassroots’ environments. The opposite seems to be the case in South Africa, especially when one puts into consideration the activities of these criminal elements orchestrating this looting mayhem and the rhetorics of denial from authorities that are supposed to stem these ugly trends.

All the items listed above are simply business tactics employed by any serious minded and meaningful business owner. There is absolutely nothing mysterious about them. It would be very accommodating for the government to institute a kind of a meeting ground and platform where foreign business owners will be able to mingle with their local counterparts.

Unless if the Minister is suggesting that big retailers like Shoprite, Pick n ’Pay and Spar are very comfortable sharing business tactics amongst each other. Unless if the government has other policies which are 'unofficial' and which are based on a systematic flushing out of the foreign elements in the South African small business landscape. To insist that foreign-owned shops must share their secret is to justify the constant looting of their shops and businesses by locals.

By Johnson Ehidonye Bernard

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Johnson-Ehidonye Patrick Sopuruchukwu Bernard

Mr. Johnson-Ehidonye Patrick Sopuruchukwu Bernard is Political activist and social critic on Nigerian, African and World affairs. Ambassador at the University of the People, Pasadena California. U.S.A