South Africa, like many countries in the world, is seeing some significant storm clouds building up as global uncertainty intersects with a hotly contested election season, threatening to disrupt and destabilise the economy.
Business Leadership South Africa CEO Busisiwe Mavuso said that it will be a challenging year for businesses in South Africa due to the upcoming vote and the unprecedented geopolitical stress against Ukraine and Russia and Israel and Hamas wars, creating major uncertainty.
Locally, Mavuso warned political campaigns can be distractions that do not help run the country, which is especially worrying considering the economic challenges the economy is facing. She also warned of populist policy being rushed in parliament as part of the election campaign – evidence of which has already been seen.
More globally, market analysts have already painted a sketchy picture of what lies ahead for world economies – particularly economic slowdown in Europe, the USA and China, which will invariably impact other emerging market economies like South Africa.
Mavuso noted that South Africa is expected to grow its economy by 1.5% in 2024, having likely posted a better-than-expected 0.8% growth in 2023. However, this is by no means a flourishing economy, with the business lead warning that disruptive policies that deter investment and shatter business confidence could send the figures in the opposite direction.
Add to this mounting worries over potential escalations between global powers, and it’s easy to see that 2024 is lining up to be an anxious year for markets.
However, looking more positively, the Mavuso highlighted the partnership between business and the government to help tackle three of South Africa’s most significant issues – energy, logistics and crime – which should go some way in settling tensions back home.
“A pleasing announcement over the festive break was the appointment of a board for the Eskom transmission company, an important next step in its eventual unbundling to allow for a competitive and open electricity market,” Mavuso said.
She also highlighted the publishing for public comment of the Integrated Resource Plan (IRP), which despite widespread criticism from energy experts, is historically important for the nation’s plans for energy.
That said, as the private sector produces more electricity, the IRP becomes less important.
“It is progress that the draft (IRP) has been published, yet there is much that needs to be fixed in it to meet the principle of lowest cost in planning out the future of the electricity system. An effective consultation on the draft will be important to align stakeholders on a rational plan for the sector,” Mavuso said.
She added that the private and public sectors must work together despite the election.
This is especially the case for Transnet, whose inefficiencies in managing the port and rail infrastructure are impacting exporters, resulting in job losses and limiting economic growth.
She noted that the partnership is key to showing the rest of the world that South Africa is getting its act together.
The World Economic Forum opens in Davos on Monday (15 January), and a team of business and government leaders, including Finance Minister Enoch Godongwana, will try to show that South Africa is making progress to an audience that is on guard due to heightened risks globally.
“There will be new challenges, particularly until the election is done, in keeping the focus on the sometimes intricate work that must be done to unlock economic activity. As business, we will also have to navigate populist rhetoric that can damage business confidence,” Mavuso said.
