QUESTION ONE (40 MARKS)

Statement made by Lynette Chen, CEO NEPAD Business Foundation Africa against Xenophobia/Afro-phobia South Africa is one of Africas most culturally diverse nations with 11 official languages and 5 racial groups, which include black African, white, coloured, Indian and Asian. According to the last census in 2013, South Africa is also the home to nationals from 53 African countries giving the country a wider range of ethnic variety than the rest of the continent. As one of Africas leading economies, South Africa is not only supposed to take the mantle of a continental leader but should also provide the basis of Africas socioeconomic integration. Post-colonial Africa should be more focused on economic prosperity through increased intra-African trade and local investment.

The NEPAD initiative which was founded to accelerate continental development and the African Union (AU), have just launched Africas Agenda 2063 which is a 50-year roadmap to Africas economic success and envisions a continent united in its identity, vision and progression. The recent xenophobic attacks not only have an immense negative effect on South Africas economy, but it will also stifle the growth of local companies in their efforts to expand into other African countries. According to a report by PwC, more South African companies are either already expanding or considering expansion of their business operations across Africa. The report also states that foreign multinational companies seeking to invest in Africa are more likely to use South Africa as a base to 'explore' business opportunities in other African countries. These recent attacks are threatening to undo the repair done after similar attacks in 2008 and have the potential of further lowering foreign investor confidence not only in relation to South Africa but the continent as a whole. Rating companies, Standard & Poors and Fitch recently downgraded South Africas sovereign credit rating to BBB- and warned of further downgrades if the economy does not improve. Citing concerns of South Africas inability to tackle its deeply rooted structural problems, Moodys has followed suit and has downgraded South Africas major banks to BAA1.

If not resolved quickly, the disruptions caused by the xenophobic attacks to normal business operations and the threat of more widespread attacks across the country will exacerbate the financial position of the South African economy and may add to the factors that will result in further downgrades. In last years budget speech, Finance Minister, Pravin Ghordon anticipated a steady employment gain of some 2% a year, with the government having committed to creating 5 million jobs in ten years through sizable cash injections into job creation programmes and initiatives. The recent attacks on foreigners (who are also the owners of most small business operations in high-density suburbs) are going to counter the governments plans and negatively impact employment projections. The lack of jobs and a deep sense of disappointment by South Africans of non-delivery of promises by Page 4 of 7 the government, has created the frustration which is at the root cause of these attacks as the perception is that foreigners are taking opportunities from South Africans.

The NEPAD Business Foundation does not condone the aggressive violence and looting that is being meted out by the people of South Africa against foreign nationals. We therefore call for all NBF members, stakeholders, partners and the South African people to support initiatives that are driving campaigns against the attacks such as: Lead SAs #NoToXenophobia (on twitter) and Khaya Dlanga and Shaka Sisulus Durban Peace March. We also urge corporates to offer financial support to the organisations such as Gift of the Givers Foundation and Churches which have been working tirelessly to provide food and shelter to those affected by the xenophobic attacks.

1.1 What impact will the xenophobia have on South African Economy and how will it have an impact on foreign investors that have invested in South Africa and that are willing to invest in the country? (20)

1.2 Rating companies, Standard & Poors and Fitch recently downgraded South Africas sovereign credit rating to BBB- and warned of further downgrades if the economy does not improve. What message does this send to South African government and how can the government respond to this to avoid further downgrades? (10)

1.3 The recent attacks on foreigners (who are also the owners of most small business operations in high-density suburbs) are going to counter the governments plans and negatively impact employment projections. In your own opinion explain the root cause of the xenophobia attacks around your area and explain how it has affected your campus or your area of location. (10)