By Gabriel Manyati
The winter morning air in the Germiston central business district on the East Rand of Gauteng is usually thick with the scent of roasted coffee, exhaust fumes and fresh vetkoek. By 8am, the informal exchange between cross-border wholesalers and township retailers typically reaches a deafening hum. But in the first week of July 2026, a heavy, anxious silence hung over the concrete pavilions. Row after row of metal shutters remained pulled down, locked tight with heavy padlocks. On the street corners, instead of fruit sellers and clothing vendors, small groups of men carrying traditional sticks stood watch.
Following months of escalating tension driven by the March and March movement, led by former radio broadcaster Jacinta Ngobese-Zuma, the country arrived at the group’s self-declared 30 June deadline. The ultimatum demanded that all undocumented foreign nationals leave South Africa and that local businesses immediately terminate their employment. While the massive deployment of the South African Police Service and private security firms managed to avert a total repeat of the catastrophic July 2021 civil unrest, the economic fallout has been immediate, severe and structural.
The economic shockwaves of this latest wave of anti-immigrant mobilisation travel far beyond the direct victims of vigilante violence. According to data monitored by the Armed Conflict Location & Event Data Project (ACLED), the weeks leading up to the deadline saw dozens of localised operations targeting foreign-owned enterprises across Gauteng, KwaZulu-Natal and the Western Cape.
The informal retail network, dominated by township spaza shops and inner-city wholesalers, has borne the immediate brunt. Estimates from local trader associations suggest that thousands of small retail outlets closed either temporarily or permanently during the mid-2026 protests. For landlords in working-class neighborhoods who rely on rental income from these immigrant entrepreneurs, the sudden closures have triggered a wave of defaults.
The disruption has rippled up the value chain to South African wholesalers, food manufacturers and logistics operators. Immigrant retail networks serve as highly efficient distribution channels for large South African fast-moving consumer goods corporations. When these shops close, corporate order books shrink. Furthermore, the closing of these shops creates immediate artificial food deserts, causing the prices of basic goods like bread, milk and maize meal to spike in adjacent informal settlements due to diminished retail competition.
The March and March movement has justified its campaigns by claiming that South Africa’s economic difficulties are caused by an estimated 15 to 30 million illegal immigrants. However, data from Statistics South Africa and the African Centre for Migration & Society (ACMS) at the University of the Witwatersrand repeatedly expose these figures as wildly inflated fabrications. The actual number of refugees and asylum seekers in the country stands at approximately 75 000 and 165 000 respectively, a minuscule fraction of the population compared to regional peers such as Uganda, which hosts nearly two million refugees.
Wits University economists Justin Visagie and Ruth Castel-Branco have argued that the true causes of South Africa’s staggering expanded unemployment rate, which hovers above 43 percent, are structural. The crisis is rooted in low GDP growth, capital flight, severe state capacity constraints, electricity supply challenges and a historical mismatch between the skills available in the labour market and the needs of a modernising economy.
Loren B. Landau, a prominent migration scholar at Wits University, points out that the scapegoating of foreign nationals serves to obscure governance failures. Far from displacing local workers, foreign entrepreneurs frequently expand township economies and hire South Africans. When these businesses are intimidated into closing, South Africans employed as shop assistants, cleaners and delivery drivers lose their livelihoods, worsening the local unemployment crisis.
The geopolitical and commercial consequences of this domestic instability are rapidly mounting across the Southern African Development Community (SADC) region and the broader African continent. In response to the June and July intimidation campaigns, regional governments initiated unprecedented diplomatic and logistical counter-measures.
The government of Malawi successfully coordinated the emergency repatriation of more than 15 000 of its citizens who fled the escalating hostility. Official diplomatic protests were lodged with the Department of International Relations and Cooperation by the governments of Zimbabwe, Mozambique and Nigeria. Public condemnations from the African Union in Addis Ababa have grown increasingly pointed, while travel advisories issued by regional neighbours have cooled cross-border tourism and business travel.
This regional friction directly threatens the commercial interests of South African multinational corporations operating across the continent. South Africa’s intra-African trade totaled US$42 billion in 2024, a vital driver of domestic industrial performance. In capitals like Abuja, Harare and Maputo, consumer groups and political formations have initiated localised boycott campaigns against prominent South African retail, telecommunications and banking brands, creating substantial reputational and commercial risks for South African capital.
The vital transport corridors that connect South Africa to Botswana, Zimbabwe, Zambia and the Democratic Republic of Congo have also faced operational bottlenecks. Freight logistics companies report that truck drivers from neighbouring countries are increasingly hesitant to cross the border into South Africa due to safety concerns, slowing down the movement of regional mineral exports and industrial inputs.
For the South African state, the cost of managing recurring cycles of xenophobic mobilisation is measured directly in fiscal exhaustion. National Treasury and security analysts indicate that millions of rands have been diverted to fund the emergency deployment of the National Joint Operational and Intelligence Structure (NatJoints), which includes thousands of police officers and members of the South African National Defence Force tasked with maintaining public order.
These unbudgeted public expenditures draw scarce resources away from critical municipal infrastructure repair and social service delivery. In major metropolitan areas, municipal revenues have faced an erosion due to declining retail activity, property damage and the general freeze on informal sector investments. The South African Chamber of Commerce and Industry (SACCI) and Business Unity South Africa (BUSA) have both warned that this environment of unpredictability severely damages investor confidence.
The recurring waves of xenophobic mobilisation expose a profound contradiction at the heart of the South African democratic project. The country’s constitution explicitly commits the republic to human dignity, equality and human rights, a legacy born from the global solidarity that helped defeat apartheid.
Yet, as Human Rights Watch researcher Nomathamsanqa Masiko-Mpaka has documented, vigilante groups have been allowed to operate with a troubling degree of political impunity. Mainstream political parties have increasingly courted the anti-migrant vote, moving xenophobic rhetoric from the populist fringe directly into the centre of national political discourse. Jean Pierre Misago of the ACMS has noted that the failure of the state to systematically prosecute those who instigate xenophobic violence creates a culture of lawlessness that erodes the rule of law for all residents, regardless of nationality.
If the current pattern of anti-immigrant mobilisation and state passivity continues, the long-term economic destination for South Africa appears increasingly bleak. The South African Reserve Bank has consistently highlighted that sustained economic recovery requires massive inflows of fixed direct investment. However, international ratings agencies and chambers of commerce are raising their risk assessments for the country.
As insurance premiums inevitably rise in violence-prone urban centres and townships, the cost of doing business will become prohibitive for small and large enterprises alike. Highly skilled African migrants, researchers, tech entrepreneurs and medical professionals are already beginning to choose alternative destinations like Rwanda, Kenya or Mauritius, robbing South Africa of crucial human capital.
Ultimately, the greatest casualty of this instability may be South Africa’s aspiration to lead continental economic integration through the African Continental Free Trade Area. A nation that treats the economic contributions of its neighbours within its own borders with hostility cannot realistically expect to serve as the prosperous commercial gateway to the rest of Africa.
