The Impact of Severe Weather on South Africa’s Economy

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JEREMY MAGGS: South Africa increasingly faces the repercussions of climate change, with severe weather events like floods and droughts becoming more common and intense.

These events have serious implications for both the environment and the economy, affecting industries, infrastructure, and daily living. I’d like to explore this further.

We have Dr. Nomhle Ngwenya, a board member of the National Advisory Council on Innovation and an expert in climate risk and ESG [Environmental, Social and Governance], with us today.

Thank you for joining us, Dr. Ngwenya. You have highlighted the financial strains caused by climate-related incidents. How do you assess South Africa’s current economic resilience in light of recurring weather-related challenges?

NOMHLE NGWENYA: Thank you for having me. This discussion is crucial, especially as climate change intensifies existing economic difficulties.

For example, we are grappling with aging infrastructure and inadequate maintenance.

Climate change is only worsening these issues: whenever extreme events like floods occur, our infrastructure is waylayed, particularly our stormwater drainage systems and the ongoing pothole crisis. If climate trends continue to worsen, the economic consequences will undoubtedly be significant.

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JEREMY MAGGS: It seems climate risks are not sufficiently incorporated into macroeconomic planning and policy, indicating a disconnect between the environmental issues you’ve mentioned and broader economic strategies.

NOMHLE NGWENYA: That’s absolutely correct. There’s a pronounced lack of institutional coordination during weather events. We often rely excessively on Cogta [Department of Cooperative Governance and Traditional Affairs].

However, climate change affects multiple sectors, including Health and Transport.

On the governmental level, there’s a lack of integration, and extreme weather events are often omitted from national statistics or economic modeling, which is essential for understanding their impacts on our economy and GDP.

JEREMY MAGGS: What do you believe is the reason for this lack of integration? Are we simply ignoring it?

NOMHLE NGWENYA: Several factors contribute, including inadequate collaboration between the private sector and the government. The South African Reserve Bank and the Prudential Authority are beginning to partner closely with businesses to incorporate climate-related risks into their financial frameworks.

While there’s genuine interest in how the private sector can adapt and minimize the effects of climate change, collaboration thus far remains insufficient, and both sectors possess critical insights to exchange.

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Moreover, there’s a notable skills gap. A decade or two ago, the concept of integrating climate-related risks with financial acumen was relatively new, resulting in a significant knowledge gap that must be bridged.

This is why global initiatives like the Network for Greening the Financial System, along with other international entities, are essential—they offer valuable lessons on adapting to and mitigating extreme weather from both developed and developing nations.

JEREMY MAGGS: Is there a hesitance in the private sector to engage more proactively, or is the government adopting a “we can manage this” stance?

NOMHLE NGWENYA: Many elements are at work here. First, there’s substantial reliance on private sector funding for initiatives like early warning monitoring systems.

However, we also need to engage fiscal policy and budgeting effectively. For instance, Cogta has committed over R600 million from a R1 billion allocation to address extreme weather events. We must utilize contingency funds wisely.

We need to identify available resources in both the private sector and government and discover collaborative paths forward.

Furthermore, it’s essential that our policy framework is effectively adjusted. While we have strong policies, implementation remains a struggle, underscoring the gaps in institutional collaboration.

JEREMY MAGGS: In your role with the National Advisory Council on Innovation, do you think enough investment is being funneled towards technological innovation aimed at tackling the climate risks you’ve noted?

NOMHLE NGWENYA: Looking at major policies like the Decadal Plan and initiatives advocated by Minister Blade Nzimande, there’s growing momentum, especially regarding artificial intelligence and early warning systems.

Read: Cape Town invests millions to monitor its sewer pump stations digitally

We are experiencing heightened awareness and sustained efforts to ensure that investments are made not only in early warning infrastructures but also align with broader scientific and decadal goals.

JEREMY MAGGS: It’s essential, I presume, for local communities to be engaged and to enhance their preparedness for resilience against climate-induced calamities. Yet, numerous competing priorities exist.

NOMHLE NGWENYA: Absolutely. Many socio-economic hurdles are present, such as high unemployment, poverty, and health issues. This underlines the immense value of indigenous knowledge, equipping communities to participate in climate adaptation and mitigation initiatives.

JEREMY MAGGS: As a closing question, given our discussion, how much time do we have left?

NOMHLE NGWENYA: Very little. Extreme weather occurrences are becoming increasingly frequent and severe, indicating we are in a volatile climate emergency. For instance, the floods in Durban in April 2022 led to a 0.7% contraction in our GDP. Key sectors, such as agriculture, rely on consistent climate conditions.

With climate change’s unpredictability, it will inevitably affect agricultural pricing.

In terms of time, our window is limited. Nonetheless, there are significant prospects for investment, partnerships, and collaboration to effectively adapt to and mitigate these extreme weather events.

JEREMY MAGGS: The warning has been made clear. Thank you, Dr. Nomhle Ngwenya, for your valuable insights as a board member of the National Advisory Council on Innovation and an expert in climate risk and ESG.

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