Xenophobic attacks may threaten SA Inc. in Africa (and therefore your pension)

Do you have a pension fund or retirement annuity? Do you own any shares of the large companies listed on the Johannesburg Stock Exchange?

Xenophobia has the potential to harm the wealth you've worked tirelessly to build.

South African companies are piling into the rest of Africa

MTN, Vodacom, Sasol, SABMiller, Shoprite, Multichoice (a Naspers cash cow), Standard Bank, Absa, FNB… The list of South African companies that earn increasing proportions of their profits elsewhere on the continent is growing… continuously.

In 2005 South African companies invested R35-billion (US$3-billion) in the rest of Africa. Since then, according to MGAfrica.com, South African investments into the rest of the continent have increased by 536 percent. In 2012, South African companies invested in 75 new FDI projects in the rest of Africa, more than any country on Earth. That’s according to a 2013 report by FDI Intelligence, a firm that consults on cross-border investments.

For over a decade we’ve been placing an increasing number of our eggs in an African basket and rightly so, considering its booming economies.

MTN has about 125-million African subscribers, of which only about 20 percent comes from South Africa, a saturated market. Shoprite operates in 14 African countries outside of Africa, Multichoice in 50, Absa in 15 and Standard Bank in 19. SABMiller depends on 15 African markets outside of South Africa for 14 percent of its profits.

Could the attacks on businesses owned by foreign Africans, in time, affect SA Inc.’s earnings up North? The signs are ominous.

Nigeria issues a warning

On Thursday representatives of the newly elected Nigerian government warned their South African counterparts to put a stop to the xenophobic attacks. They threaten to shut down South African companies operating there if the violence doesn’t stop.

They mentioned MTN, Multichoice and Shoprite – companies in most investment portfolios and, therefore, probably yours – by name.

“We actually handed a letter to the South African embassy yesterday, making them aware that we are not happy with what is going on in South Africa,” said Tolu Adesanya, a representative of the governing All Progressive Congress (APC). “Should there be any more attacks, we are going to shut down South African businesses in Nigeria. That is MTN, Multi Choice, Shoprite, etc.”

There are already reports of South Africans being chased out of Mozambique and concerts in Harare showcasing our artists cancelled due to xenophobia.

Africa is rising

In the last 10 years Sub-Saharan Africa (excluding South Africa) was, after China and India, the third fastest growing region in the world averaging close to six percent.

The World Bank expects growth in Sub-Saharan Africa at about five percent this year. Nigeria, which is Africa’s largest economy, will grow (according to Bloomberg) by 4.9 percent despite plummeting oil prices. Kenyan growth will exceed six percent.

Our biggest companies have realised opportunities are emerging North of the Zambezi. Your pension is growing nicely, partly as result of the latter. But the xenophobic attacks must stop. The Continent has taken notice. We’re biting the hand that is, increasingly, feeding us.

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