Crime, protests put SA businesses at risk

South African businesses this year face challenges resulting from low economy and protests, a report by a global risk consultancy said.

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Johannesburg - Global business risk consultancy, Control Risk, on Monday released a report which predicts that South African businesses this year would face a myriad of challenges resulting from the stagnating economy, high levels of crime, increasing protests, regulatory uncertainty, and cyber vulnerabilities.

According to the report, RiskMap 2016, the stagnating economy in South Africa was the driving force behind rising crime, while trade unions were likely to respond to higher inflation by becoming more inflexible in demands for wage increases. The report also said social unrest, previously largely restricted to low-income areas on the outskirts of South Africa's cities, was increasingly becoming a consideration in city centres.

Rising food prices would likely prompt an increase in social unrest, the report said. RiskMap 2016 highlights the most significant underlying trends in global risk and security, and provides a detailed view from the markets that will matter most in 2016.

RiskMap 2016 said political constraints would prevent any rapid and substantial improvement, and as a result, South Africa's economy and overall levels of sovereign risk will remain vulnerable. In a media briefing in Johannesburg on Monday, George Nicholls, senior managing director of Control Risks Southern Africa, said despite many positive indicators, Control Risks does not believe that Budget 2016 would reduce the risk of credit rating downgrades. “The lack of details around specific cost-cutting mechanisms and populist pressures against significant restructuring of state-owned enterprises means that the downgrade risk will persist. Nonetheless, the main political issue for commercial operations will remain state institution corruption, legislative stagnation and regulatory uncertainty,” Nicholls said.

RiskMap 2016 also stated that in the wider Southern African region falling mineral export revenues widened current account deficits, and would put upward pressure on inflation. Nicholls said depressed commodity prices and countries' responses to the economic downturn would define the risk landscape for SADC (Southern African Development Community) in the upcoming year.

African News Agency