Page 30 - Risk Report 2024

IRMSA
30 RISK REPORT 2024/25

8.1 8.1 Functional State

A sustainable constitutional democracy requires of the State to protect citizens’
fundamental rights, ensure economic development, and deliver basic services. The provision
of such services relies on functional municipalities, supported by provincial and national
government, and effective SOEs.

Risk to a continued functional and democratic State may be caused inter alia by the following:
• Citizens not benefitting equally from constitutional rights, affecting their economic wellbeing and social
cohesion.
• Public trust in government’s ability to deliver services has been eroded due to governance failures, weak
leadership, unethical behaviour, lack of accountability, and poor consequence management.
• Apathy towards unethical leadership, with systemic corruption remaining in place, and service delivery reduces
further.
• Slow and/or poor performance by the State in response to many challenges, including the following:
• Prevention of unauthorised, irregular, fruitless, and wasteful expenditure.
• Insufficient maintenance and lack of innovative investment to stimulate growth through improved
infrastructure.
• Destabilised national electricity grid that constrains economic growth, whilst increasing unemployment
and inequality.
• Insufficient climate change adaptation, and response to extreme weather events that result in displacement,
loss of life, and severe infrastructure damage (requiring reprioritisation of funding from service delivery).
• Cumbersome skills immigration requirements which accentuated supply side constraints of domestic
skills.
• Dysfunctional coalition-led local governments resulting in insufficient revenue streams and collection to
fund activities, and critical decisions not being taken or implemented (e.g. appointments, budgets, critical
infrastructure management).
• Continued leadership and key human resource challenges (e.g. lack of technical, project, planning, and
management skills).
• Reduced national revenue during commodity booms due to policy frameworks causing delay in granting of
mining licenses.

THULI MPANZA CHANDU KASHIRAM DR CHRISTOPHER WHITTLE PAVANA RANJITH
Senior Manager Risk, Partner Head, ESG and Risk CRM Prof
Governance and Lucidum Advisory Director
Compliance CBS Group RQ Institute
ABSA