Page 55 - 2022 IRMSA Risk Report
P. 55

South Africa Top Risks

         SECTION 3: South Africa Top Risks continued




         The reality is that infrastructural investment has been   than anticipated. That process has been accelerated by
         `i>Ì > È}˜ˆwV>˜Ì vÕÀ̅iÀ LœÜ LÞ  "6  ‡£™ >˜` ̅i   ՘«ÀiVi`i˜Ìi`] “>ÃÈÛi wÃV> >˜` “œ˜iÌ>ÀÞ Ã̈“ՏÕÃ
         ÀiÃՏÌ>˜Ì œÃà œv Vœ˜w`i˜Vi ˆ˜ ̅i LÕȘiÃà Vœ““Õ˜ˆÌÞ   by leading industrialised countries.
         >˜`  ÜVˆiÌÞ  >Ì  >À}i°    /…i  À>̈œ  œv  wÝi`  V>«ˆÌ>   The rise in commodity prices has enabled SA’s strong
         vœÀ“>̈œ˜  ̜    *  …>à  È˜Vi  `iVˆ˜i`  ̜  >˜  >‡Ìˆ“i   iÝ«œÀÌ  «iÀvœÀ“>˜Vi]  LœœÃ̈˜}  iVœ˜œ“ˆV  }ÀœÜ̅°
         œÜ œv £Î¯°  /…i œÀˆ}ˆ˜> œLiV̈Ûi œv ̅i   * Ü>à ̜    œÜiÛiÀ]  ̅i  Lœœ“  ˆÃ  ˜œÌ  ÃÕÃÌ>ˆ˜>Li°   Ì  ˆÃ  VÀˆÌˆV>
         À>ˆÃi ̅i À>̈œ œv V>«ˆÌ> vœÀ“>̈œ˜ ̜   * ̜ Îä¯ œv   that the world economy remains buoyant for SA to
           *°  č È}˜ˆwV>˜Ì }>« i݈ÃÌà LiÌÜii˜ ܅>Ì …>à Ì>Ži˜   rely on the processing of its resource endowments
         place in terms of capital formation and infrastructural   in agriculture and minerals to overcome some of the
         investment to what the intentions of the Government   domestic structural challenges. The massive amount
         ÜiÀi ˆ˜ ̅i wÀÃÌ «>Vi°
                                                              œv  }œL>  wÃV>  >˜`  “œ˜iÌ>ÀÞ  Ã̈“Տˆ  …>à  i`  ̜
         "˜i  œv  -č½Ã  Lˆ}}iÃÌ  V…>i˜}ià  ÞiÌ  ˆÃ  iÝiVṎœ˜°   ՘«ÀiVi`i˜Ìi`  «ÕLˆV  `iLÌ  iÛiÃ]  ˆ˜`ÕVˆ˜}  Vi˜ÌÀ>
          ˜  "V̜LiÀ  ÓäÓä]  ̅i  *ÀiÈ`i˜Ì  >˜˜œÕ˜Vi`  x£    banks to keep interests as low as possible for as
         ˆ˜vÀ>ÃÌÀÕVÌÕÀi  «ÀœiVÌà  ܜÀ̅  ,Î{äL˜  ܅ˆV…  ÜiÀi  ̜   œ˜} >à «œÃÈLi] i>`ˆ˜} ̜ ˆ˜VÀi>Ãi` }œL> ˆ˜y>̈œ˜
         be undertaken in partnership with the private sector.    requiring central banks to raise interest rates. Other
          œÀi ̅>˜ > Þi>À >ÌiÀ > ̅ˆÀ` œv ̅iÃi «ÀœiVÌà …>Ûi   ˆ˜ÌiÀ˜>̈œ˜>  ÀˆÃŽÃ  ̜  Li  Vœ˜vÀœ˜Ìi`]  ˆ˜VÕ`i  “œÀi
         yet to get underway. In a further announcement in the   infectious diseases and the resultant damages to the
         “i`ˆÕ“‡ÌiÀ“ LÕ`}iÌ «œˆVÞ ÃÌ>Ìi“i˜Ì ˆ˜ ÓäÓ£] ̅iÀi   ܜÀ` iVœ˜œ“Þ] Vˆ“>Ìi V…>˜}i >˜` i˜œÀ“œÕà v՘`ˆ˜}
         was an additional pledge to embark upon another      needed for greener technologies.
         xx ÃÕV… ˆ˜vÀ>ÃÌÀÕVÌÕÀ> «ÀœiVÌà ܜÀ̅ ,x™xL˜°  /…ÕÃ]
         the 2 sets of projects combined would have resulted
         ˆ˜vÀ>ÃÌÀÕVÌÕÀ>  ˆ˜ÛiÃ̓i˜Ì  ܜÀ̅  œÛiÀ  ,™ääL˜°    /…i   /œ}i̅iÀ  ܈̅  `iˆLiÀ>Ìi  ivvœÀÌà  ̜  >``ÀiÃà  i݈Ã̈˜}
         V>«>VˆÌÞ  ̜  iÝiVÕÌi  ̅iÃi  «ÀœiVÌà  «œÃià  >  VÀˆÌˆV>   V…>i˜}iÃ] ̅i vœœÜˆ˜} «œVŽiÌà œv iÝVii˜Vi “ÕÃÌ
         impediment to economic growth.                       be leveraged:
