Reversing South Africa's social cohesion deterioration

Purpose-driven companies can help reverse the deterioration in South Africa’s social cohesion

Johannesburg, 16 November 2022 — PwC South Africa is pleased to share its new report entitled ‘Rebuilding social cohesion is an essential contributor to economic development in South Africa’. The document explores how private companies can help resolve societal challenges in South Africa by incorporating Environmental, Social, and Governance (ESG) factors into their corporate strategy.

South Africa has made tremendous strides as a nation over the past three decades, however, numerous challenges still need to be addressed. The civil unrest in KwaZulu-Natal and parts of Gauteng during July 2021 occurred within a context of multiple socio-economic challenges facing the country, and concerns remain that many of the driving forces behind the 2021 unrest — including unemployment, poverty and inequality — have not improved.

The growing gap between the ‘haves’ and the ‘have-nots’ is a key driver for the decline in social cohesion across many societies and economies. Our latest report looks at the evidence showing that social cohesion in South Africa has deteriorated in recent years within this socio-economic context. Social cohesion is defined in the local context as comprising: 

• Inclusion in economic and social life;
• Acceptance and belonging in society;
• Social relationships and trust;
• Participation in political life; and
• Trust in the legitimacy of institutions. 

Christie Viljoen, PwC South Africa Senior Economist, says:

“The risk faced by South Africa at present is that the breakdown in social cohesion experienced in recent years continues on a negative trend over the short- to medium-term. For private companies, this increases operational and security risk for business activities. Our survey data shows that local business leaders are very concerned about the impact of social inequality on their businesses. At the same time, the public sector is overwhelmed, and stretched in every direction to cope with these and other challenges.”

Through this report, we aim to also deliver a message of hope. South African companies can continue to make an even more meaningful and sustainable impact on their communities by adopting the right strategy for their business and stakeholders. We believe the private sector will need to play an increasingly important role in helping the state address socio-economic challenges — specifically at the community level. 

However, financing socio-economic development interventions in the same manner as we have in the past will not achieve this. Making budget allocations for Corporate Social Investment (CSI) is insufficient to make a societal impact. Private sector organisations can only have a meaningful impact on social cohesion by deliberately taking a purpose-driven approach to their general business operations with a focus on the five pillars of social cohesion. 

Lullu Krugel, PwC Africa ESG Leader, says: 

“Modern societal expectations are that companies should be purpose-led organisations, committed to contributing towards important ESG goals through their influence in society. Purpose defines how an organisation can contribute to society, and there is growing acceptance that purpose is a commercial imperative amid evidence of a strong link between purpose-driven companies and strong financial performance. Only purpose-driven organisations can earn the trust of communities and employees, reduce social risk, and rebuild social cohesion.”

In our view, addressing the breakdown in social cohesion at a community level can best be achieved by implementing a comprehensive ESG approach that is embedded within an organisation’s core business strategy. ESG is more than ticking boxes — it is about making a difference by creating sustained outcomes that drive value and fuel growth while strengthening our environment, societies and governance structures.