MechChem Africa May-June 2025

Based on data released in the World Economic Forum’s (WEF) Global Risks Report 2025, which captured the perspectives of more than 10 000 global business leaders through an executive opinion survey (EOS), PwC’s global strategy consulting team, Strategy&, has released a South African Economic Outlook report for 2025. WEF’s EOS asked company executives to identify the five risks most likely to pose the biggest threat to their country in the next two years (2025 to 2026). South Africa’s respondents identified Energy supply shortage; Unemployment/lack of economic opportunity; Water supply shortage; Poverty and inequality; and Economic downturn as their top five risks. From a global perspective, the biggest risks identi fied were state-based armed conflict, extreme weather events and geoeconomic confrontation. PwC’s South African Economic Outlook Report analy ses three of the key local risks and the mitigating company action required: Energy disruptions and the pressure on electricity, jet fuel, and gas; Water shortages and strate gies, given that nearly half of South Africa’s water systems (46%) are performing poorly or are in critical condition; and the increasing risk of extreme weather events, includ ing droughts, floods and wildfires. Despite the suspension of load-shedding a year ago, findings suggest that SA’s business leaders still viewed energy supply shortages as a major risk for 2025-2026. Beyond electricity, however, energy concerns extend to jet fuel and gas shortages, with increased dependency on imports. “Disruptions caused by these diverse energy supply challenges highlight the need for robust energy strategies and action plans to ensure business resilience,” reads the findings summary for energy disruptions. On South Africa’s water shortages, the report advises that businesses can recover, recapture, and reuse water; implement backup systems and harvest rainwater and greywater to mitigate water supply risks. Nearly half of all water supply systems (WSSs) across the country are performing poorly or at a critical level. Even though the key challenge to maintaining water infrastructure is money: non-revenue water increased from 42% in 2014-2015 to above 46% in 2021-2023. This means that almost half of all clean and treated water intended for consumers does not generate revenue – whether due to physical losses such as leaks, apparent losses such as meter inaccuracies or illegal connections, or authorised but unbilled consumptions, such as free basic water. “Conducting a water risk and usage baseline as sessment is crucial for developing a water strategy. Collaborating with the public sector can address infra structure and related service delivery challenges, while improved natural capital management could result in Mitigating our uncertain future

Peter Middleton

water and biodiversity making a larger contribution to the country’s labour productivity.” On extreme weather events, the report highlights that South Africa has experienced droughts, most notably in the Western Cape from 2015-2018, which led to the ‘Day Zero’ water crisis, and in the Eastern Cape from 2018 2021; recurring severe floods in KwaZulu-Natal (2017, 2019, 2022 and 2023); unseasonal hailstorms in Gauteng (2020 and 2024); snowstorms in the Free State (2021); +40 °C heatwaves in Limpopo (2020), North West (2020) and the Northern Cape (2021 and 2024); and wildfires in Mpumalanga (2020 and 2024), to name but a few. These have caused significant economic disruptions in recent years, impacting businesses across all industries by reducing water supply, damaging infrastructure and increasing operational costs. Risk identification and adaptation plans to mitigate these effects and ensure resilience are sure to be necessary. PwC is working with South African industry to de velop specific action plans. For companies facing electric ity disruptions and gas shortages, the suggested starting point is to implement energy efficiency measures, before investing in renewable energy solutions such as solar and/or wind. In addition, using power generators with alternative fuel sources; conducting energy audits to identify opportunities for efficiency and cost savings; and reducing reliance on public sector-supplied power and imported hydrocarbons, PwC suggests, are all crucial. On the water side, as well as maximising water recovery and reuse opportunities, collaborating with municipalities can also help to address infrastructure and related service delivery challenges. Extreme weather mitigation involves identifying the physical and transition risks across climate change scenarios, evaluating exposure and the sensitivity of assets and operations and putting comprehensive plans in place that consider a combination of technological, nature-based and behavioural solutions. Every country in the world seems to be facing its own ‘perfect-storm’ combination of challenges: climate change, poverty, unemployment, food insecurity, migra tion, rising social unrest, the increasing risk of violent conflict, and many more. South Africa is not the worst af fected of the world’s nations, though. We have long been aware of the problems raised in the 2025 PwC report, and in an increasing number of industrial sectors, including our energy sector, risk mitigation solutions have emerged. There is no reason for complacency though. Urgent action is needed – especially in the water and wastewater sectors. Effective mitigation, however, will require a col lective effort, with genuine investment and cooperation between business, industry, society, municipalities and all sectors of government.

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2 ¦ MechChem Africa • May-June 2025