South Africa’s immigration tensions put MTN, Standard Bank and other African giants at risk

For years, South Africa's largest companies expanded across Africa in search of growth, building businesses that now serve millions of customers far beyond their home market.

• South African companies increasingly depend on markets across Africa for growth.
• Recent migration-related tensions highlight the business risks of operating across borders.
• Companies such as MTN, Standard Bank and Gold Fields could face reputational and regulatory challenges.
• The developments come as Africa pushes for deeper economic integration under AfCFTA.

That strategy helped create some of the continent's most recognisable corporate brands, from MTN and Standard Bank to Shoprite, MultiChoice and Gold Fields.

But recent tensions over immigration and the treatment of foreign nationals in South Africa are exposing a growing challenge for these firms as their African footprint expands, so does their exposure to political and diplomatic risks across the continent.

The latest concerns follows reports of intensified immigration enforcement in South Africa triggered criticism from some African countries and renewed debate over the treatment of migrants.

While the dispute is largely political, analysts say the economic consequences could be far-reaching for South African companies whose fortunes increasingly depend on markets outside their home country.

The shift has been years in the making.

South Africa remains one of Africa's most industrialised economy, but slower domestic growth, energy shortages and weak consumer spending have pushed many of its largest corporations to seek opportunities elsewhere on the continent.

For MTN Group, the strategy has been particularly successful. The telecommunications giant generates the majority of its earnings outside South Africa, with Nigeria remaining one of its most important markets.

Millions of subscribers across West Africa, East Africa and Southern Africa now account for a significant share of the company's growth story.

Standard Bank has followed a similar path. The lender operates in numerous African markets and has positioned itself as a financial institution serving the continent's growing trade and investment flows. Its long-term strategy depends heavily on deeper economic integration across Africa.

Mining firms have also expanded beyond South Africa's borders. Gold Fields derives a substantial share of its production from Ghana, while several South African mining companies maintain significant interests across West and Southern Africa.

That growing regional presence has created new opportunities, but it has also increased corporate exposure to diplomatic tensions, regulatory actions and shifts in public sentiment.

The risks are not imaginary. During the xenophobic violence that shook South Africa in 2019, businesses linked to South African interests became targets of protests in several countries, particularly Nigeria.

MTN outlets were affected, diplomatic tensions escalated and both governments were forced to engage in efforts to calm the situation.

Although the current circumstances are different, they have revived concerns about how quickly domestic political issues can spill into the business environment.

The timing is particularly sensitive. African governments are investing significant political capital in the African Continental Free Trade Area, the world's largest free trade agreement by number of participating countries.

The agreement is designed to encourage the movement of goods, services and investment across borders. Yet persistent tensions around migration threaten to complicate those ambitions.

For companies that have built their business models around a more integrated Africa, worsening relations between countries could create new uncertainties ranging from consumer boycotts and reputational challenges to increased regulatory scrutiny.

The issue is not limited to telecommunications or banking. Retailers, insurers, mining companies and consumer brands with operations spanning multiple African markets could all face greater pressure if diplomatic tensions deepen.

For investors, the developments shows a bigger reality of doing business in Africa.

Corporate success increasingly depends not only on financial performance and market share but also on maintaining strong relationships with governments, communities and consumers across multiple jurisdictions.