South Africa to become more resilient to withstand expected economic shockwaves

If there's one certainty to emerge from the geopolitical chaos of the past few weeks, it is that South Africa will need to become more resilient to withstand expected economic shockwaves. 

US tariffs now appear likely, in one shape or another, amid an atmosphere of export uncertainty. It means South African goods may require new trade pathways to remain internationally competitive. 

And to remain competitive local companies need to ensure they are limber enough to respond to unpredictable market conditions. 

A notable case in point which requires our immediate attention is the European Union's Carbon Border Adjustment Mechanism (CBAM) which involves taxing carbon-intensive imports as a means of reducing the EU's carbon footprint.

This has particular relevance to a range of South African products targeted upfront by CBAM, such as minerals, steel and aluminium.

Currently importers of these products into the EU only need to report emissions associated with imported products. But the proposal is to levy a fine relative to carbon footprint. 

CBAM has the potential to negatively impact the local economy which is still heavily dependent on coal-fired power stations for electricity supply.

To date the CBAM mechanism does not make allowances for developing countries’ challenge of decarbonising with limited resources, while having to address other priorities such as healthcare and education.

However there is pushback from lobby groups hoping for a fairer dispensation that takes account of developing nations’ historic debt in terms of environmental impact, while also seeking to assist developing countries to decarbonise, rather than harming economic progress with punitive taxes. 

The Cape Chamber intends assisting efforts to reform CBAM to minimise potential economic disruption. Local companies can do the same, by making their voices heard.  

But CBAM is but one example of many challenges that lie in waiting in the years ahead. Massive change is all spheres of life is guaranteed as new technologies like AI reshape society, business and trade.   

Resilience, imagination and creativity are now far more than buzzwords for corporate teambuilding; they are essential building blocks to help us navigate an increasingly unpredictable future.

John Lawson
CEO of the Cape Chamber of Commerce and Industry