Page 118 - Risk Report 2024

1. Functional State 2. Politics

Prioritisation of transformation criteria over skills and Geopolitical conflicts, political unrest, riots, strikes, and
competencies, cadre deployment, and poor vetting lead to a disruptive events create a climate of uncertainty, with coalition
lack of expertise, ineffective leadership and lack of strategic national and provincial governments adding another layer of
direction in many organisations. Personal and political unpredictability, volatility, and policy uncertainty. This could
interests often overshadow institutional mandates, resulting in impact medium-term development planning and hinder
misaligned plans. Leadership challenges are often exacerbated realisation of the NDP Vision 2030. Sector entities tainted
by budget constraints and inefficient resource use, which lead by fraud and corruption during the years of state capture
to investor flight, project delays, and price competition. Public may find it difficult to participate credibly in new coalition
institutions often struggle to translate legislation into citizen- structures. Strategic use of key offerings by the sector (e.g.
centric strategies and actions while dealing with entities on the political contingency and research) will free up resources in
verge of collapse. Professional service providers are often used organisations to focus on delivery of their core mandates and
to respond to these challenges at high cost, with their ability result in greater efficiencies in terms of skilled resources across
to add sustainable developmental value hampered by these the economy.
impacts.

3. Economy 4. Social Security
Government must develop and support small enterprises to Semigration (people migrating from one province to another
create employment and significantly drive output growth. The seeking a better quality of life) together with the influx of
sector lags other developing nations, requiring Government migrants from other countries continues to place a strain on
to create enabling conditions for small businesses to thrive, the economies, infrastructure and service delivery of provinces
including reduced red tape, an entrepreneurial culture, and seen to offer better opportunities, like Gauteng and the Western
supporting informal businesses to formalise and build their asset Cape. This leads to misaligned perceptions of wealth creation
bases. Highly skilled resources are still available to the economy (as revenue may not be earned in the same location as where it
but may not be employed by sector firms. Finding innovative is physically delivered), which could disrupt economic activity
ways to leverage these professionals will alleviate the skills unexpectedly. Leveraging ‘knowledge’ workers more effectively
shortages and cash constraints preventing the appointment through enabling technology may also support professional
of permanent inhouse resources. Large companies dominate skills development in the sector.
productive sectors – interventions are needed to incorporate
capable small businesses in the supply chains of large firms,
particularly in the emerging sectors such as renewable energy,
cannabis, and information technology. Appropriate operating
models are needed to leverage SA’s competitive advantage in
key sectors and rebuild capabilities to export.

5. Rule of Law 6. Water
Many entities face internal and external prevalence of fraud Slow implementation of large water supply projects such as
and corruption, often coordinated between each other and the Lesotho Highlands Project Phase II has set water supply,
with clients. One of the most notable manifestations is the particularly, in Gauteng, back by 10 years. Highly skilled sector
construction mafias, which affect the delivery of infrastructure, professionals that are able to operate in the SA context often
and crime syndicates causing dysfunction in the rail and move to countries or regions where their skills can be utilised
energy sectors where use of the sector’s services are high. more profitably. Silo approaches to water reliant infrastructure
Service delivery protests damage/destroy much needed social development projects have had a knock-on impact so that there
infrastructure, and theft of assets directly impact service is a general scarcity of these skills available in South Africa.
delivery. Resources are thus directed at fraud and corruption
prevention, costly investigations, and security measures to
protect infrastructure, assets, and people as opposed to
professional services that will ensure long-term sustainability.
The resource base for service provision is thus eroded, directly
affecting those in need of the services, particularly, the poor
and underserved communities. Opportunities exist for sector
entities to contribute to a more transparent and efficient
business environment by developing strategies, data analytics
tools, capacity building, and support of oversight bodies.