Page 151 - Risk Report 2024

IRMSA
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RISK REPORT 2024/25
Current and emerging issues and challenges in the SADC region

SADC countries have common opportunities rooted in mineral wealth, natural resources, agricultural land, and
tourism. In addition, because of its youthful population, SADC will only benefit from a demographic dividend
during the second half of the 21st century – SADC’s total population is currently 380m and is expected to
increase to 618m by 2043. However, SADC countries face a broad spectrum of challenges spanning across social,
development, economic, health, integration, diplomatic, defence, security, institutional, political, and policy
implementation - some of which cannot be dealt with effectively by individual member states. Some of the
current and emerging issues in the SADC region include:
• High inflation and interest rates, low investment and high unemployment (compounded by external factors
such as geopolitical conflicts) will continue to slow down the region’s economic growth.
• Reliance on fossil fuels for bulk share of energy needs, will continue well into the future, while SADC’s carbon
emissions are likely to increase by just over 100m tons (of carbon) in the next 20 years.
• The percentage of poor people will continue to decline, reaching 34% in the next 20 years (down from 51%
in 2019), but the number of poor people will climb to 209 million (180 million) in the same timeframe as
populations grow.
• Isolated threats to peace and security in specific countries and regions.
• A wide range of transnational organised crime.
• Of concern is that new HIV infections may persist for the foreseeable future.
• Communicable health risks and disease outbreaks remain expected – e.g., Marburg Virus Disease, Cholera,
Measles.
• Food security is on a downward trend and will remain a concern.
• Environmental management issues, e.g., pollution, inadequate access to clean water and sanitation services.
• Water insecurity is expected to continue in some parts of the region, largely due to climate change, population
growth, urbanisation and intra-country migration.
• Shortage of energy will continue because of, but not limited to, growing demand for electricity; insufficient
water (due to poor rainfall for some key hydro-power stations); floods and storms that damage or destroy
infrastructure for power generation and transmission; and low investment in generation and transmission
capacity.
• Increasingly longer and or intensive climate shocks, including droughts, floods, storms and extreme
temperatures, across SADC, will significantly impact agricultural production and food security. Some SADC
member states’ central banks have issued climate risk management guidelines requiring reporting on
climate change scenarios, scenario stress tests, and actions related to carbon credits, while SADC’s RISDP
also includes disaster risk management under the cross-cutting issues pillar.
• The risks and associated impacts stemming from increasing use of AI and the pursuit of its benefits, including
cybercrime, are expected to increase in less developed countries as significantly more people gain access
to, and use the internet. Relative favourable risk perceptions have, however, been recorded in the WEF 2024
Global Risk Report for SADC countries.
• Roughly half of the world’s population will vote in local, regional, legislative, and national elections, which
could lead to increased geopolitical tensions and volatility in global financial markets. The challenging
global economic environment (including high inflation and rising interest rates in advanced economies) and
geopolitical tensions may continue to negatively affect financial markets in SADC.
• Other challenges shared by SADC countries include illegal migration, overcrowded prisons, poaching,
insufficient water resources, substandard transport services, and inaccessible health services.

Political Risk: Regulatory Risk: Legal Risk: Financial Risk: People and Operational Risk:
inter-, intrastate, and political stability, independence, efficacy economic trends (e.g. Reputation Risk: market environment,
regional geopolitical democratic of the judicial system, growth prospects, choosing the right supply chain,
conflicts, terrorist government, competent crime levels (including inflation, exchange partners, cultural and communications
activity, social unrest. public and private corruption). and interest rates, the language differences, networks, infrastructure
sector leadership, availability of foreign retention of key people including digital,
strong institutions, exchange), the ease in post-acquisition, skills energy availability, road
bureaucracy, which to remit capital and human capital. and rail networks.
privatisation policies, (including management
and restrictions fees and dividends),
on foreign, capital, trade agreements,
exchange, and import tariffs, tax authority
control. attitudes.