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
85