Sim Tshabalala said xenophobia damages economies by slowing growth and job creation in host countries.
Standard Bank CEO Sim Tshabalala believes that migration is positive for growth, while its effects on local workers are usually small and often positive. Picture: Steven Ferdman/Getty Images
Standard Bank CEO Sim Tshabalala made bold remarks at a seminar hosted by the Kgalema Motlanthe Foundation about the role that migrants play. Unlike many people who have viewed the matter pessimistically, Tshabalala said migrants usually play an important role in the country’s economy.
His comments come at a time when South Africans are protesting against the high number of illegal migrants in the country.
People move, money moves
Tshabalala’s address at the dinner focused on the link between migration and financial services.
“Migration and financial services are linked through remittances, transaction accounts, foreign exchange, mobile wallets, cash-out networks, merchant payments, and the broader task of moving money safely, cheaply and lawfully across borders,” said Tshabalala.
“To put it simply: people move; money moves; and – crucially – support for families and for businesses is created.”
He noted that from a financial sector perspective, there are three major economic and commercial issues closely related to migration, and even more significant than remittance flows.
These are the effects of migrants on their host economies; the effects of the politics of migration on multinational corporations and on each host country’s economies more broadly; and openness in general to flows of ideas, goods, capital and people.
Effects of migrants on host economies
Tshabalala highlighted that one of the recurring claims in anti-migrant politics is that foreigners take jobs, lower wages and contribute little to their host society.
“These claims are, quite simply, contrary to the evidence,” he said. “Yes, rapid migration – like rapid changes in trade patterns – can cause economic costs and social distress in particular places and industries. And a capable government needs to manage and mitigate those local costs.
“But, overall, migration is good for growth, and good for job creation.”
He noted that economists have never claimed that migration imposes no adjustment costs.
However, it has been proven that migration is positive for growth while its effects on local workers are usually small and often positive, thanks to migrants’ entrepreneurship, demand creation and productivity.
Migrants rent accommodation, buy food
Tshabalala referenced a 2025 meta-analysis by Alexandre Luz and co-authors in a 2025 edition of the respected journal Economies to support his view that immigration plays a positive role to some extent.
“This paper analyses 41 studies to find that, on average, immigration has a positive and statistically significant impact on the economic performance of the economies of the receiving countries,” he said.
“Further, immigration tends to reduce unemployment in the receiving countries. Let me repeat that. Immigration tends to reduce unemployment. Migrants are not only workers; they are also consumers, tenants, commuters, savers, borrowers, traders and entrepreneurs.
“They increase the demand for goods as well as the supply of labour. They rent rooms, buy food, use transport, pay school fees, start small businesses and create jobs for local people.
“In many settings, they also fill shortages, broaden skills and deepen commercial links between the places where they were born and where they now live.”
‘Bad politics thrives on false claims’
Tshabalala highlighted that “bad politics thrives on false claims”; therefore, it is important to clearly state that “migrants do in fact pay tax”.
“Migrants in the formal labour market obviously do, while those in the cash economy pay VAT whenever they purchase goods and services. So the claim that migrants contribute nothing to the government’s capacity to serve citizens is, quite simply, false.”
He said Standard Bank made R49 billion in headline earnings in 2025; of this, R19.7 billion was earned in African countries beyond South Africa – highlighting the importance that other African markets play in South Africa.
“But, to succeed in other African countries, firms like MTN and Standard Bank also need a continental environment of reciprocity, trust and legitimacy. So, if citizens and policymakers in other African countries come to see South African firms as the commercial face of a society that is hostile to other Africans, then those firms will bear costs – formally through regulatory pressure, and informally through reputational damage, consumer hostility and political suspicion.”
Xenophobia damages economies
South Africa has recently experienced a wave of xenophobic turmoil, and Tshabalala noted that such incidents tend to damage economies more broadly and slow down growth and job creation.
“As we have all seen over the past month, xenophobia does this by reducing business and consumer confidence and by increasing the costs of doing business. It also – justifiably – worsens country risk perceptions and therefore increases the cost of capital.
“In plain language, more xenophobia means higher interest rates, less investment and fewer jobs.”
Tshabalala also highlighted that well-managed migration is an essential component of Africa’s economic integration.
“Migrants create corridors of trade, information and finance. They are often the first customers for cross-border payment products, low-value transfers, diaspora savings products, and small-business banking relationships that later support deeper commercial integration. Migrants, in other words, are the pioneers of African economic and financial integration – and the forerunners of African unity.”
