MTN’s Rob Shuter: Xenophobic attacks and looting will weigh on investor sentiment

Africa’s largest mobile phone operator has warned that the recent wave of violence in South Africa against foreign nationals that has claimed lives and ruined many businesses will have a negative investor sentiment towards the country and African continent.

Rob Shuter, the CEO of telecommunications giant MTN, spoke out against the violence and looting, mostly against businesses owned by foreign nationals in Johannesburg, Ekurhuleni, and Tshwane over the past week.   

The violence, which is apparently fuelled by xenophobic sentiment, has created a diplomatic quagmire for South Africa because citizens in Nigeria and Zambia have, in retaliation, attacked stores operated by South African companies including MTN, MultiChoice and Shoprite in both countries.

Shuter said the violence will have a “significant negative implication” for investor sentiment and add another layer of complexity for doing business not only in South Africa but the rest of Africa.

“We are concerned about the implications of investor sentiment long-term, which is so important to get on top of the situation in all markets so we can give investor confidence,” Shuter said on Monday 9 September at a gathering, organised by the South African Chamber of Commerce and Industry (Sacci), of business to discuss the xenophobic attacks and their impact on companies and the economy.

Shuter is another executive to warn about the impact of the violence on investor sentiment after business lobby groups, Business Unity South Africa and Business Leadership South Africa, said the unrest will have a devastating impact on South Africa’s economy.

For South Africa, the violence is expected to have a negative impact on an already ailing economy, which is expected to pencil in growth of 0.6% in 2019, and president Cyril Ramaphosa’s drive to raise $100-billion in new investments over the next four years.

Shuter said the violence and looting come at a time when Africa is in “tremendous need” of foreign direct investment because many economies operate at trade deficits – an important metric that points to a country’s imports exceeding the value of its exports, rendering its trade activities as unproductive and uncompetitive.

South Africa runs a trade deficit, with latest data from the South African Revenue Service showing that the country recorded a R2.9 billion deficit in July.  “We need to be an open, viable and accessible market for international investors.”

Affected operations

MTN was affected by the xenophobic attacks and looting in South Africa and the resultant reprisals in Nigeria.  At the height of last week’s violence, MTN closed four franchise outlets in Nigeria – owned and operated by Nigerians – after they were damaged. MTN also closed its Nigeria head office, which was reopened on Monday 9 September.  Nigeria is MTN’s largest market in terms of the number of subscribers, with 61.5-million subscribers recorded for the six months to June 2019 compared with 29.2-million in South Africa.

Pay-TV giant MultiChoice, which broadcasts in 50 countries on the continent, closed two of its outlets and head office in Nigeria as attacked grew. It reopened the office on Friday 6 September.  MTN and Multichoice are still committed to Nigeria.

MTN’s Shuter said it received communication from the office of Nigeria President Muhammadu Buhari that the government is “supporting South African businesses and assisting them to secure their assets.”  Meanwhile, MultiChoice CEO Calvo Mawela said the company doesn’t “see enough reason to panic” because he believes that the diplomatic relationship between South Africa and Nigeria is “strong”.

Meeting with police authorities

Mawela and Shuter were among business leaders that met with police minister Bheki Cele and representatives of the state intelligence agency on Monday 9 September about the xenophobic attacks and looting in South Africa.

In a closed meeting with business leaders, Shuter said Cele briefed leaders about, among others, factors fuelling the violence and steps that law enforcement authorities have taken in the past week to quell the violence. Cele said 12 people (mostly South Africans) have died and 639 people have been arrests (implicated in arson, looting and related illegal acts) since violent attacks intensified last week.   

Cele said the government and law enforcement agencies have a long-term plan to quell the violence. But he refused to share details of the plan.  BM