Chris Hattingh, head of Policy Analysis, Centre for Risk Analysis (CRA) gave a presentation at the GCCA Africa Risk & Insurance seminar in Johannesburg some time ago. The following article is derived from his presentation, edited by Eamonn Ryan. This is Part 1 of a two-part series.
I would like to discuss the topic of risk management in South Africa and shed light on some of the key economic and social indicators that pose potential risks to the cold chain and the broader economy over the next three to five years.
The global supply chain disruptions experienced during the Covid-19 pandemic highlight the need for resilient supply chains. South Africa’s potential role in implementing the Africa Continental Free Trade Area offers an opportunity to build more robust supply chains within Sub-Saharan Africa. However, the successful implementation of such initiatives depends on the political will and focus of the government.
South Africa finds itself at a critical juncture, where the African National Congress (ANC) remains the most influential political party in the country. However, it faces the delicate task of balancing forces of reform and pragmatism while striving to maintain control accumulated over years of legislation.
A survey conducted in September 2022 revealed that a majority of respondents believe their quality of life has declined over the past five years. While this sentiment does not justify violent protests or civil unrest, it may reflect a growing dissatisfaction with the political system’s ability to address their needs. This discontent could persist, leading to social unrest and various associated risks in the foreseeable future.
The value of large investment projects in South Africa’s economy slumped by more than a third in 2022, reflecting the devastating effect blackouts — as well as the deterioration in global growth prospects — have had on business confidence. Nedbank research shows that the value of new projects announced during the year fell to R248.5 billion from R392.7 billion the year before.
Despite the challenges faced by the government, there are opportunities for the private sector to step in and contribute to the country’s development. Investment as a proportion of GDP has steadily declined over the years, and government investment in infrastructure has also decreased due to fiscal constraints. This creates a gap for the private sector to take the lead in implementing smaller-scale infrastructure projects.