South Africa’s economic crisis continues to mount and disrupt plans to get the country back on the right foot for building a sustainable economy.
Based on the sixth South Africa Economic Outlook report released by the PwC South Africa on Wednesday, instead of the country’s economy going up, it is spiraling down due to challenges faced by local companies to keep afloat. Many businesses are dealing with contrasting crises where a diverse set of disruptions and risks are at play, creating further operational problems and endangering job security. PwC has identified five challenges faced by local companies that have created problems for enterprises to keep operating effectively and this has resulted in mass profit losses and job shedding.
Based on the changing world through fourth industrial revolution where the impact of artificial intelligence on businesses replaces human capital, the economy is stagnant, if not going down, while loadshedding creates a massive disruption of food security.
PwC chief economist Lullu Krugel said: “South African businesses need to respond to the weak economy, changing jobs landscape, social risks, technological change, and sustainability considerations. Each of these challenges require business leaders to respond with the right mindset and risk approach. “Specifically, business leaders need to put in place the right strategies to deal with these challenges. These strategies, in turn, must address each challenge separately but also be coordinated into a broader strategic framework that supports the long-term sustainability of the organisation.”
The South African economy rose by 0.4% quarter on quarter in the three months to March this year, following a downwards revised 1.1% decline in the previous quarter, thus avoiding a technical recession, as the latest gross domestic product data shows that South Africa is not in a recession. However, economic growth is small at present, registering only 0.2% q/q in the first quarter. Based on such paltry economic growth, this has resulted in the unemployment rate to increase from 32.7% in the fourth quarter of last year to 32.9% in first quarter of this year. However, the majority of South African CEOs, based on PwC’s 26th Global CEO Survey, Africa Business Agenda: South African Perspective 2023, are anticipating a decline in economic growth over the next 12 months. They are being more cautious about workforce management than their global counterparts, and are more likely to protect current jobs.
The report delves into factors impacting company profitability, including the transition to new energy sources, technological disruptors, supply chain disruption, labour shortages and regulatory changes. The private investment currently seen and planned in alternative electricity supply is significant. Operation Vulindlela is tracking a pipeline of 10 000MW in private sector energy generation projects, up from 4 000MW reported a year ago. The positive impact this will have on power supply in the country and on individual business operations makes for a more positive economic growth outlook for next year. Krugel added that it was expected that the economy was going to grow by 1% next year, based on the premise that South Africa will see a turning point in loadshedding this year. “This energy investment will bring with it more green jobs.
As the world transitions to net zero, the role of traditional jobs is changing. And with that, green jobs are growing at a significant pace.
“However, the transition to a green economy requires organisations to take a proactive and intentional approach towards developing a green workforce. It allows people to move to new jobs that are better and more future-proof and helps preserve a nation’s taxation revenues and reduce social safety net expenses,” said Krugel.
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