South Africa Must Act to Avert Economic Ruin, Risk Managers Say

(Bloomberg) -- South Africa risks becoming a failed state if its “lack of decisive, ethical, and courageous leadership” persists and no action is taken to bolster economic growth and address high levels of poverty, unemployment and inequality, according to the Institute of Risk Management South Africa.

“If South Africa continues to experience a continued breakdown of ethical and legal principles, unmanageable societal unrest and breakdown of the rule of law, complete economic collapse becomes almost inevitable,” the nation's professional body for risk management said Monday in a report published on its website.

Leaders in the government and private sector need to urgently develop and execute risk mitigation strategies to respond to the country's mounting challenges, IRMSA said.

President Cyril Ramaphosa's pledge to effect widespread structural reforms when he took power in 2018, have been stalled by powerful vested interests, leaving the economy stuck in its longest downward cycle since World War II and more than a third of the workforce unemployed. While steps, including bolstering electricity generation by independent power producers are showing progress, there are still intermittent blackouts that discourage investment.

Ramaphosa this month reiterated his commitment to usher in changes in his state-of-the-nation address this month, appointing former mining executive Sipho Nkosi as the head of a team tasked with cutting restrictions that stifle business. Finance Minister Enoch Godongwana's Feb. 23 budget, expanded on the president's plans to create a more market-friendly economy, cutting the corporate tax rate by one percentage point to 27%.

A panel headed by Acting Chief Justice Raymond Zondo that has spent almost four years investigating graft is due to publish a third volume of findings and recommendations this week on how to prevent a recurrence of the looting of taxpayer funds.