How a lack of understanding of the free market is to blame for so-called xenophobic attacks in South Africa’s townships.
By Akhona Ndiki
These so-called Xenophobic attacks in Soweto and other Highveld townships are an indication of the work that still needs to be done to educate the masses about the importance of a free market economy.
People need to be educated about the importance and benefits of free trade. I say them so-called xenophobic attacks because the attacks were not really xenophobic in nature. It’s just that foreign traders (typically from Malawi, Bangladesh, Pakistan and Somalia) this time around were easy targets.
According to English etymology and the Oxford dictionary, xenophobia is defined as an irrational fear of foreigners. The looting and thuggery in Soweto was neither xenophobic, nor prejudice motivated by fear or hate. I do not think that the main motivation for the attacks was xenophobia. I say this because the looters did not assault nor threaten foreign traders and they don’t fear them. All they wanted was their inventory and I believe the attacks were motivated by some people hating the foreigners’ successful businesses.
Funny enough this happened in January – the toughest month economically for most township residents. I guarantee you these attacks will never occur in December (when everyone has money). This time around, unlike May 2008, they started in Soweto instead of Alexandra Township.
The first ever ‘xenophobic’ attacks occurred during the height of the 2008 global economic meltdown. This raises a very important question: is there a correlation between economic tough times and these so-called xenophobic attacks?
Let’s us all ‘pray’ for economic prosperity for all South African citizens or else we will see more of these attacks. Secondly, among the looters we also saw other non-South Africans. When Zimbabweans attack or assault foreign traders in South Africa, is that still xenophobia? They are both ‘foreigners’ in a foreign land. In Soweto, some Zimbabweans also joined the local looters. Why we call this ignorance and criminality “xenophobic attacks” is beyond my comprehension. It was just pure criminality.
The principles of free trade and the free market are not foreign in Africa. They date back to pre-colonial Africa. Africans have always traded with one another and, indeed, with the rest of the world. King Mansa Musa of the 13th century Mali kingdom is according to some sources the richest man who ever lived (after being adjusted for inflation). He was an African and most importantly he was a trader. Actually he taught most people including non-Africans about the importance and benefits of trade. Trade breaks down all the barriers that limit interpersonal connection and promotes personal growth.
The entrance of the foreign retail traders into South African townships created misery and happiness. Local Spaza (tuck shop) owners were not happy as this meant more competition for them, but the consumers (the most important people) were happy because competition meant better service and lower prices for them.
Competition is good for consumers. It drives prices down and improves customer service levels. As a service provider you need to do what your competitors are doing, but do it better and more efficiently. I believe that the arrival of foreign traders should be seen as a positive development and it should be welcomed by all relevant stakeholders. Not only their arrival benefits consumers – it should also benefit local traders. They need to learn from these foreign traders (commonly referred to as ‘my friendohs’ by locals) about how to make it in the competitive township retail environment. They are called ‘my friendoh/s” because that is what they call each and every customer. It is their way of showing that they are here to trade and build friendships.
Holding all other factors constant, on average township residents are price sensitive as most of them are either working in low paying jobs or unemployed. In addition, township customers received poor service from local traders prior to the arrival of these foreign traders. The foreign traders took notice of this poor customer service and decided to capitalize on it. To gain the trust of the locals they not only treated them with dignity but they were willing to sell some of their merchandise at a loss.
Foreign traders will tell you that they don’t mind selling sweets, cigarettes and sometimes bread at a loss because these products attract customers to their shops and more often than not the customers end up buying other products as well. Furthermore, they understand the price sensitivity of township consumers; hence they decided to work in teams where they could bargain for low wholesale prices and in turn charge their customers relatively cheaper prices.
The township retail space is a jungle – only the toughest survive. It’s easy to hate and I understand the frustration of local township traders, but I believe that their anger is directed at wrong people. They should be angry at government for making empty promises. People have been used as political prostitutes by politicians in order to gain votes. Politicians made and continue to make dubious and unrealistic promises that create the culture of dependency. The sooner poor mense realize that they are on their own, the better. Instead of hating, they need to learn from these foreign traders about how to compete peacefully within a free market, without relying on government to help them. Only then will we have peace, prosperity and economic growth in South Africa’s townships.
“Hate is only a form of love that hasn’t found a way to express itself logically.” – Lil Wayne
Akhona Ndiki is a South African entrepreneur and financial planner. He holds a BCom from the University of the Western Cape, a PDGM Marketing from the University of Cape Town and a certificate in financial planning from Milpark Business School. He is currently based in Johannesburg, Gauteng.