FINANCIAL REVIEW
RISK TREND
POLITICAL AND ECONOMIC CLIMATE RISK
Risk Events
� Land Bank downgrade and subsequent repricing of the agricultural debt industry .
� Continued state-owned enterprise ( SOE ) bailouts .
� Continued trade war between USA and China , impacting the South African economy and agri-industry .
� Brexit .
� Insufficient power supply - load shedding .
Description The group and the agricultural sector could be negatively impacted by political decisions , civil unrest , high unemployment rates , mismanagement of SOEs ( electricity and water ), volatile exchange rate movements and unsustainable growth . Various policy changes impacting the agricultural sector could severely impact the group ' s strategic intent .
The most significant political threat to the group and industry remains the policy of land expropriation without compensation . Furthermore , the impact of credit rating downgrades could be fuelled by the already struggling local economy and agri-industry .
Mitigation and Control Senwes utilises agricultural land owned by producers to secure
Opportunities
� Externalisation and / or diversification into new markets and / or lower risk jurisdictions .
� Engagement at political / government level to aid in the formulation and roll-out of sustainable solutions for South Africa ’ s political and economic challenges .
� Development solutions which aim to reduce the impact of political and economic challenges for both the Senwes Group and its customers ( e . g . cost or risk sharing between Senwes and its customers with regards to selected pro ducts and / or services ).
Strategic focus areas triggered
� Diversification , horizontal integration and consolidation .
� Reorganisation of business models .
� Increased investment in efficiencies within the value chain .
� Externalisation .
For more info on the group strategy see p . 44
credit extension to these clients . In the event of agricultural land being nationalised or expropriated without compensation , the value of agricultural land will diminish and nullify the value of the security that Senwes holds against outstanding funds . This risk can only be accepted and cannot be mitigated .
SENWES INTEGRATED REPORT 2020
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