South Africa unrest shakes AfCFTA

LIVINGSTONE MARUFU

Recurring xenophobic attacks in South Africa are threatening to derail Africa’s flagship economic integration project, with economists warning that the violence is undermining confidence in the African Continental Free Trade Area (AfCFTA), disrupting cross-border commerce and fuelling protectionist responses across the continent.

The attacks have exposed a fundamental contradiction at the heart of Africa’s integration agenda.

While AfCFTA seeks to create a seamless continental market built on the free movement of goods, services, investment and people, periodic violence against African migrants and foreign-owned businesses has raised questions over whether those ambitions can be realised amid growing mistrust between member states.

Analysts say the violence extends beyond a humanitarian crisis, carrying significant economic consequences for intra-African trade, investment flows and regional cooperation.

South Africa, the continent’s most industrialised economy and one of AfCFTA’s principal beneficiaries, plays a pivotal role in regional value chains. Yet repeated attacks on foreign nationals risk eroding investor confidence and weakening the political goodwill required to implement the continent’s most ambitious trade agreement.

The irony is that AfCFTA Secretary-General Wamkele Mene is South African, while the agreement itself stands as one of the African Union’s flagship initiatives aimed at transforming Africa into a single market of more than 1.4bn people with a combined gross domestic product exceeding US$3 trillion.

Since trading commenced in January 2021, AfCFTA has sought to eliminate trade barriers, deepen regional value chains, accelerate industrialisation and boost intra-African commerce.

However, economists argue that these objectives cannot be achieved where businesses and workers fear for their safety.

Economist Malone Gwadu said xenophobic sentiment directly threatens the principles underpinning continental integration.

“The sentiment that African foreigners should return to their respective countries is regrettable because it threatens AfCFTA. It undermines the spirit of Pan-Africanism and weakens economic opportunities by restricting the movement of people, trade and investment across borders,” Gwadu said.

He warned that deteriorating relations between African countries were reversing gains made under AfCFTA and encouraging protectionist policies that weaken regional trade.

“The current situation requires urgent intervention by regional bodies such as SADC, COMESA and the African Union to de-escalate tensions and restore confidence in continental trade. A united Africa stands to benefit from economies of scale, greater competitiveness, stronger employment creation and enhanced bargaining power in global markets,” he said.

Gwadu added that despite the current setbacks, AfCFTA still presents enormous long-term opportunities provided African governments demonstrate the political will to preserve the agreement and strengthen regional cooperation.

The attacks have also disrupted informal cross-border trade, forcing many migrant-owned businesses to shut down while damaging supply chains that support thousands of livelihoods across Southern Africa.

Retaliatory calls by some African countries to boycott South African companies and cancel performances by South African artists have further highlighted the growing diplomatic fallout, threatening trade in goods and services beyond South Africa’s borders.

Another economist Tony Hawkins said persistent social unrest was increasingly damaging South Africa’s reputation as an investment destination.

“Free movement of labour is fundamental to economic integration. These events will inevitably have knock-on effects on trade and investment flows while undermining African free trade, particularly given that many African economies already maintain protectionist tendencies. The biggest beneficiaries of these disruptions will ultimately be Asian economies,” Hawkins said.

Yet another economist Eddie Cross said the latest developments underscored the considerable distance Africa still needed to travel before achieving genuine continental integration.

“Africa has a long way to go before its vision of continental free trade becomes reality. Even regional trade agreements are not being fully implemented. The immigration crisis will worsen the situation by encouraging countries experiencing migration pressures to adopt even more protectionist policies,” Cross said.

He, however, commended Botswana’s relatively liberal approach towards the movement of people, arguing that greater openness would ultimately deliver higher living standards and stronger regional trade.

Cross warned that anti-foreigner rhetoric undermines Pan-African solidarity and directly weakens the foundations upon which AfCFTA was established.

“The idea that African foreigners should simply go back to their countries is a threat to the African Continental Free Trade Area. It erodes unity, damages economic opportunities and discourages countries from opening their borders to trade and investment,” he said.