CEOs warn of social unrest in South Africa

Over two-thirds of Southern African CEOs expect to face disruptions from social unrest in the next 12 months.

This was revealed in PwC’s 26th Global CEO Survey and Africa Business Agenda Report for 2023, which focuses on environmental and social factors affecting business on the continent. 

The report emphasised the fears expressed by African CEOs around social and political instability, particularly those from Southern Africa. 

While only 26% of global CEOs expect disruptions from social unrest, 46% of CEOs in Africa and 67% of CEOs in Southern Africa expect their companies to face high or extremely high exposure to threats from social unrest. 

PwC says the heightened fears of social unrest in Southern Africa are due to the region being the world’s most unequal based on income and consumption per capita. 

A repeat of the July Riots

PwC raised the July riots of 2021 as an exemple of what social unrest could look like in the next 12 months.  There was looting, violence, disruption, and the deaths of 354 South Africans during the riots. 

PwC measured the impact of the riots on the South African economy at R50 billion. 

Business Leadership South Africa’s CEO, Busi Mavuso, said in February that South Africa faces an “Arab Spring-like revolt” if the government does not take decisive action. 

Mavuso says that “we are in deep trouble” and “need meaningful and targeted interventions that will ensure we don’t end up in the doldrums and we don’t end up as another failed African state”.

This warning has been followed by business leaders in South Africa, with MTN’s CEO, Ralph Mupita, warning that South Africa is at risk of becoming a failed state. 

The fear of social unrest is not only coming from CEOs. 

Allianz’s Social Risk Index (SRI) has identified South Africa as “highly vulnerable to social unrest in the next 18 months”. 

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

A World Bank report on Southern Africa in 2022 also highlighted the region’s rising risk of social unrest. 

What is driving social unrest

PwC’s analysis of social unrest in South Africa brought five factors to the fore that drive social unrest and tracked how they have deteriorated. 

• Workforce inclusion – South Africa’s unemployment is among the highest in the world and shows no sign of being sustainably reduced. 
• Political belonging – South Africans are increasingly dissatisfied with political parties in the country, including the opposition, with the number of parties represented in elections rising from 7 in 1994 to 304 in 2018. This also indicates growing political fragmentation. 
• Trustworthiness – According to an Ipsos study, only 3 out of 10 South Africans believe that ordinary men and women in the country are trustworthy. 
• Democratic participation – Fewer South Africans participate in democratic processes, with less than 50% voter turnout in the local government elections of 2021. This emphasises South Africans’ increasing dissatisfaction with political parties and institutions. 
• Trust in institutions – Trust in South Africa’s public institutions is very weak, with the police being the least trusted institution in the country, followed closely by local government. 

Solutions

Lullu Krugel, the chief economist at PwC South Africa, said that the government could not solve these problems alone. The public sector “needs the private sector”. 

“Businesses need to demonstrate their ability to create value, build trust, and contribute to solving important problems”, Krugel added. 

For businesses in Southern Africa, “‘business as usual’, with a sole focus on profitability, has become obsolete”. 

The private sector in South Africa needs to be proactive and force the agenda to tackle social issues. Otherwise, they will not be solved.