Page 34 - Risk Report 2024

IRMSA
34 RISK REPORT 2024/25

8.2 Politics

Changes in national and provincial governments by nature affect local governments, and
cause uncertainty, declined trust and increased scepticism until stabilised.

Delays in establishing functioning coalitions (or governments of national unity) whether at national or provincial
levels, or worse, collapsed government structures, will detract focus from national policy development and
execution that is good for the overall country versus party political interests. Impacts of international relations
decisions on the economy and business environment will affect the currency and foreign direct investment
negatively.

Risk is mainly driven by the following:
• Slow pace of reforms to create an investment friendly economy.
• A historical lack of competent and ethical leadership has led to poorly performing or failed coalitions in local
governments.
• Declining social confidence that elections result in benefit for the average citizen versus for political parties
(as reflected in declining voter turnout for national and provincial elections over the 30 years of democracy).
• Disjointed multiparty views on foreign affairs which affects international relations.
• SA taking political stances based on historical party alignments to the detriment of the national interest.
• Indecisiveness of the incoming administration to deal with how SA’s role in BRICS will play out.

Risk consequences include the following:
• Erosion of FDI, which will preclude economic growth.
• Rise in internal conflicts, insurrection and riots will destabilise economic reform efforts.
• Cancellation of AGOA legislation and/or sanctions either because of the US election outcomes or SA’s
international policy will affect duty free trade with the US.
• Reduced global supply to SA and restriction on SA exports to traditional markets will negatively impact the
trade balance.
• Further depreciation of the Rand.

ANDREA COPLAND RUDZANI FUNZANI AMITH SUKHNANDAN
Head of Business CRM Prac CRM Prof
Intelligence Chief Risk Officer Deputy Head: Corporate
Purple Group Government Printing Entities and Transversal
Works Auditing