Top government and business leaders warn that South Africa is sitting on a ‘ticking time bomb’ 

 ·11 Jul 2022

Top business and government officials have warned that South Africa is set to face a repeat of the July 2021 riots as very little has been done to address the issues facing the country over the last year.

Speaking to BusinessDay, Business Unity South Africa chief executive Cas Coovadia says the country’s law enforcement is a particular point of concern, with the ANC’s upcoming elective conference set to contribute to the violence.

“The factors leading to the July insurrection remain. The political infighting and factionalism persist and there is significant jockeying for power in the run-up to the ANC elective conference in December,” said Coovadia.

He added that the government seems to be making little progress in tackling this law and order weakness. “So, conditions are still ripe for disruption, if forces bent on this want to do so,” said Coovadia.

These concerns were echoed by the head of the Presidency’s investment and infrastructure office  Kgosientso Ramokgopa, who described the situation as a ‘ticking time tomb’, TimesLive reports.

“The price of fuel and its relationship with where we are. Don’t watch TV and think people are bombing each other here, the bombing is in the fridge. The bomb is on the stove. And when it explodes, no one will be able to stop it. If food prices continue to rise it means the poor must have one meal. If it continues, it’s two meals every two days. That’s hunger. That’s anger. And that means the rich will never sleep.

“They will rise and topple an ANC government. We are seeing it in many parts of the world. The shortage of inventory has resulted in inflationary pressures. There aren’t enough cars in the US. That drove inflation and the federal reserve had to adjust the interest rates, and that’s followed by the South African Reserve Bank.”

Worst-case scenario 

Banking group Absa has indicated that further violence and unrest in the country is a key consideration in its economic modelling.

While the alleged orchestrators of the unrest have been named by the police ministry, to date, no one has been convicted. This protracted investigation and apparent lack of accountability could heavily factor into how things proceed from here, Absa said in a May economic note.

The bank outlined three main scenarios it could see stemming from the unrest.

  • Absa’s baseline scenario assumes no one is brought to account for the 2021 unrest, and KwaZulu-Natal remains fractious, but there is no big further eruption, just small, localized service delivery protests.
  • In the bank’s upside scenario, rising socio-economic opportunities and greater political responsiveness diminish the risks of social unrest, particularly as the organisers of the July 2021 riots are brought to account.
  • The bank’s downside scenario forecasts another big eruption of unrest along the lines of July 2021 riots at some point.

The South African Special Risk Insurance Association (Sasria) has already warned that it cannot afford to cover the country’s businesses should it see a repeat of the July 2021 riots in the coming years.

Sasria is a state-managed entity that provides cover for riots and other damage caused by civil violence. In a presentation to the National Council of Provinces at the end of April, the group said that the riots in KwaZulu-Natal and parts of Gauteng saw it payout over R37 billion in damage claims.

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. Sasria is currently restricting all of its clients – including these major retailers – to a maximum cover of R500 million, which is ‘clearly not adequate’.

The group noted that reinsurer Lloyd’s of London had hiked 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.

The riots, which were the worst since the end of apartheid and claimed 354 lives, led to heavy criticism of president Cyril Ramphosa’s government and its ability to respond to major security issues. The perceived lack of response from the government subsequently led to a cabinet reshuffle and the axing of the national police commissioner.

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