The business community is appalled at the ongoing looting and violence taking place in the country. Business organisations have warned if it does not end soon, it could threaten food safety, increase unemployment and cause irreparable damage to the country’s economy. Also, while they have welcomed the deployment of the army to help police bring the situation under control in Gauteng and KwaZulu-Natal, they said it was not a long-term solution.
The Small Business Institute (SBI) said that the damage to business supply chains would delay the badly needed economic recovery and reconstruction needed for South Africa as a result of the Covid-19 pandemic and a recession, and it would dampen investor sentiment. “The Small Business Institute strongly condemns the wanton looting of businesses, destruction of vital economic infrastructure, burning of trucks and blockading of roads primarily in KwaZulu-Natal and Gauteng,” the SBI said in a statement.
“We also call on law enforcement agencies to urgently protect lives, property and businesses which have become the main target of the ongoing violence. Whilst our Constitution guarantees the right of every South African to protest, we find the violence visited on ordinary people, property, trucks and business premises completely indefensible.” The SBI has called on the government to show leadership on the matter, after President Cyril Ramaphosa and the rest of his Cabinet were criticised for taking not speaking out on the mayhem soon enough, which was believed to have been started by supporters of former president Jacob Zuma after he was jailed.
Business Unity South Africa CEO Cas Coovadia said that the “anarchy has caused significant economic damage and cost and the ongoing violence and destruction of property continues to cause severe losses to the economy”. He warned that the resultant loss of jobs because businesses did not have the confidence to continue operating would exacerbate the already high unemployment rate.
“These events are being reported on globally, resulting in significant loss of confidence in our country as an investment destination, at a time we are competing with more positive destinations in different parts of the world,” Coovadia said. “This will have a negative impact on our efforts to put SA onto a sustainable inclusive growth path and hamper our efforts to address the severe social and economic challenges our country faces.”
A report released by the World Bank this week titled: “The South Africa Economic Update, Building Back Better from Covid-19”, suggested that entrepreneurship and self-employment would offer the biggest opportunity to create jobs in South Africa. This was if the country particularly took into consideration the growing number of startups in the digital sector, which the bank said could become an engine of growth for jobs of the future.
“Cape Town alone, the ‘tech capital of Africa’, has over 450 tech firms and employs more than 40,000 people,” it said. “In 2020, a total of $88 million (R1.2 billion) disclosed investments went into its tech startups.”
Marie Francoise Marie-Nelly, World Bank Country Director for South Africa, Botswana, Eswatini, Lesotho and Namibia, said that in order to generate employment, the country would have to address extremely high levels of inactivity, high rates of unemployment and low rates of self-employment. “By improving the business climate, the entrepreneurship ecosystem and access to financing, as well as investing in skills, the government can encourage self-employment and support the growth of micro and small enterprises,” she said.
Ramaphosa said earlier this week the country was on the path to doing just this before the violence and looting started, and it would do everything in its power to put an end to it soon.