PwC has warned that energy disruptions remain the number one concern for business leaders in South Africa as they fear the power supply shortages would be a key challenge in 2025–2026, despite the suspension of load shedding since March 2024.

The second PwC South Africa Economic Outlook for 2025 released on Monday looked at the status quo of three challenges - energy supply, water supply and weather events - approaches for South African businesses to mitigate associated risks.

Local business leaders responding to the survey for the World Economic Forum (WEF) Global Risks Report 2025 identified energy and water supply shortages among South Africa’s biggest risk factors over the next two years, while global results included extreme weather events as a top-three risk.

Despite the absence of planned power outages for most of last year, PwC said business leaders likely remained concerned about electricity cuts due to continued large volumes of unplanned generation breakdowns near 12 000MW.

Elsewhere, PwC said their concerns extended to jet fuel and gas shortages, with the country seeing increased dependency on energy imports. South African companies facing electricity and gas shortages need an energy action plan.

Since load shedding began, many have reduced dependence on public power and imported hydrocarbons. A comprehensive energy strategy includes energy efficiency measures, renewable energy investments and alternative fuel generators.

PwC said an energy audit is crucial to identify efficiency opportunities and cost savings, ensuring reduced reliance on traditional energy sources.

Lullu Krugel, PwC South Africa partner and chief economist, said

“While much of the current economic analysis on South Africa looks at global uncertainties, there are several key domestic risks to the economic outlook that business leaders are concerned about,” Krugel said.

“These factors risk negative impacts on economic activity, increased cost of production and reduced food security. It is imperative for South African businesses to assess their risk exposure to these elements and mitigate accordingly.”

Water shortages are also becoming commonplace in South African society. Nearly half of the country’s municipal water supply systems (WSSs) performed poorly or at a critical condition due to multiple reasons.

These systems are experiencing increasing levels of non-revenue water—the difference between the amount of water injected into the water-supply system and the actual amount of water billed to customers.

Non-revenue water increased from around 42% in 2014–2015 to above 46% in 2021–2023.

Nino Manus, PwC South Africa water management leader, said South Africa was challenged by deteriorating water supply due to several factors, including over-consumption, aging infrastructure, maintenance challenges, pollution and extreme weather.

“Businesses need to understand the risk of water shortages to their operations and take appropriate action to reduce this risk. This could include recapturing and reusing water, installing backup water systems on the municipal feed, as well as rainwater and greywater harvesting,” Manus said.

“It is also important to consider collaborative mechanisms that businesses can leverage to help municipalities address the infrastructure challenges in their geography.”

Extreme weather events like droughts, floods, hailstorms, heatwaves and wildfires have caused significant economic disruptions in South Africa in recent years. Droughts have already affected mining in South Africa, with the industry having faced a severe drought in 2015–2017, when water scarcity led to mine closures and job losses.

PwC said responding to risks associated with extreme weather requires identifying physical and transition risks across different climate change scenarios, evaluating a business’s vulnerability to climate change, and designing effective adaptation solutions.

Christie Viljoen, PwC South Africa lead economist for macro analysis, said extreme weather events like droughts, floods, hailstorms, heatwaves and wildfires have caused significant economic disruptions in recent years.

“These occurrences impact businesses across all industries by reducing water supply, damaging infrastructure and increasing operational costs. South African companies must identify risks, assess vulnerabilities and plan adaptations to mitigate these effects and ensure resilience,” Viljoen said.

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PwC warns of energy risks and water shortages as business concerns rise in South Africa