South Africa’s risk managers urged to prepare for geopolitical and economic uncertainty

The Institute of Risk Management South Africa (IRMSA) is urging local risk managers to prepare for an increasingly uncertain global and domestic landscape.

As geopolitical shifts and economic turbulence intensify, South Africa faces significant challenges that could impact trade, investment, and financial stability.

A second term for Donald Trump as President of the United States adds another layer of unpredictability. According to Yvonne Mothibi, CEO of IRMSA, South African businesses and policymakers need to anticipate disruptions in trade relations, currency fluctuations, and investor sentiment. The already strained relationship between the US and South Africa could be further tested under Trump’s leadership, with the potential for shifts in economic alliances and trade policies.

"The inaugural speech of the US President was a rallying call for bold leadership and decisive action. And yet, it places the global trade and economic outlook at a crossroads of volatility and uncertainty. As the Institute, we want to urge business leaders and risk professionals to stand ready to lead the charge in transforming risks into opportunities, driving South Africa, Africa, and the world towards navigating shock with agility and building stronger, more resilient economic futures," says Mothibi.

South Africa’s foreign policy stance, particularly its engagements with Russia, China, and Iran, has drawn criticism from Washington. With Republicans holding a majority in Congress, there is mounting pressure to reassess South Africa’s eligibility for the African Growth and Opportunity Act (AGOA). If South Africa loses its preferential trade status under AGOA when it expires in 2025, critical industries and thousands of jobs could be at risk.

Trump’s first term saw a focus on economic nationalism and tariff-driven trade policies, a trend that may return with greater force. Emerging markets like South Africa are particularly exposed to protectionist trade measures, which could fuel inflation and disrupt supply chains. Risk managers must be prepared for heightened commodity price volatility and currency pressures as global investors seek refuge in the US dollar.

Meanwhile, the US economy is grappling with rising federal debt, inflationary pressures, and shifting monetary policies. Should Trump pursue aggressive fiscal expansion, inflation could accelerate, prompting sustained monetary tightening. This could reduce global liquidity, making it more challenging for South Africa to attract foreign investment and manage its debt obligations.

South African Reserve Bank Governor Lesetja Kganyago has noted that while the country’s economic outlook has shown improvement, inflation remains a key concern. Protectionist trade measures, fluctuating oil prices, and food security issues all contribute to an uncertain economic environment. Risk managers should actively engage in scenario planning to navigate these potential challenges.

Despite these risks, opportunities exist for South Africa to recalibrate its relationship with the US. Experts suggest that a more pragmatic and flexible foreign policy approach could help strengthen economic ties while maintaining strategic partnerships with emerging global powers. With South Africa set to host the G20 summit in 2025, followed by the US in 2026, these engagements could be pivotal in shaping bilateral relations and securing mutual economic benefits.

Given the rapidly changing global landscape, South African businesses must take a proactive approach to risk management. Strengthening resilience against economic shocks, assessing vulnerabilities in trade and investment, and engaging policymakers to safeguard stability will be crucial.

"South Africa must move beyond a reactive stance and develop strategic solutions that ensure long-term economic stability. A clear and forward-looking risk management approach will be key to navigating the challenges ahead," Mothibi adds.