• Several pre-existing conditions may enable long-term economic growth and shared well-being.
• Trade has increased over the years and remains a key driver in preserving a positive trade balance.
• The Ubuntu factor is crucial to maintain synergies, connectivity and trade partnerships.
• The agenda for the just energy transition must act as the leading force to drive foreign direct investment.

 Johannesburg – May 22, 2023. Allianz Global Corporate & Specialty and the Insurance Institute of Gauteng (IIG) hosted a leadership forum for leaders within the financial services sector on May 17, 2023, at Melrose Arch in Johannesburg on the topic South Africa at a crossroads: exploring possible scenarios. The forum focused on possible scenarios for the South African economy and featured Ludovic Subran, Chief Economist at Allianz SE, and Professor Nick Binedell, Founding Director and Sasol Chair of Strategic Management of the Gordon Institute of Business Science.

Binedell urged delegates to reflect and learn from activities that led to the end of apartheid by tapping into their corporate and professional network and experience to make a difference in the country. Subran presented economic scenarios for the country and guided brokers on how they can be more resilient to continue to protect businesses and enable them to grow sustainably. 

Increase in trade

Despite the geographic distance, capacity constraints and logistical difficulties, South African trade to the heavyweights in the Northern Hemisphere has increased over the years and remains a key driver in preserving a positive trade balance. “Regardless of the challenges ahead in the banking sector related to overall transparency and the regulatory environment, banks are better positioned and supervised than regional peers, insolvencies remain broadly stable (+1% year on year as of Q1 2023), and demand for B2B trade credit solutions is likely to increase,” says Ludovic Subran, Chief Economist at Allianz SE.

ESG-oriented approach

The anticipated reduction in the global appetite for certain commodities can be offset through an ESG-oriented approach towards metals and critical raw materials, where South Africa is already a leading producer. “Trade openness must be preserved, as the average weighted tariff for South African exports is already one of the lowest among the G20 and foreign direct investment amount to more than 40% of GDP, a percentage well above that of BRICS countries. The trade balance with non-BRICS countries was also positive by USD16bn last year, compared to a trade deficit of USD6bn within the BRICS bloc – underscoring the need to maintain a wide and diversified business perimeter,” explains Subran.

The Ubuntu factor

Historically, South Africa has been able to leverage its Ubuntu factor, positioning itself as a credible interlocutor for the continent at the G20 and maintaining a historically balanced approach to global issues. “This Ubuntu factor remains key in times of geo-economic fragmentation and widening divide between economies globally and within countries, as it can enable the much-needed technology and energy shift, increase connectivity, and preserve access to markets and investment flows that are crucial to managing South Africa’s just energy transition,” says Subran.

The just energy transition

With 85% of the energy mix based on coal, the just energy transition can act as the leading force to drive foreign direct investment, create a more inclusive labor market, and reinforce the social contract. Funds need to develop these new skills are limited and must be directed efficiently to bridge existing divides in labor and education. Women account for 21% of the workforce in the coal sector and only 14% of employees in the renewables sector. However, female employees are usually better educated. For example, 67% of females at the electricity public utility Eskom hold a post-matric qualification against 49% of men.

“The investment into the just energy transition should then maintain above-average secondary school enrolment rates, reinforce qualified female labor participation, and ensure reskilling opportunities for those in need. It should enable the country to maintain a higher rate of school enrolment and less brain drain compared to other countries in Sub-Saharan Africa (SSA). Equally, it should assist the country in increasing the female labor force participation, which is currently below that of SSA but elevated compared to other sub-regions. Despite widespread and grounded negativity, several pre-existing conditions and South Africa’s Ubuntu factor may enable long-term economic growth and foster shared and durable well-being,” concludes Subran.

For further information please contact:
Johannesburg: Lesiba Sethoga
Tel. +27 112147948
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About Allianz Global Corporate & Specialty

Allianz Global Corporate & Specialty (AGCS) is a leading global corporate insurance carrier and a key business unit of Allianz Group. We provide risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across nine dedicated lines of business and six regional hubs. Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses. Among them are not only the world’s largest consumer brands, financial institutions, tech companies and the global aviation and shipping industry, but also floating wind parks or Hollywood film productions. They all look to AGCS for smart solutions and global programs to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience. Worldwide, AGCS operates with its own teams in more than 30 countries and through the Allianz Group network and partners in over 200 countries and territories, employing more than 4,200 people. As one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial ratings. In 2022, AGCS generated a total of €11,2 billion gross premium globally.

About IIG
The Insurance Institute of Gauteng (IIG) established 27 August 1911 aims to engage and connect the short-term insurance industry in Gauteng through professional networking, education, inclusive transformation and proud affiliation. Our vision as the IIG is to be a world-class, high-performing institution that gives its members and sponsors tangible value. The IIG is about collaboration and innovation, remaining refreshed, relevant and sustainable, and working towards growth and progress. For more information, please visit our website https://iig.co.za/

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