Xenophobia means higher interest rates, less investment and fewer jobs

Migration and financial services are linked through remittances, transaction accounts, foreign exchange, mobile wallets, cash-out networks, merchant payments, and the broader task of moving money safely, cheaply and lawfully across borders. To put it simply: people move; money moves; and – crucially – support for families and for businesses is created.It is of course well known that our continent receives about $100-billion a year in remittances from migrants back to their countries of origin. For context, this is more than twice the amount that Africa receives in a year as Foreign direct investment (FDI) and 1.6 times the amount we receive in development finance. Importantly, of the total $100-billion we receive, $20-billion is sent from within Africa itself to other African countries.Incidentally, South Africa’s share of the $100-billion received by the continent is about $1.25-billion. Very roughly, $250-million of that comes into SA from other African countries. Looking at outward flows, migrants to SA from other African countries send about $1.5-billion a year from here to their countries of origin.These huge financial flows represent immense self-sacrifice in leaving loved ones and familiar places behind. They represent equally great self-discipline in saving money to send home. For the receiving households, these numbers pay for food, rent, school fees, transport, medicines and dignity. At the macro level, they support foreign exchange earnings and balance-of-payments resilience.We should honour what these remittances tell us regarding the courage and kindness of the people who send them. And we should honour the good that they do for the people of Africa.But I don’t want to spend all my time on remittances because, from a financial sector perspective, there are three major economic and commercial issues which are closely related to migration, and which are even more significant than remittance flows. These are:First, the effect of migrants on their host economies.Second, the effect of the politics of migration on multinational corporations and on each host country’s economies more broadly.Third, openness in general to flows of ideas, goods, capital and people.Migration is good for growthI’ll start with the effects of migrants on host economies. One of the recurring claims in anti-migrant politics is that foreigners take jobs, lower wages, and contribute little to their host society. These claims are, quite simply, contrary to the evidence.Yes, rapid migration – like rapid changes in trade patterns – can cause economic costs and social distress in particular places and industries. And a capable government needs to manage and mitigate those local costs. But, overall migration is good for growth, and good for job creation.It’s important to be clear. Economists don’t claim that migration imposes no adjustment costs anywhere, ever. The evidence shows that, in general, migration is positive for growth while its effects on local workers are usually small and often positive, thanks to migrants’ entrepreneurship, demand creation and productivity.Immigration reduces unemploymentIf you want a recent chapter-and-verse source on this, I refer you to a 2025 meta-analysis by Luz and co-authors in a 2025 edition of the respected journal Economies. This paper analyses 41 studies to find that, on average, immigration has a positive and statistically significant impact on the economic performance on the economies of the receiving countries. Further, immigration tends to reduce unemployment in the receiving countries.Let me repeat that. Immigration tends to reduce unemployment.This actually makes a lot of sense if you think about it. Migrants are not only workers; they are also consumers, tenants, commuters, savers, borrowers, traders and entrepreneurs. They increase the demand for goods as well as the supply of labour.They rent rooms, buy food, use transport, pay school fees, start small businesses, and create jobs for local people. In many settings, they also fill shortages, broaden skills, and deepen commercial links between the places where they were born and where they now live.We should also say clearly – because bad politics thrives on false claims – that migrants do in fact pay tax. Migrants in the formal labour market obviously do, while those in the cash economy pay VAT whenever they purchase goods and services. So the claim that migrants contribute nothing to the government’s capacity to serve citizens is, quite simply, false.Politics of migration and investment not a one-way streetNow let me move on to the politics of migration and its effect on Multinational Corporations (MNCs). Since we are both represented here, let’s use MTN and Standard Bank as examples – although I also want to emphasise that these points would apply just as well to any other African or international business – for example Alhaji Dangote’s businesses across Africa.Talking of entrepreneurs and investors like Alhaji Dangote, it’s important not to forget that investment between SA and our neighbours is not a one-way street. Indeed, according to IMF data, SA’s stock of direct investment from our African neighbours now stands at over R64-billion.Direct investment from SA into our continent is even larger, standing at about R500-billion. And, as both my good friend Ralph Mupita and I can attest, SA’s multinational firms do not operate in a vacuum. We rely on trust from regulators, customers, employees, suppliers and governments across many African markets.South African multinationals, including in telecoms, banking, retail and industrial sectors, have invested heavily across Africa over many years. We have done this because it’s good business. Almost every African country grows much faster than SA, and the overall African market is, of course, much bigger than just the South African one.There really is a lot at stake here. Again, to use Standard Bank as an example. Last year we made R49-billion in headline earnings. Of that, 40% – or R19.7-billion – was earned in African countries beyond SA. And since I am speaking to an audience containing many public servants, we paid R10.3-billion in taxes in African countries beyond SA, and R7.7-billion in tax in SA.Commercial cost of African hostilityBut, to succeed in other African countries, firms like MTN and Standard Bank also need a continental environment of reciprocity, trust and legitimacy. So, if citizens and policymakers in other African countries come to see South African firms as the commercial face of a society that is hostile to other Africans, then those firms will bear costs – formally through regulatory pressure, and informally through reputational damage, consumer hostility and political suspicion.That is one reason why well-managed migration is not a peripheral issue for business leaders. It goes to market access, licence to operate, staff mobility, customer trust and long-term franchise value across the continent. Of course, SA has recently experienced a wave of xenophobic violence – but let me emphasise that the point is a general one. MNCs everywhere are highly dependent on effective and rational management of migration.And I’m not just talking my own book as the manager of an MNC. Xenophobia damages economies more broadly, slowing growth and job creation in host countries. As we have all seen over the past month, xenophobia does this by reducing business and consumer confidence and by increasing the costs of doing business. It also – justifiably – worsens country risk perceptions and therefore increases the cost of capital. In plain language, more xenophobia means higher interest rates, less investment, and fewer jobs.Migrants create corridors of trade, information and financeThird and finally, well-managed migration is an essential sub-component of Africa’s economic integration. Migrants create corridors of trade, information and finance. They are often the first customers for cross-border payment products, low-value transfers, diaspora savings products, and small-business banking relationships that later support deeper commercial integration. Migrants, in other words, are the pioneers of African economic and financial integration – and the forerunners of African unity.Again, the stakes are enormous. The UN Economic Commission for Africa estimates that full implementation of the the African Continental Free Trade Area (AfCTFA) by 2045 could increase intra-African trade by $276-billion – a 45% uplift – and boost continental GDP by $141-billion. The key phrase here is “full implementation”.To get the full benefit of the AfCFTA we need far more than low mutual tariffs. We need quick and clean border processes; improved logistics; and economically sensible rules on human movement and migration. Africa can’t get the full benefits if we don’t welcome our neighbours to do business with us – and, yes, to come and work in each other’s countries.Let me end with a non-African comparison, both to reinforce my point – and to show that we are in no way unique. As we all know, one of the main reasons why the UK decided to leave the EU was to slow down immigration from their European neighbours.As a banker, it is not my place to comment on whether this was good politics. But I can say this. According to the latest estimates, Brexit has so far reduced the UK’s GDP by 6–8%, investment by 12–13% and employment by 3–4% relative to staying in the EU.In other words, while a desire to detach one’s country from its neighbours and to slow down migration may have emotional and political appeal in some contexts, it doesn’t make economic sense. DMSim Tshabalala, Chief Executive of Standard Bank Group, delivered this address to The Kgalema Motlanthe Foundation Winter Seminar on 23 July 2026.