Page 123 - Risk Report 2024

7. Energy 8. Logistics

Loadshedding adds significantly to losses in public sector The collapse of the rail infrastructure makes SA less competitive
manufacturing. Unreliable energy supply stifles industrial globally and less attractive to exporters due to increased costs
growth and consequently the tax base and the greater economy. of inefficient transport to harbours. The risk that, barring
SMMEs are likely to close their doors first due to lower liquidity a few commodities, exports may dry up could deprive SA of
buffers to absorb these losses. This is the exact opposite of how the foreign trade and currency needed to compete globally.
and where the economy should be growing. With the tax breaks SA must streamline and improve its infrastructure network to
available in the Income Tax Act, decentralisation of power offer competitive solutions to reliably service export customers
generation is moving in the right direction to mitigate the risk globally, through public-private partnerships if needed.
of a national grid failure. Even in the public sector the answer Efficient logistics and supply chains are vital for economic
may lie in securing independent energy supply. SA’s struggle stability and access to goods. Disruptions in these areas can
with energy supply, notably its dependency on Eskom and have immediate effects on daily life and long-term impacts on
frequent power outages poses significant risks to all sectors of economic recovery and growth.
the economy. Investment in infrastructure and diversification of
energy sources are essential to mitigate these risks and ensure
the stability of the grid.

9. Food Security 10. Climate Change
While food insecurity might not have a direct financial impact The existential risks associated with climate change and extreme
initially, social unrest, health problems, and population weather pose a global threat. The more near-term cost impacts
displacement caused by food shortages can have significant of these events culminate quickly and disrupt supply chains,
indirect costs for the public sector. The public sector plays adding to existing economic challenges. If business and the
a critical role in shaping food security through policies and public sector is to remain competitive, the drive for initiatives
programs, which require a comprehensive national food like Just Energy Transition and real sustainability over the long
security strategy. Government should increase investment term should be prioritised.
in initiatives that promote sustainable food production and
access to affordable food and collaborate with private sector,
civil society, and farmers' organisations to strengthen the food
system.

11. Technology 12. Skills

AI offers vast opportunities for the country for innovation Government departments drove the national job creation
and growth. The public sector must facilitate the expansion agenda by inflating workforces in the sector, leading to
of broadband access, improve digital literacy, and build unsustainable wage bills. The risk for the sector is not so much
advanced computing resources to support AI development the availability of human resources or even educated employees,
and deployment across the economy. As reliance on AI and the challenge lies in finding resources with the requisite
digital technologies increases, so does vulnerability to cyber- skills, experience, work ethic, and integrity to enable SOEs. It
attacks. AI systems can be targets for malicious attacks that transcends qualifications and speaks to aspects of culture and
manipulate or compromise their functionality. Furthermore, dedication. The public sector should seek to retain and reward
the public sector faces challenges due to legacy technology quality employees. A cross-pollination from the private sector
systems and a potential lack of skilled personnel to manage could also assist in driving the appropriate culture and bring in
complex technologies. SA’s readiness to manage these risks much needed expertise. The lack of skilled labour and effective
while harnessing the benefits of AI is critical. The public sector education systems can limit economic growth and innovation.
can ensure it utilises technology to improve service delivery, To prevent the emigration of skilled professionals, the public
enhance efficiency, and drive innovation for the benefit of sector must ensure that there are attractive job opportunities
all citizens by modernising infrastructure, building a skilled within the country for all its citizens. With respect to AI, the
workforce, and developing comprehensive AI strategies to public sector must lead in reforming educational systems and
address opportunities and risks. workforce training programs to prepare citizens for future jobs.