A combination of the COVID-19 pandemic, trade tensions, climate change, and a range of other factors means the probability that the performance of companies, markets or economies will be impacted by political decisions, events or conditions is at post-World War II highs. The Commission was established in January 2018 by the then-President Jacob Zuma, with Deputy-Chief Justice Raymond Zondo appointed by the Chief Justice as the Chairperson, in accordance with Section 84(2) of the Constitution, pursuant to investigation and remedial action of the Public Protector with regards to complaints and allegations of State Capture. Political stability or instability. A trade agreement between SADC and the European Union enables many European products to enter South Africa duty-free or at lower rates than U.S. products. The views and opinions expressed in this article are the authors alone; they do not represent the position and opinions of NIHSS or its staff. Read our latest articles and listen to all of our podcasts. In their guideline suggestions for South African SOEs, the, OECD notes that SOEs tend to set the business climate. A few foreign companies have addressed the ownership element of B-BBEE by negotiating equity equivalency programswith the Department of Trade, Industry, and Competition that emphasize training and development of local companies. If state-owned enterprises continue to prioritize aiding the achievement of political goals instead of profits, they will likely continue to exacerbate the nations economic vulnerability. Political factors Governments can raise or lower corporation tax, which will impact on profits. [27]Mining MX (2021) Coal Production from KwaZulu-Natal Disrupted by Last Weeks Violent Protests, 19 July, Available at: https://www.miningmx.com/news/energy/46820-coal-production-from-kwazulu-natal-disrupted-by-last-weeks-violent-protests[Accessed 9 August 2021]. Zambia's political Challenges Part Two: 'The triumph of democracy' March 7, 2013 In "Columns". The World Bank ranks South Africa as the most unequal society in the world, with 90% of the countrys wealth being owned by only 10% of the population. How does political stability affect businesses? The sorry financial state left by poor governance hamstrung the SOEs ability to borrow money, limiting their future prospects. All rights reserved. Should this kind of unrest prove effective in creating political change, the nation risks bringing violence into the political equation. To reinforce the previous point, the government is encouraged to invest in civic infrastructure and community engagement to foster community development and promote social cohesion. [35]Job losses have increased since the onset of Covid-19. It is unclear how this will affect the industrial transportation industry. Key content in this edition includes: Tax collections: Personal income tax revenues grow more than expected as jobs increase and salaries rise. ANC councilors are attempting to remove corrupt politicians. Between 9 and 18 July 2021, protests flared up in two provinces - Gauteng and KwaZulu-Natal - which were accompanied by massive violence, the destruction of key infrastructure such as factories and warehouses, and pillaging. [36]In the first quarter of 2021, total employment in the formal non-agriculture sector was reduced by 5.4% compared to March 2020 levels, equating to 552000 job losses. During the period 9 to 17 July 2021, South Africa experienced violent protests and socio-political unrest characterised by widespread looting of shops and businesses, as well as burning and destruction of public facilities and private properties, mostly in the provinces of KwaZulu-Natal (KZN) and Gauteng. Environment Factors Affecting Retail Industry . According to an estimate, India's annual GDP (gross domestic product) was 2.59 trillion dollars, and it's the 6th highest in the world.The country's per capita income in 2020 was 1876 dollars, and it's the 142nd most elevated in the world.. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. Therefore, they identify common grievances and shared bonds as they engage in survivalist-motivated violence and frustration-instigated social unrest or are prone to manipulation by elites to fight political battles on their behalf. Official websites use .gov [40]Therefore, although theJuly 2021 protestsmay have been politically motivated, they were fueled by deep-rooted and acute socio-economic challenges facing poor, hungry and frustrated citizens, mostly in the townships, which provided fertile ground for social unrest. The South African Government (SAG) is pursuing a qualified policy of Expropriation of Land Without Compensation (EWC) that is constitutionally sound and will not endanger food security. The protests were amongst the worst political violence South Africa has witnessed since the end of the Apartheid. Daily life has been thrown into utter chaos as food supply chains break down and people face homelessness. You also have the option to opt-out of these cookies. