Xenophobia, FDI and myths about wealth

There seems to be a massive misunderstanding as to how exactly wealth is generated with governments trying to mark their non-performance (i.e. their inability to effectively generate wealth rather than redistributing it) by throwing xenophobic tantrums.

Zambia’s opposition leader said that Chinese and Indian traders were taking local jobs and should be sent ‘home’, Chad decided to simply kick the foreigners out, while Tanzania is looking to shut out alien workers.

While this is most certainly not the case for the whole of Africa, it does highlight a worrying trend. Every African government is pushing for FDI to supplement poor levels of public spending, but what doesn’t seem to be anticipated is that large international companies are likely to want to bring in their own support staff, especially in areas that require skilled workers. Why? because this means minimal training is required, bosses know what their employees are capable of and then there’s speaking the same language.

Training is key though and government policy has seldom addressed this adequately. Tanzania’s labour minister inferred that locals were lazy, while his South African counterpart – more critically – noted that productivity was the issue. It is likely that ministers are realising that there is growing discontent by local workers at the expanding local aristocracy, who, like the foreigners, earn a lot more. It is far easier for ministers to blame the foreigners for 'stealing' the wealth, which the locals should somehow have, thereby minimising critique on themselves for implementing poor policies.

Perhaps what needs to change is to understand that foreigners, and the aristocracy who probably benefited from them, did not pick dollar bills out of the ground. Instead of blaming foreign workers for ‘stealing’ wealth, governments need to ask how this wealth was generated.

Part of the answer can be found in Africa’s incredibly skewed Gini coefficient. Africa has massive supplies of unskilled labour, with a relatively small supply of skilled labour. Dealing with this coefficient has very little to do with empowerment and everything to do with decreasing the amount of unskilled labour in favour of skilled labour. This is simple economics: More skilled labour means skilled labour costs less, while less unskilled labour pushes up the price.

As for this apparent trend towards xenophobia, I would hate to see Africa expel those who can in favour of those who can’t because governments, by alienating foreign workers, are also alienating the tiny aristocracies they helped create in the hope of becoming self-sufficient.