SA counts the cost of xenophobia

2015-04-26 18:00

South African businesses will be counting the costs of the recent xenophobic violence for a while to come as imports are battling to cross borders, stiffer business laws in Nigeria loom, and construction and development projects are delayed.

Added to that are damaged perceptions ahead of a multimillion-rand bid to host the Commonwealth Games.

While it is too early to quantify the full financial impact of the fallout, Mark Lamberti, CEO of logistics group Imperial Holdings, said the border post between South Africa and Mozambique was temporarily closed for a day last week following riots and roadblocks on the road leading towards Ressano Garcia on the Mozambican side of the border, where protesters would not let vehicles with South African number plates pass – and reportedly threw rocks at them.

“To date, none of our [Imperial] vehicles has been threatened or damaged,” said Lamberti.

He said there had been little to no financial impact for Imperial due to the border closure because the company was able to re-route vehicles timeously.

DN Freight general manager Olin Frederiksen said the road barricades and stoning did not affect the company directly because it did not use its own vehicles, but it forced its nominated truckers to suspend the route.

“Cargoes that should have moved have been held back,” he said. “The impact was therefore more on our clients and our ability to dispatch their consignments in due time.”

Frederiksen said any financial impact from the delays was hard to estimate because DN Freight trusted the consignments had been sent.

“Short term, it would be that we did not invoice the consignments in April, therefore our profitability would be lower than if they had been sent,” he said.

“The damage might be in the medium to longer term as the Mozambique importers might decide to source products elsewhere, and that could have a more lasting effect on our clients, ourselves and the truckers. Luckily, at this stage, this is not a major route of ours.”

Petrochemicals group Sasol, which last week sent home about 340 South Africans from projects it was developing or constructing in Mozambique, did not respond to questions on its status or the financial impact of the unrest.

But on Thursday last week, the members of Nigeria’s lower house of Parliament debated invoking business laws to make it tougher for South African companies to trade in the country.

South Africa is one of only 13 countries that have a double taxation agreement with Nigeria, according to Nigeria’s Federal Inland Revenue Service.

Economic Development Minister Ebrahim Patel told factory workers in Pretoria this week that South Africa sold goods worth R260?billion to other African countries, which translated to more than 160?000 local jobs.

He warned that were intra-African trade to be cut out of South Africa’s economy, scores of people would lose their jobs; and he called for an end to the attacks on foreign nationals.

The attacks also threaten to scupper the country’s bid for the next big sporting event after the 2007 Cricket World Cup and the 2010 Soccer World Cup – Durban’s bid to act as the host city for the 2022 Commonwealth Games.

The bidding process to host the games closed last year, and Durban was left as the sole bidder after the Canadian city of Edmonton pulled out in February. A final decision on the host city will be made in September.

Mark Alexander, chairperson of the Durban bid committee, said the operational budget for the games was set at R6?billion. About R1?billion of this amount has been set aside for the preparation of Team SA, an expense that will be incurred regardless of whether the bid succeeds or not.

Alexander added that the rationale for the bid – which extended beyond the “big event mentality” by including job creation, housing and social cohesion – coupled with South Africa’s proven experience in hosting the cricket and soccer showcases would outweigh the effects of the xenophobic attacks.

“We are confident that our government, which is working with all sectors, will be able to bring the current attacks to an end,” he said. “We are equally confident that this would not have an effect on the bid decision in September 2015.”

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