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. Nike: How Political Factors Affect Nike? Using pretext of a political grievance, those behind these acts have sought to provoke a popular insurrection. External links to other Internet sites should not be construed as an endorsement of the views or privacy policies contained therein. South Africas heavy reliance on SOEs and the storied history of corruption make fertile ground for inefficient business. Most notably, South Africa's new data protection legislation will enter into force in July 2021. While Bishop says there are indications that the recession might lift in the second quarter of 2017, she says that even a positive growth rate of 1-2% is wholly insufficient in improving the unemployment situation. South African Chamber of Commerce and Industry Support network for SMEs and companies representing businesses across the country. The violence put as many as 129,000 jobs in SOEs and small businesses at risk in a nation with staggeringly high unemployment. Listen to regular interviews with experts from across the Investec group. On the other hand, an increase in COVID-19 relief money and deployment of the army makes it unlikely that future violence will reach this level of destruction for the time being. South Africa's ease of doing business ranking has declined from 82nd position in 2018. . [21]Business Tech (2021) South Africa has a New Covid-19 Vaccine Target for Christmas, 22 July, Available at: https://businesstech.co.za/news/trending/508010/south-africa-has-a-new-covid-19-vaccine-target-for-christmas[Accessed 8 August 2021]. As a result, many SOEs are run with low supervision and support, making them prime targets for sabotage. For example, companies such as Toyota, which has a car manufacturing plant in KZN, have raised serious concerns about the conduciveness of the provinces business environment.[29]. Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet. [42]This may have been avoided if timeous proactive measures were taken. [20]The South African Department of Health reported that about 25000 vaccine doses were lost during protest action through acts of looting and arson. Citizens were frustrated by worsening poverty, unemployment, food insecurity, and inequality due to the Covid-19-induced national lockdown measures. The resultant contraction of economic activity, has pushed South Africa into a recession. A political influence is a government regulation that impacts commercial operations positively or negatively. A locked padlock ) or https:// means youve safely connected to the .gov website. 00:53: The level of business lack of confidence in South Africa has increased to almost 70%. After the dust settled over 300 people had died and the insurrectionists had caused over $1 billion in damage. 01:27: The difficulty with pricing risk and return in an uncertain political environment. 03:16: Theres been a reduction in consumer confidence. Starting a Business Starting a business is a lengthy procedure in sub-Saharan Africa and can cost a significant proportion of income per capita. While the unrest does not appear to be a coordinated attack, South Africas economy is uniquely vulnerable to such disorder because it is. Zumas political allies called for action in an attempt to release the former president. U.S. Department of Commerce [13]Massmart Holdings Limited reported that 41 of its stores had been looted in KZN and Gauteng, with four facilities burnt and damaged. However, they have had limited reach. Procurement preferences and other benefits are based on a companys B-BBEE certification level which it receives through a scorecard assessing points based on equity ownership, management control, skills development, and socio-economic development. Share sensitive information only on official, secure websites. The Retailing in South Africa report includes: Analysis of key supply-side and demand trends. This will deter similar future cases of criminality and violence. [35]United Nations Human Development Report (2020) South Africa, Human Development Indicators, Available at: http://hdr.undp.org/en/countries/profiles/ZAF [Accessed 3 August 2021]. constituted by state-owned enterprises (SOEs). Zumas political allies called for action in an attempt to release the former president. These cookies track visitors across websites and collect information to provide customized ads. [18]In addition, there was looting and destruction of radio stations and community radio equipment,[19]which infringed on citizens rights to access information, entertainment and news. [1]Initially, Zuma made a court application to interdict the Public Protector Report on State Capture, but the North Gauteng High Court ruled on 14 December 2017 that the remedial actions of the State Capture Report were wise, necessary, rational and appropriate. [6]Constitutional Court of South Africa (2021) Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State v Zuma and Others [2021] ZACC 18, 19 June, p. 2, Available at: http://www.saflii.org/za/cases/ZACC/2021/18.pdf [Accessed 2 August 2021]. Share sensitive information only on official, secure websites. The United States War Against Russian Disinformation: Is the GEC Fit for Purpose? The choice is not up to our opponents, but to us, and our willingness to face and work through them.[43]. While the involvement of a third force may be a possibility, it is the continued existence of enabling factors for social unrest that contributed significantly to the situation that unfolded. On the 7th of July, former president Jacob Zuma. Right now, this is a good thing. They can . This included the Passenger Rail Agency of South Africa (PRASA), which delivers commuter metro-rail train services in metropolitan areas, and the South African Petroleum Refineries (SAPREF) oil refinery, which suspended services citingforce majeure. 