The Top 5 risks SA faces in 2024

As South Africa starts a pivotal year, it faces a confluence of risks that threaten its socio-economic stability. From the spectre of civil unrest to the shaky foundations of state-owned enterprises (SOEs), each carries the potential to exacerbate the others, creating a complex web of issues.

However, within these challenges lie opportunities for resilience and strategic foresight.

Listen/read: The FixSA podcast: Top pods for 2023

There are, I believe, five key risks facing South Africa next year and various ‘curve balls’ where vigilance is important.

Political tension

As we edge closer to the general elections, political tension, compounded by labour disputes and budgetary constraints, is palpable. The key to navigating this storm lies in fostering a culture of transparency and inclusivity. The government must ensure that the electoral process is beyond reproach and that budget allocations reflect the country’s capacity-rebuilding priorities. Equally vital is the need for genuine dialogue with labour unions, transforming potential conflicts into collaborative efforts for national progress.

SOEs

SOEs (like Eskom and Transnet) and key entities like the National Prosecuting Authority are not just economic pillars but should be symbols of national pride. Their potential failure is a ticking time bomb for the economy. This risk demands a two-pronged approach: robust management reforms to ensure efficiency and accountability, and innovative financial strategies to secure their longevity. Public-private partnerships could be a notable change, injecting much-needed dynamism and expertise into these institutions.

Read/listen:
Government and private sector partnership is crucial – Silke
The only thing keeping SA from chaos is its private sector
Why BEE and public private partnerships could work

China

South Africa’s increasingly heavy reliance on China as a trade partner is a double-edged sword. A recession in China could send shockwaves through our economy, particularly affecting commodity-based sectors. Diversification is our lifeline here – both in terms of trade partners and industrial focus. We can create an economic buffer against global market fluctuations by nurturing non-commodity sectors and exploring new markets.

Climate change

The increasing severity of weather events, from droughts to storms, is no longer a distant threat but a present reality. This calls for a proactive rather than reactive approach. Investing in sustainable agriculture and water conservation technologies is crucial. Additionally, a shift towards renewable energy sources can mitigate the broader impacts of climate change.

Read/listen:
SA needs to spend an extra R535bn a year to meet climate goals
Climate change ranked as third greatest concern for South Africans – Climate Barometer
‘No one is safe from climate change’ after hottest 12 months ever recorded

Service delivery

The failing state of many local authorities is the most immediate of our challenges. Poor governance and service delivery failures erode public trust and hamper development. The solution lies in re-establishing the fundamental service delivery pillars: resources are allocated locally so that communities benefit from services and infrastructure development; currently, the opposite is happening, with a greater proportion of resources being allocated to municipal administrations to fund salary increases.

Read/listen:
Municipal BEE compliance could lead to better service delivery
Service delivery protests ‘will intensify ahead of 2024 elections’
Are coalition governments the answer for better service delivery?

Opportunities for change

The year ahead for South Africa is fraught with challenges but is also ripe with opportunities for transformative change. By adopting a multi-dimensional approach that encompasses political transparency, economic diversification, environmental foresight, and grassroots governance reforms, South Africa can not only navigate these turbulent waters but also emerge stronger and more resilient.

The path ahead is complex, but with collective will and strategic action, stability and growth are within reach.

Much of this lifting will be done by the risk community, and it is imperative that analysts, strategists, and risk professionals in both the public and private sector come together to provide insightful foresight and pragmatic solutions.

My advice is to step forward and lend your expertise. Engage actively in policy discussions, contribute to strategic planning, and help craft robust risk mitigation frameworks. The aim is not just to predict and warn but to be an active architect in shaping a resilient South Africa. This includes identifying vulnerabilities and highlighting opportunities for growth and stability.

Listen/read: No respite on the horizon for SA economy in first half of 2024

Moreover, there is a dire need for innovative thinking and collaborative efforts. Stakeholders must foster strong partnerships across sectors – government, private enterprises, academia, and civil society – to ensure a holistic approach to these challenges. By sharing knowledge, resources, and best practices, we can create more resilient systems and communities.

Voices are crucial in advocating for necessary reforms, whether pushing for sustainable practices in response to climate change, promoting economic diversification to cushion against global market shifts, or aiding in transforming our SOEs.

This is the time to act to influence policies, guide decision-making, and steer South Africa towards sustainable growth and stability. Individual and organisational expertise and proactive engagement are vital in navigating the complexities of the present and unlocking the potential of our nation’s future.

Volker Von Widdern is head of strategic risk at Riskonet.