Anti-migrant protests threaten South Africa's economy as foreign-worker exodus risks labor shortages

A wave of anti-migrant protests that culminated in a nationwide march on June 30 is driving thousands of African migrants out of South Africa, threatening to create labor shortages in sectors that rely heavily on foreign workers and undermining the country's vast informal economy, economists and analysts say.

Although the demonstrations were largely peaceful, fears of violence have prompted thousands of migrants to leave. Their departure could hit businesses from construction sites and farms to delivery services and corner shops, according to multiple reports.

"Migrants typically find work in sectors where vacancies are difficult to fill, including farming, construction, hospitality, retail, transport and the informal sector," said Mpho Lenoke, a lecturer at North-West University, in comments reported by Reuters.

Anti-migrant sentiment has been building for months, fueled by frustration over unemployment, crime and years of weak economic growth. The World Bank in June cut its 2026 growth forecast for South Africa to 1.0% from 1.4%. Official data from Statistics South Africa shows the unemployment rate at nearly one in three in the first quarter, leaving 8.1 million people without work.

Those conditions have helped stoke resentment toward migrants. But economists warn that pushing them out could backfire.

"Many foreign nationals are starting businesses that employ South Africans and bring competition, which is good for consumers," said Lenoke. "International experience suggests that restrictions on migrant labour often have unintended economic consequences."

Retail disruption and informal economy

The protests have already caused disruption in parts of the retail sector. Foreign-owned "spaza shops" — informal convenience stores operating from makeshift stalls, garages or shipping containers — are a backbone of South Africa's informal economy, supporting wholesalers, landlords and local employees, the reports note.

Sixty60, the online grocery delivery platform of Africa's largest food retailer, the Shoprite Group, also faced disruptions during the protests. Company data shows fewer than one in four of its drivers were South African, underscoring the sector's dependence on foreign labor.

According to United Nations data, some 2.6 million migrants lived in South Africa in 2024, roughly 5% of the population. While recent data on their economic contribution is limited, estimates from the OECD and the International Labour Organization (ILO) dating from 2018 and based on 2010 modelling put their contribution to South Africa's GDP at 9%.

Countering the narrative that migrants take jobs from South Africans, an ILO study using labour force survey data found that as immigrant participation in the workforce increases, employment opportunities for South African-born workers also tend to rise.

Investor caution and broader risks

Investors have so far reacted calmly to the protests, but they now view the unrest as adding a new risk factor for Africa's most industrialized economy.

"It is a significant social problem in South Africa that investors keep hearing about, but they actually haven't seen an actual real-life impact of it," said Kaan Nazli, emerging markets debt portfolio manager at Neuberger Berman, as reported by Reuters. "Now, with these protests, this is a risk."

Protests can also disrupt economic activity through looting and business closures, said Susanna Deetlefs of ACLED. "Supply chains are disrupted, jobs are lost, and access to goods and services is curtailed when tensions escalate," she said.

The stakes extend beyond South Africa's borders. The country is the region's main source of remittances and largest host of working-age migrants, according to ILO data. A joint report by FinMark Trust and the South African Reserve Bank found that remittance outflows more than tripled between 2016 and 2024, reaching more than 19 billion rand ($1.16 billion) in 2024. Nearly 90% of transfers to southern Africa went to Lesotho, Malawi, Mozambique and Zimbabwe, with Zimbabwe receiving more than 60% of the total, the report showed.