Renewed violence targeted at immigrants in South Africa spread to Central Business Districts and threatens export routes for minerals and manufactured goods.

Implications

Retaliatory action in many African countries is likely to target South African nationals, diplomatic assets, and companies.

Outlook

The violence is increasingly politically motivated, indicating that more outbreaks of anti-immigrant violence are likely in the three year outlook.

The SANDF will be deployed in areas prone to attacks on immigrants, including the Alexandra township near South Africa's key financial and business centre at Sandton in Johannesburg, and the city of Durban, which is also a manufacturing hub and hosts Africa's largest seaport. So far, at least seven people have died in violence mostly targeting African immigrants from Mozambique, Zimbabwe, Malawi, Somalia, and Nigeria, as well as Asian immigrants from Pakistan.

The intervention by the SANDF follows the worst outbreak of violence targeting immigrants in South Africa since May 2008, when at least 62 people died in riots motivated by xenophobia mostly in Gauteng province, Durban, Cape Town and the coal-producing province of Mpumalanga.

During subsequent interviews conducted in 2008, IHS found that the riots were partially politically motivated: to cause disorder ahead of the 2009 general elections. Since then, anti-immigrant violence has simmered mostly in rural locations and within townships. Between 2009 and 2010, at least 20 people were killed, and in 2011, at least 120 died.

IHS sources also reported that the anti-immigrant violence has been incited on a lower level by groups hostile to the ANC party, including opposition parties in Gauteng and KwaZulu-Natal. By capitalising on rising sentiments of xenophobia, such groups look to undermine the ANC's political dominance ahead of the 2016 municipal elections. Meanwhile, opposition parties have been vocal in their condemnation of the government's management of the violence.

The political undertones of the violence, an increasingly ethnic and nationalist tinge, and the ease with which local political and traditional leaders are able to incite such violence, all indicate that anti-immigrant attacks will become more frequent and widespread. This is likely to be disruptive for the South African economy, but the real commercial risk is derived from retaliatory action against South African nationals and companies operating in countries from which the targeted immigrants hail.

Within South Africa, the violence has mostly been disruptive as riots have spread into some central business districts of cities such as Durban, triggering a police response including rubber bullets, tear gas, water cannon, and stun grenades to disperse crowds. Collateral risk of property damage is therefore high in central urban centres where security forces are heavy-handedly curbing violence, while riots also increase the risk of vandalism and arson attacks on retail businesses, banks, vehicles, and public infrastructure. The risk of contagion to other urban centres is also high, as proven by

recent violence spreading between cities. Exports of minerals (platinum, gold, coal, and iron ore) and manufactured goods (automotive, metals, chemicals, agri-processing) face increased risk of disruption as violence spreads to commercial ports. Disruption to the strike-prone mining sector, which employs many immigrants, is also likely to rise.

In response to the attacks on their nationals, foreign governments have begun

evacuations from South Africa and publicly condemned the violence. The risk of attacks on South African nationals has raised death and injury risks in the wider region. Such violence is likely to continue as long as anti-immigrant violence in South Africa persists and is more likely to intensify if regional governments pursue evacuation of their nationals. Haulage assets are at highest risk of vandalism, looting, and arson, especially at border crossings, disrupting key cargo flows including the Zambia and DRC to Durban Port route and the Maputo Corridor between Gauteng and Maputo Port. Diplomatic assets also face increased risk of vandalism and looting, especially in Nigeria and Ghana. The South African consulate in Lagos has already closed down due to the threat of violence. High commissions and consulates are at particular risk of looting and arson attacks.

South African companies operate widely around the African continent, including retailers Pick 'n' Pay, Shoprite, and Game (part of Massmart Holdings Limited); telecoms firm MTN Group; chemicals firm Sasol Limited; agri-firm Tongaat-Hulett; construction firm Murray and Roberts Holdings Limited; hospitality group Sun International; miner Impala Platinum Holdings Limited; and banks Nedbank, Standard Bank, and First National Bank. The companies' African operations will face increased risk of vandalism and looting, as well as boycotts. However, discrimination and contract cancellation is less likely.

Source : IHS 24/04/2015

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