Inclusivity is a word that has been echoing in our collective narratives. When we speak of inclusivity, we are referencing not just economic indicators, but a way of living and governing that ensures everyone has an equal chance at prosperity.

From the policies enacted by governments to the strategies adopted by businesses, from the educational systems to the very fabric of our people, inclusivity requires an approach that places the well-being and opportunities of every individual at its heart.

Inclusivity is not only about financial prosperity, but about creating environments where every voice is heard, every potential is nurtured, and every individual, irrespective of background, has an unobstructed path to realise their dreams and aspirations. This holistic view ensures that as we progress, no one is left behind; it is progress in its truest form.

Yet, as we look ahead, the path to inclusive growth is strewn with difficulties.

A primary concern is global risks, which bring uncertainty, particularly affecting the growth and development prospects of South Africa and the African continent. Indeed, macroeconomic factors, both globally and locally, exert immense pressure on countries, companies, and individuals. These strains become evident when we see global and local liquidity and cash flow stresses. The era of cheap and abundant liquidity seems to be ending.

Sub-Saharan Africa economies remain under pressure, but they are working towards macroeconomic stability and a more sustainable growth path. Many of the region’s key economies are under International Monetary Fund (IMF) programmes and have embarked on reforms to address macroeconomic imbalances by implementing fiscal consolidation, strengthening governance and moving towards more inclusive growth.

While many economies, particularly in East and Southern Africa, are holding quite firm, some of the region’s larger economies continue to waver. Global geopolitical concerns, along with regional insecurity, climate shocks, elevated living costs and interest rates, persistently tight global financial conditions, fiscal constraints, a stronger US dollar, foreign exchange liquidity problems and softer commodity prices continue to weigh on the region’s growth outlook.

That said, there is hope that the current reforms, despite being painful and a drag on growth, will help spur growth on a higher trajectory in the long run. In addition, energy sector developments across the region, including in Mozambique, Uganda, Namibia and Tanzania, could further improve the long-term story in these markets.

The risk environment, particularly for sectors such as financial services, is further complicated by increased compliance risks arising from new and emergent regulations and oversight. The accelerating pace of these changes necessitates vigilant monitoring.

Simultaneously, the tangible effects of environmental and social risks, both in their evolving nature and our ability to monitor them, cast a shadow of uncertainty over businesses and the broader environment in which they operate. Looking ahead, we can anticipate a surge in resilience, fraud, financial crime, people and cyber risks, elevating strategic, execution, and business risks for many organisations due to myriad factors.

Some of the imminent risks that we anticipate will probably affect most businesses:

• Geopolitical instability and conflicts leading to global polarisation are affecting trade blocs, with movements, such as de-dollarisation gaining
momentum.
• Country and sovereign risks have surfaced because of rising concerns about debt sustainability and liquidity pressures on sovereign entities.
• Operational resilience risks are becoming more prevalent because of deteriorating infrastructure, external threats like ransomware, fraud
and other security challenges.
• Consumers face immense stress caused by higher interest rates, the cost-of-living crisis and shrinking economic opportunities.

The rapidly evolving dynamics of geopolitics, the shifting sands of trade wars, the shocks in the global financial markets, and the unprecedented crises created by climate change — they all resonate differently here than in more developed nations. While some regions have the financial muscle and established institutions to withstand such shocks, many African nations continue to grapple with foundational problems that amplify the effect of these global risks.

In South Africa, for example, we have seen how global oil prices can swiftly translate into inflationary pressures, affecting people’s purchasing power.

The issue of electricity supply also remains a potential growth risk for the economy, although we believe that ongoing efforts in private generation will make the economy more resilient over time. Nonetheless, a broader investment cycle remains unlikely given the weak business confidence and we see this continuing to constrain growth prospects.

On the broader African canvas, the implications of climate change are not just theoretical models or distant forecasts; they manifest as droughts, flooding, and locust infestations that directly threaten lives and livelihoods.

But every challenge presents an opportunity.

While we must be prudent about the risks, it is also incumbent upon us to harness the opportunities that come with them. The threats of climate change have put Africa on the global map as a potential leader in green energy, with our abundant renewable resources. Uncertainties in traditional global trade dynamics have prompted African nations to look inwards, fostering regional trade and leveraging the African Continental Free Trade Area.

In the face of these uncertainties, financial institutions stand at the forefront of driving positive change, and in particular, inclusive growth. But it is only when all the players in the ecosystem come to the party that economies full potential can be unlocked for all to benefit.

We believe that every party holds the power to inspire change, to uplift lives and to knit together the rich tapestry that is Africa’s future. Each story represents a chapter in Africa’s evolving narrative, and together, we form the roadmap to a brighter, more prosperous future.

*This article was first published by the ‘Mail & Guardian’ on 13 February 2024.