Page 110 - Risk Report 2024

1. Functional State 2. Politics

Significant challenges persist, including structural limitations The current global macroeconomic environment emphasises
like water and electricity availability and tariff increases, free movement of goods and capital, rule-based fiscal
logistical infrastructure, crime, and inflationary pressure on policies, independent central banks targeting inflation, public
food and transport. Manufacturers continue to be impacted by institutions that prioritise maintaining financial stability, and
the volatile operating environment. Business disruptions due enhanced international financial supervision and cooperation.
to electricity and rail challenges can lead to reduced consumer Geopolitical tensions raise concerns of escalating violence
spending. As a result, demand for manufactured goods could in some regions, which could affect vital trade routes and
then decrease, negatively impacting the sector. Given global freight insurance costs with resultant inflationary pressures.
and local supply chain disruptions, continuing existing While many of the global elections will be driven by internal
logistical challenges require innovative solutions. Foreign factors, their outcomes could have global repercussions such
direct investment should be monitored closely. Mulilo (ready as commodity price fluctuations, erratic market performance,
to deliver massive renewable energy generation) is an exciting the rising of new nationalism, protectionism, undermining
solution to electricity challenges. multilateralism, and fostering geopolitical rivalries. Addressing
these challenges will require efforts to promote dialogue, co-
operation, and inclusive economic development on a global
scale. Despite the significant business risks and planning
uncertainty global and local political tensions also provide
opportunities for arbitrage (depending on factors such as
location, timing, and market demand).

3. Economy 4. Social Security
The loss of SA's status as the main gateway into Africa has In the current challenging socio-economic environment skills
ramifications for manufacturers. A decline in SA's regional retention and development strategies remain a focus for the
influence jeopardises the sector’s competitive edge, hampers sector to ensure skills in critical operational environments
trade and expansion prospects, and impedes access to vital with priority being placed on strategic capabilities such as
networks and partnerships. Moreover, geopolitical uncertainties engineering and technical skills. In SA, significant challenges
can exacerbate operational risks and investor concerns, further persist, including structural limitations like water and electricity
clouding a growth trajectory. Reclaiming SA’s status as main availability and tariff increases, logistical infrastructure, crime,
gateway into Africa is crucially important for the sector’s future and food and transport inflationary pressure, all impacting
viability and global relevance. employee wellbeing. Electricity tariffs have been increased
by 12.74%, coming at a time when many households are
struggling to survive on tight budgets compounded by the
cost of transport which increases the cost of living. Employee
wellbeing levels are also negatively impacted by the ongoing
electricity loadshedding.

5. Rule of Law 6. Water
Crime exacerbates existing challenges such as unemployment, SA must invest in water infrastructure, improve water
poverty, and inequality. It cuts across all sectors with both management practices, promote water conservation and
public and private sectors being affected, and hindering the efficiency measures, and enhance drought preparedness and
delivery of essential services like healthcare, education, and response strategies. For manufacturers, efforts to address
housing. Sustained efforts across multiple fronts are needed climate change and its impacts are crucial for building resilience
with the involvement of all stakeholders, including government, to water-related challenges in the long term.
civil society, the private sector, and the public to drive a
comprehensive strategy, while strengthening institutions
like the National Prosecuting Authority and the Special
Investigations Unit to bolster their efficacy and autonomy.
Success hinges not only on legal reforms but also on political
will, unwavering leadership integrity, transparency, open
procurement processes, and robust whistleblower protection.