Analysts are worried more unrest could be about to hit South Africa – here’s why
South Africa’s escalating joblessness, combined with elevated consumer price inflation, is heightening social stability risks in the country, says professional services firm PwC.
The country saw its worst riots since the end of apartheid in July 2021, with the violence claiming 354 lives. The perceived lack of response from the government led to a cabinet reshuffle and the axing of the national police commissioner. The government also plans to enrol 12,000 police officers before the end of this year as part of efforts to rebuild its police force.
“Both unemployment and inflation are higher at present compared to the levels seen during the July 2021 unrest. Furthermore, research by the Bureau for Economic Research shows that consumer expectations in Q1 2022 for their household finances were more positive compared to their outlook for the economy,” the group said in a research note on Thursday (28 April).
“This mismatch between expected financial conditions and the ability of the economy to deliver on these expectations contributed to last year’s unrest. When considering all of these factors, as well as the upwards momentum in trade unions’ salary and wage expectations for 2022, there is enough reason to be concerned about social stability in South Africa.”
PwC added that the eventual introduction of a basic income grant – or similar cash transfer tool – could come too late to quell these social pressures.
Insurance companies have also warned that South Africa cannot afford the cost of a repeat of the July 2021 riots in the coming years.
In a presentation to parliament this week, the South African Special Risk Insurance Association (SASRIA) said that it paid over R37 billion in damage claims, with reinsurer Lloyd’s of London hiking premiums by as much as ten times in the last year as it is of the view that similar riots could reoccur in the country in the future.
Sasria added that major retail groups such as Shoprite, Pick n Pay, and the Foschini Group could disinvest from the South African economy if this cover is not provided.
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