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 2 of a two-part series.
Examining trade patterns, South Africa’s exports and imports show significant reliance on Eastern Asia and the European Union (EU). While China’s reopening presents potential export opportunities, concerns about the Chinese Communist Party’s policy trends and the impact of the conflict in Ukraine on European economic activity raise uncertainties. Businesses must closely monitor these developments and diversify their trade relationships to mitigate risks associated with overdependence on specific regions.
South Africa’s persistent loadshedding, resulting from theft and vandalism of power infrastructure, poses a significant risk to businesses. The Reserve Bank estimates that the country loses approximately R899-million/day due to loadshedding. To manage this risk, businesses need to account for the potential disruptions and consider diversifying infrastructure locations to minimise the impact. However, finding a balance between economic activity and alternative locations can be challenging.
The trade relationship between South Africa and regions like Eastern Asia and the European Union (EU) plays a vital role in the country’s economic prospects. Recent developments, such as China reopening its economy and the war in Ukraine, raise concerns about potential impacts on trade and export opportunities. To navigate these uncertainties, businesses must closely monitor geopolitical trends, adapt their strategies, and explore alternative markets such as Latin America for potential economic growth.
While South Africa has benefited from commodity booms in recent years, the inefficiencies in ports and railways hinder operations, job creation, and investment. These vulnerabilities can hamper economic growth and limit the government’s ability to fund essential services. Businesses should proactively engage with communities, integrate with local businesses, and build anti-fragile operations to withstand disruptions, ensuring continuity even in challenging circumstances.
Consumer confidence in South Africa has experienced fluctuations due to the impact of Covid-19 and associated lockdowns. However, there is a rebound in consumer spending on short-term consumer goods. Businesses can capitalize on this trend by streamlining operations, digitizing processes, and making it easier for consumers to engage and transact. Moreover, rising inflation rates and central banks hiking interest rates can further dampen consumer activity, requiring businesses to adopt cost-effective measures and manage credit constraints.
Public trust in the police has declined in South Africa, leading to increased reliance on private sector security. However, disruptions caused by union actions can impact security measures, leaving businesses vulnerable to theft and equipment damage. To address these concerns, businesses should assess the effectiveness of their security arrangements, foster relationships with private security providers, and establish contingency plans to safeguard assets.
Seize the day:
- Fill gaps left by the state
- Diversify avenues
- Use smart ports & AI
- Friendshoring