         The public service is occupied by people in          U         ˆVÀœLˆœœ}ˆV>  ÀiÃi>ÀV…  …>à  Lii˜  >Ì  ̅i
         “>˜>}i“i˜Ì  >˜`  `iVˆÃˆœ˜‡“>Žˆ˜}  «œÃˆÌˆœ˜Ã]  œ˜            forefront of development technologies to
         >VVœÕ˜Ì œv ̅iˆÀ «ÀœÝˆ“ˆÌÞ Ìœ ̅i č   >˜` ˜œÌ ̅iˆÀ         w}…̈˜}  "6  ‡£™°
         µÕ>ˆwV>̈œ˜Ã  >˜`  Vœ“«iÌi˜Vi°  /…ˆÃ  ˆÃ  «>À̈VՏ>ÀÞ   U     -č  w˜>˜Vˆ>  “>ÀŽiÌà  >Ài  Vœ“«>À>̈ÛiÞ
         acute at municipalities which have collapsed leading        “œÀi  >`Û>˜Vi`  ̅>˜  “œÃÌ  VœÕ˜ÌÀˆiÃ]  ܈̅  >
         the heavy ANC losses suffered during November               ÛiÀÞ  ˆµÕˆ`]  LÕÌ  ۜ>̈i  VÕÀÀi˜VÞ]  ܅ˆV…  >VÌÃ
         2021 local government elections (with coalition             as a shock absorber: when the economy
         governments in 25% of all municipalities and >50% of        `iÌiÀˆœÀ>Ìià   ̅i   VÕÀÀi˜VÞ   `i«ÀiVˆ>ÌiÃ]
         the main metro municipalities). It is unclear whether       i˜…>˜Vˆ˜} iÝ«œÀÌ ÀiÛi˜ÕiÃ] «ÀiÛi˜Ìˆ˜} ÃiÛiÀi
         this will lead to improved performance or a decline         downturns.
         in performance due to unstable leadership. If local
         }œÛiÀ˜“i˜Ì  «>À̘iÀà  Žii«  i>V…  œÌ…iÀ  >VVœÕ˜Ì>Li]   •   90% of government debt is owed to domestic
         ̅i  Vœ“«ï̈œ˜  ˆÌÃiv  “>Þ]  ̅iœÀïV>Þ]  }i˜iÀ>Ìi    w˜>˜Vˆ>  ˆ˜Ã̈ÌṎœ˜Ã]  >˜  i˜œÀ“œÕà  ÃÌÀi˜}̅
         ˆ˜VÀi>Ãi` ivwVˆi˜VÞ°                                        compared to many other emerging markets.
         The trade union stronghold on the labour market      U        /…i ÃÌÀœ˜} Ã̜VŽ iÝV…>˜}i ­Vœ“«>Ài` ̜ œÌ…iÀ
         “>Žià  ˆÌ  iÝÌÀi“iÞ  ՘>ÌÌÀ>V̈Ûi  vœÀ  LÕȘiÃà  ̜       i“iÀ}ˆ˜} “>ÀŽiÌî «ÀœÛˆ`ià w˜>˜Vˆ> ÃÌÀi˜}̅
         employ people fulltime and contributes to rising            and ensure continued foreign investment.
         unemployment resulting in businesses prefer capital-  U        ˜Ã̈ÌṎœ˜Ã ÃÕV… >à ̅i Õ`ˆVˆ>ÀÞ] -œÕ̅ čvÀˆV>˜
         intensive rather than labour-intensive techniques.          ,iÛi˜Õi  -iÀۈVi]  ̅i   >̈œ˜>  /Ài>ÃÕÀÞ
         Global economic events have a major impact on SA.           >˜`  ̅i  -œÕ̅  čvÀˆV>˜  ,iÃiÀÛi   >˜Ž  Ài“>ˆ˜
         ˆ˜ ÓäÓ£] -č >ۜˆ`i` ̅i `iVˆ˜ˆ˜} ÌÀi˜` œv ̅i «>ÃÌ         the country’s crown jewels and models of
         `iV>`i] ܈̅ }ÀœÜ̅ «œÃÈLÞ Ài>V…ˆ˜} x¯ vœÀ ̅i wÀÃÌ       iÝVii˜Vi ̅>Ì “ÕÃÌ Li Ài«ˆV>Ìi` ̅ÀœÕ}…œÕÌ°
         time in 15 years.  But this is primarily due to increased
         global commodity prices arising from an earlier than
         iÝ«iVÌi` Û>VVˆ˜i Àœ œÕÌ Ü…ˆV… …>à i˜>Li` ̅i ܜÀ`
         economy to return to a semblance of normality faster









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