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Demonstrators march against xenophobia in Johannesburg on Thursday after seven people were killed in anti-foreigner violence.MIKE HUTCHINGS/Reuters

The clash between Africa's two biggest economies is getting ugly. Nigerians have been forced to keep a low profile in South Africa this week to avoid a wave of anti-foreigner violence, while South African businesses in Nigeria are facing angry protests in retaliation.

The dispute between the two key African countries, after similar feuding in the recent past, is another blow to the dream of African integration that investors and traders have been touting for decades. The deadly attacks on foreign migrants in South Africa are the latest trigger for tensions that continue to block the dream.

It's been a rough week for South African businesses across the continent. Some have become the target of protests and boycotts in the aftermath of the anti-foreigner violence, while others have suspended their operations and evacuated staff for fear of retaliatory attacks. Thousands of African migrants, meanwhile, are fleeing the South African attacks and heading home to Zimbabwe, Mozambique and Malawi.

By the government's own count, at least seven people have been killed in the past three weeks in the attacks on foreigners, who are blamed for taking jobs from locals at a time of high unemployment. South Africa has controversially deployed its military to try to halt the violence and the looting of foreign-owned shops. Several African countries, including Nigeria, have protested the attacks in formal complaints to South African ambassadors.

While the loss of life and destruction of property is bad enough, the damage to trade and investment is growing. Tourism to South Africa has been hit by cancelled bookings and official travel warnings from several Western governments, including Canada. Groups such as the Namibian chamber of commerce have cancelled plans to visit South Africa because of the violence.

To try to mollify its angry neighbours and quell their fears, South Africa is dispatching cabinet ministers to several African countries in the coming days. It also temporarily closed its consulate in Lagos because of the protests. And it has issued statements reminding its citizens that South Africa depends heavily on its trade with other African countries, including its imports of oil and gas from Nigeria, Angola and Mozambique.

Several leading South African businesses, including Standard Bank and the Liberty insurance group, have placed full-page advertisements in local media to condemn the anti-foreigner attacks and to proclaim their solidarity with Africans.

In Nigeria, the retaliatory fury has focused on MTN, a South African-based multinational that is one of Nigeria's leading cellphone service providers. In several Nigerian cities, demonstrators have marched to MTN offices and delivered petitions of protest over the South African violence, while others have threatened to attack MTN's outlets in revenge. The company responded by warning that 6,000 Nigerians could lose their jobs if MTN is forced to leave the country. Nigeria is MTN's biggest market.

South African energy company Sasol suspended some of its operations in Mozambique and evacuated 340 South Africans from the country for fear of attack after the violence. One group of about 200 Mozambican protesters blockaded a highway near a South African border post and threw stones at South African cars and trucks, forcing the temporary closure of the border.

In Zimbabwe, demonstrators rallied at the South African embassy, and in Zambia and Malawi there have been efforts to organize a consumer boycott of South African products. Boycotts could be a setback for the many South African retail and service companies, such as the Shoprite supermarket chain, that have invested heavily in other African countries.

African politicians have often proclaimed the need for closer trade links among the continent's 54 countries, since the continent is still overly dependent on trade with Europe and the United States. They have promised to reduce the red tape and corruption that hinder their trade within Africa, and they have vowed to improve their transport and infrastructure to allow closer trade. But the anti-foreigner violence and the protests in response to the violence are the latest obstacles to the goal of economic integration.

Only a small fraction of Africa's trade – somewhere between 9 per cent and 12 per cent, by most estimates – is with other African countries. By contrast, Europe and Asia conduct about 60 per cent of their trade with their own continent.