05:00: Failing state-owned enterprises are a major concern for credit ratings agencies. Sectors of specific concern include the extractive industries, security services, and agriculture. The real estate market is one that is constantly changing, molding and reforming each year as the world around it does too. A .gov website belongs to an official government organization in the United States. There has been wide-ranging debate across the country on whether the Free Zuma protests, looting and socio-political unrest was caused by the imprisonment of Zuma or not. These cookies ensure basic functionalities and security features of the website, anonymously. [7]Cotterill, Joseph (2021) South Africa Counts the Cost of its Worst Unrest Since Apartheid,Financial Times, 25 July, Available at: https://www.ft.com/content/1b0badcd-2f81-42c8-ae09-796475540ccc[Accessed 3 August 2021];Winning, Alexander and Roelf, Wendell (2021) Worst Violence in Years Spreads in South Africa as Grievances Boil Over, Reuters, 13 July, Available at: https://www.reuters.com/world/africa/looting-violence-grips-south-africa-after-zuma-court-hearing-2021-07-13[Accessed 3 August 2021]. Many of the domestic economic, political and socio-economic challenges facing South African businesses in 2022 will not be new. Zumas, administration was characterised by corruption. The nations economy was particularly vulnerable to civil unrest, and served to deepen the impact of the riots. [23]Overall, theJuly 2021protests resulted in the deaths of 337 people in KZN and Gauteng as of 22 July 2021, with over 3 400 people arrested on allegations of inciting public violence, murder, arson, and looting. Links to the State Department's website for background on the country's political environment. Political challenges may impact on the grocery and supermarket industry in many different ways. South Koreas economy: Why the North wont sink it, Egypts economic crisis may finally be coming to a head, Why the U.S economy may surprise in the medium term, Reasons a currency war could still be on the horizon, Saving Afghanistans Economy: A daunting challenge. These include reports about corruption and mismanagement in government, significant unemployment, violent crime, insufficient infrastructure, and poor government service delivery to impoverished communities; these factors have been exacerbated by the Covid-19 pandemic. They were introduced to encourage economic independence, as foreign support and investment were unavailable. The Constitutional Court of South Africa sentenced the former president to 15 months imprisonment for defying its order to comply with the summons to appear before the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State, and for undermining the authority of the Court through his casual and scandalous attacks. Political factors: Political factors globally have a direct and deep impact on the hospitality industry. [8]A total of 161 malls were damaged countrywide, while 161 liquor outlets and distributors, 11 warehouses, and eight factories were extensively damaged. Lucas (1990) concludes that political instability increases capital flows into a country which would then positively affect FDI. [34]Oxfam South Africa (2020) Reclaiming Power: Womens Work and Income Inequality in South Africa November 2020, p. 12, Available at: https://www.oxfam.org.za/wp-content/uploads/2020/11/oxfam-sa-inequality-in-south-africa-report-2020.pdf [Accessed 2 August 2021]. However, what stands out is not only the undeniable fact that the developments resulted in colossal socio-economic damage countrywide at a time when the Covid-19 pandemic is wreaking havoc on national economic growth and peoples lives and livelihoods, but also the valuable lessons for sustainable future prevention, management and resolution of conflict, violence and socio-political unrest in South Africa. The legal environment serves to define what organizations can and cannot do at a particular point in time. Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country. [27]This affected the productivity of mining firms, with companies like MC Mining Uitkomst colliery announcing that the three and half days of temporary closure resulted in 5600 tons of forfeited coal production, which translated into export losses. Economic factors affecting India Highest GDP. Failure of critical infrastructure Abstract Political risk factors are of prime importance to business operations around the world, as they may impact negatively on the financial performance thereof and may even lead to the financial failure of enterprises and industries. In the last five years that number has jumped up to 13.8 per year. South Africa has the highest income inequality in the world - the income share of its top 10% (more than 60% of national income) exceeds its peers in the USA, Brazil and India - and is even higher than the Middle East region (Assouad et al., 2018).A number of studies have documented this extreme level of income inequality, albeit using different data sources, time periods and dimensions of .