South Africa

Social unrest risk from high interest rates

Financial advisory firm PwC warned that elevated inflation and interest rates are social risk factors and social cohesion in South Africa may break down. 

This warning was contained in PwC’s South Africa Economic Outlook in June, highlighting the potential for social unrest breaking out in the country.

The firm has previously warned of potential social unrest due to South Africa’s high unemployment rate and large social cleavages.

A report published late last year noted that the growing gap between the ‘haves’ and the ‘have-nots’ is a key driver for the decline in social cohesion in South Africa.

However, this time it specifically flagged elevated inflation and interest rates as a risk to social cohesion in the country. 

Last year’s report focussed on long-term factors that do not fluctuate as frequently as inflation and interest rates do, as this provided a better base from which predictions could be made. 

In June’s report, PwC said “elevated inflation and interest rates are very much a social risk factor”, and there is a risk of “social unhappiness boiling over” if inflation remains high. 

Food inflation was singled out, reaching a 14-year high in 2023 and making basic staples unaffordable to large parts of the population.

PwC also warned that South Africa’s food supply is under threat, with food insecurity on the rise in 2023 due to load-shedding, adverse weather, and deteriorating infrastructure.

For private companies, this increases operational and security risks for business activities and will inevitably have an impact on future investments. 

PwC also said that social cohesion would likely continue on a negative trend over the short to medium term. 

It has previously raised the spectre of a repeat of the July Riots in 2021 as an example of what social unrest may look like in future.  

These riots resulted in looting, violence, disruption, and the deaths of 354 South Africans. R50 billion and 150,000 jobs were lost as a result.

Business leaders warn of social unrest

Iain Williamson
Old Mutual CEO Iain Williamson

PwC’s warning echoes those of Old Mutual CEO Iain Williamson and other business leaders. 

Williamson warned that South Africa would likely experience social unrest before elections next year, with a grid collapse on the cards. 

Williamson issued this warning when addressing Bloomberg’s Future of Finance Conference on 1 June along with other South African business leaders. 

Williamson said South Africa faces three prominent risks in 2023:

  • Social unrest
  • Grid failure
  • Sanctions from the country’s stance on the Russia-Ukraine conflict

In the short term, South Africa will see a lot of risk and instability, with significant uncertainty about how the 2024 elections will play out.

“Once we get beyond the election next year, the outlook is better”, with it being the most likely flashpoint for widespread unrest,” Williamson said.

Social unrest can do billions of rands worth of damage and push the South African economy into a deep and protracted recession. 

Williamson noted the rise of protest action in South Africa and raised the possibility of a repeat of the July Riots of 2021 in KwaZulu Natal.

PwC’s 26th Global CEO Survey for 2023 revealed that over two-thirds of Southern African CEOs expect to face disruptions from social unrest in the next 12 months.

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.

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 said, “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”.


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