The Impact of Severe Weather on South Africa’s Economy

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JEREMY MAGGS: It’s evident that South Africa is increasingly impacted by climate change, with severe weather events such as floods and droughts occurring more frequently and intensely.

These events have serious implications not only for the environment but also for the economy, affecting various industries, infrastructure, and our everyday lives. I would like to explore this issue more thoroughly.

We are joined by 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].

Dr. Ngwenya, thank you for joining us. You’ve highlighted the financial strains arising from climate-related events. How do you assess South Africa’s current economic resilience in light of these recurring weather-related crises?

NOMHLE NGWENYA: Thank you for having me. This is a crucial conversation, as climate change exacerbates ongoing economic challenges.

For instance, we are already dealing with a persistent problem of aging infrastructure and inadequate maintenance.

Climate change worsens these challenges: whenever extreme weather events like floods occur, our infrastructure is affected, especially our stormwater drainage systems and the ongoing pothole crisis. As climate change trends escalate, the economic impacts will certainly be significant.

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JEREMY MAGGS: I would contend that climate risks are not adequately integrated into macroeconomic planning and policy. There appears to be a disconnect between the environmental realities you’ve described and broader economic strategies.

NOMHLE NGWENYA: Absolutely. We observe a considerable lack of institutional coordination when weather events occur. There tends to be an over-reliance on Cogta [Department of Cooperative Governance and Traditional Affairs].

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

On a governmental level, we lack integration, and extreme weather events are not reflected in national statistics or economic modeling, which is vital for understanding their effects on our economy and GDP.

JEREMY MAGGS: Why do you think this integration is lacking? Are we merely ignoring the issue?

NOMHLE NGWENYA: There are several factors at play, one being insufficient collaboration between the private sector and government. The South African Reserve Bank and the Prudential Authority are beginning to collaborate closely with businesses to incorporate climate-related risks into their financial strategies.

There is genuine interest in how the private sector can adapt and mitigate the effects of climate change, but collaboration remains inadequate, and both sectors have valuable insights to share.

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Furthermore, there is a skills gap. A decade or two ago, incorporating climate-related risks alongside financial knowledge was a relatively new concept. This has created a knowledge deficit that we need to address.

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

JEREMY MAGGS: Is there a reluctance in the private sector to engage more actively, or does the government adopt a “we can handle this” mindset?

NOMHLE NGWENYA: Multiple factors contribute to this. First, there’s a substantial reliance on private sector investment for areas like early warning monitoring systems.

Nevertheless, we also need to engage in fiscal policy and budgeting. For example, Cogta has allocated over R600 million towards R1 billion for responding to extreme weather events. We must use contingency funds effectively.

We need to investigate what resources are accessible to both the government and the private sector and how we can collaborate.

Moreover, it’s crucial that our policy framework is appropriately adjusted. While we have sound policies in place, implementation remains a challenge, highlighting the previously mentioned gaps in institutional collaboration.

JEREMY MAGGS: In your role within the National Advisory Council on Innovation, do you think sufficient investment is directed toward technological innovation for addressing the climate risks you’ve outlined?

NOMHLE NGWENYA: Examining key policies like the Decadal Plan and initiatives promoted by Minister Blade Nzimande, there’s increasing momentum, especially around artificial intelligence and early warning systems.

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

There’s heightened awareness and ongoing efforts to ensure investments not only focus on early warning systems but align with our broader science and decadal goals.

JEREMY MAGGS: It must be essential for local communities to be engaged and better prepared for resilience against climate-induced disasters, yet there are numerous competing priorities.

NOMHLE NGWENYA: Indeed. Various socio-economic challenges exist, including high unemployment, poverty, and health issues. This is why traditional knowledge is incredibly valuable, as it empowers communities to participate in climate adaptation and mitigation initiatives.

JEREMY MAGGS: As a final question, given everything we’ve discussed, how much time do we have left?

NOMHLE NGWENYA: Very little. Extreme weather events are becoming more commonplace and severe, placing us in a precarious climate emergency. For example, the Durban floods in April 2022 led to a 0.7% contraction in our GDP. Key sectors such as agriculture rely on stable climate conditions.

As climate change becomes increasingly unpredictable, this will undoubtedly impact agricultural prices.

In terms of time, we don’t have much left, but there are significant opportunities for investment, partnership, and collaboration to effectively adapt and mitigate these extreme weather events.

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

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