If the current economic circumstances in South Africa do not look too good, future
prospects do not seem any better. Economic growth (GDP) on a year-to-year basis is
in a downward spiral, while the quarter-to-quarter figures indicate that the country
barely succeeds in keeping head above water with the possibility of an economic
recession not so farfetched. These low economic growth figures influenced the
employment rate negatively – unemployment is currently at one of its highest levels in
history. The rand devaluated further against the USA dollar in the past 12 months,
which significantly increases food import costs. South Africa is a net importer of many
food products and will have to import more food as a result of the drought – which will
be much more expensive than a year ago. And although interest rates increase in a
bid to support the rand and reduce inflation, higher interest rates put more pressure
on consumers who have debt29.
History taught us through many examples that people can survive many disasters for
long periods of time as long as they have access to food and water. However, hunger
does not listen to reason and as soon as food becomes unaffordable, consumers start
to take a stand against it.
The impact of the above-mentioned scenario can be summarised as follows30:
Although unemployment will increase throughout the country, the rural areas
will be hit hardest. The socio-economic impact can be enormous.
Economic activity will be reduced severely, especially in rural areas. People
who cannot absorb price inflation will resort to crime, and hunger and crime will
increase drastically. We can expect another large migration to cities of up to
2 million people. The outlook is negative, while human misery will surely
increase.
29
The next year will most probably see an increase in food inflation, and basic
Maré, F. & Willemse, J. (2016). Expected implications of the 2015 drought on the red meat industry.
Available at http://rpofs.co.za/images/nuus/2016/Expected-implications-of-the-2015-drought-on-thered-meat-industry.pdf.
30 Willemse, J., Strydom, D. & Venter, M. (2015). Implications of 2015 drought on economy, agri
markets and consumers. Available at http://www.growinggreatness.co.za/implications-of-lingering2015-drought-on-economy-agricultural-markets-food-processors-input-suppliers-and-consumers/.