Anti-migrant protests risk economic blowback for South Africa

JOHANNESBURG, July 10 - Frustrations over unemployment, crime and years of weak growth are driving South Africa's anti-migrant protests. But economists warn that the departure of thousands of foreign workers could end up hurting the very businesses and labour markets that anti-migrant campaigners say they are trying to protect.

Anti-migrant sentiment has surged in recent months, culminating in a nationwide march on June 30. Although the protests were largely peaceful, fears of violence have prompted thousands of African migrants to leave South Africa.

Their departure could create labour shortages in businesses that have long relied on foreign workers - from construction sites and farms to delivery services and corner shops - while also undermining the country's vast informal economy.

"Migrants typically find work in sectors where vacancies are difficult to fill, including farming, construction, hospitality, retail, transport and the informal sector," Mpho Lenoke, a lecturer at North-West University, said.

According to U.N. data, some 2.6 million migrants called South Africa their home in 2024 - around 5% of the population. While recent data on their economic contribution is limited, OECD-ILO estimates from 2018 based on 2010 modelling put their GDP contribution at 9%.

"Many foreign nationals are starting businesses that employ South Africans and bring competition, which is good for consumers," said Lenoke. "International experience suggests that restrictions on migrant labour often have unintended economic consequences."

The protests have already caused disruption in parts of the retail sector.

Foreign-owned spaza shops — informal convenience stores that operate from makeshift stalls, garages or shipping containers — are a key feature of South Africa's informal economy, supporting wholesalers, landlords and local employees.

Sixty60 — the grocery delivery platform of Africa's largest food retailer Shoprite Group — faced disruptions during the latest protests. Company data shows fewer than a quarter of its drivers were South African.

BUILDING MOMENTUM

South Africa's anti-migrant movement has been building for years as the country grapples with weak growth.

The World Bank in June cut its 2026 growth forecast for South Africa to 1.0% from 1.4%, while Statistics South Africa reported an unemployment rate of nearly one third in the first quarter, leaving 8.1 million people without work.

Those conditions have helped fuel resentment towards migrants. However, a study by the U.N.'s International Labour Organization (ILO) using labour force survey data found that as immigrant participation in the workforce increases, employment opportunities for South African-born workers also rise.

Protests can also disrupt economic activity through looting and business closures, said Susanna Deetlefs of ACLED.

"Supply chains are disrupted, jobs are lost, and access to goods and services is curtailed when tensions escalate," she said.

BEYOND BORDERS

Investors have so far reacted calmly, but say the protests add a new risk factor.

"It is a significant social problem in South Africa that investors keep hearing about, but they actually haven't seen an actual real-life impact of it," said Kaan Nazli, emerging markets debt portfolio manager at Neuberger Berman. "Now, with these protests, this is a risk."

The stakes extend beyond South Africa, the region's main source of remittances and largest host of working-age migrants, according to data from the ILO.

A joint FinMark Trust and South African Reserve Bank report found remittance outflows more than tripled between 2016 and 2024 to more than 19 billion rand ($1.16 billion) in 2024.

Nearly 90% of transfers to southern Africa went to Lesotho, Malawi, Mozambique and Zimbabwe, with Zimbabwe receiving more than 60% of the total. REUTERS