On Monday morning, the fourth day of violence following the arrest of former president Jacob Zuma, private security firms were encouraging owners of businesses on the R103 from Heidelberg to Johannesburg to close their gates, lock their businesses, and evacuate as looters and others intent on damaging properties and businesses made their way up the road.
Elsewhere in KZN retailers including, Massmart, Dis-Chem, Mr Price, Shoprite and Pick n Pay reported extensive damage to property.
Massmart reported that looters had gained access to, and made off with merchandise from seven Massmart-owned stores including Game, Makro, Cash & Carry, and Cambridge Foods.
Dis-Chem announced that it was closing its pharmacies, vaccination sites, and drive-through testing stations in the KZN area. This was due to the unrest, the company said.
“We are not being targeted specifically. I believe that it is general lawlessness and criminality taking hold of the country. We do not want to put our staff and our customers at risk. So, as a precaution we have closed our KZN stores and will do so in other regions if we feel that there is a risk,” Brian Epstein, the operations director at Dis-Chem, told Business Maverick.
Spar has closed several stores in the KZN area. Roads were closed in and around eThekwini with reports of shots being fired.
The economic fallout has happened thick and fast. The rand fell by 1.3% against the US dollar amid the spread of violent riots across the country. At the time of writing (12 July at 14.40), the rand was R14,45 against the US dollar — levels last seen on 4 May 2021.
The economy will not escape unscathed either.
“The economy is already struggling with the negative impact of tightening lockdown restrictions at the turn of Q2.21 into Q3.21, but the sharp political unrest SA is now experiencing could have an even more severe impact, and cause GDP growth forecasts to be downgraded,” says Investec chief economist, Annabel Bishop.
“SA risks seeing economic growth of less than 4.0% y/y this year if key CBD’s, retail shopping malls and road transport routes remain closed, and particularly if the violence spreads, as RET Zuma supporters bring economic activity in a number of areas to a standstill.”
She noted that as supporters have felt little or no real retribution so far, the risk is that the collapse of law and order spreads across the entire country. “Free, unchecked access to consumer goods at volume, the lure to gain free TV’s, clothes, shoes, other appliances and groceries (that many do not usually access), will tempt a vast number to join in, fuelling lawlessness and making it more difficult to control.”
This could be fuelled by key members in the Zuma/RET faction who are using the violence as an attempt to entrench their own positions and gain political power and popular support.
The riots, which were initiated in KZN, have spread to areas in Johannesburg including Hillbrow and Soweto.
In Soweto, there are reports of shopping malls and retail outlets being looted. One of the shopping malls is Dobsonville Mall in Soweto, which is owned and operated by JSE-listed real estate company Vukile Property Fund.
Vukile Property Fund CEO Laurence Rapp told Business Maverick that the shopping mall was looted and damaged overnight – from Sunday 11 July. Rapp said Vukile has decided to close Dobsonville Mall and other malls in high-risk areas such as Daveyton (in Ekurhuleni) and KZN on Monday, 12 July.
“We are now in crisis mode as we are managing the situation on an hourly basis,” said Rapp. “The primary approach is to turn to the police for security. Our shopping mall managers are engaging with the police to provide additional security. Police, on their own, are not managing to keep protestors at bay.”
Vukile spent more than R100-million in 2017 to refurbish and extend Dobsonville Mall. Even though Vukile has insurance against any damage to the mall, its investment in the area has been damaged. “This is worrying. The Soweto community will need these amenities to be up and running tomorrow.”
Growthpoint Properties, another large real estate company on the JSE, has reported damage to its City Mall in KZN.
Growthpoint SA CEO Estienne de Klerk said the company will have to spend money repairing the damage and hiring more security personnel to safeguard its shopping malls. “This is disappointing. Shopping malls fulfill an important role in society from a job creation and supply chain point of view. And all of this has now been damaged,” he said.
De Klerk warned that the riots will have a chilling effect on future investments in South Africa. “The image of South Africa continues to deteriorate globally. The capital flow and investments into the country will be impacted.” After all, investors prefer to invest in countries where the rule of law is upheld.
The South African Chamber of Commerce and Industry condemned the violence, the looting of businesses, damage to property and intimidation, and victimisation of people.
“The right to peaceful protest is one of the fundamental rights in our constitutional democracy, what we are experiencing now with this violence that is targeted at looting and damaging public infrastructure, is pure criminality by marauding gangs who are masquerading as protesters. There is no legitimate protest that is based on breaking and entering business premises to steal goods and damage property,” the Chamber said in a statement.
The president of the Durban Chamber of Commerce, Nigel Ward, noted that the recent riots have had a devastating impact on businesses. “From Friday morning the traffic disruptions made it difficult for employees to commute to work with some businesses having to shut down their operations completely to minimize risk.”
The threat to food security should be taken very seriously, he adds. Producers of essential foods have also shut down temporarily. “Their onsite factories have had to stop production, due to the non-movement of stock, from Friday. This has had an impact on job security and livelihoods; as workers will have to stay home, be placed on short time, or even retrenched.”
In addition, the logistics sector has been hit severely hard. The number of trucks that have been burnt over the past two days, has caused other business owners in the industry to decide to ground their trucks, for the safety of their employees and the protection of their businesses.
Fuel supplies could be affected. A spokesperson for Shell confirmed that several Shell SA sites have been disrupted. In addition at least two Shell sites have been set on fire, fortunately with no injuries or fatalities reported. In addition Shell confirmed that activities at its Alberton and Island View distribution terminals have been reduced significantly. “We are increasing security across all our at-risk terminals,” the spokesperson said.
“I’m concerned that the rioting could affect the flow of crude and refined fuel into the pipeline,” says Syd Vianello, a former analyst and now fuel retailer. “If the problems persist there is the prospect that Gauteng could run out of fuel.” DM/BM