Page 17 - IRMSA Risk Report 2021

1.7 STRUCTURAL INEQUALITY AND
HUMAN POTENTIAL

Business thrives when society thrives. In the last ten to fifteen years, the
gap between rich and poor is growing. This is a global issue. In South
Africa, we face the highest Gini co-efficient in the world. Globally, one in
five people cannot even think about their next meal, which highlights the
challenge of food security - a risk that has been exacerbated by the current
crisis, with the number of human beings facing food insecurity increasing
from 850 million to 1.4 billion globally this year. To help the millions stuck
in poverty, we need to focus on economic growth and innovation, with the
aim of building a sustainable society for the benefit of the next generation
– those leaving school and university and who will be looking to make a
contribution.

Singapore, that just 60 years ago was a fishing community with limited
resources, changed their reality, simply by leveraging their human capital.
In comparison, South Africa has all the human resources that we could
hope for. Yet, we have been unable to exploit the country’s full potential.
Covid-19 has provided us the opportunity to rethink how we can shape the
whole social landscape, leveraging technology as an accelerator in areas
like education and health. We cannot afford to continue facing some of
the knock-on effects of structural inequality like poverty, gender-based
violence, drug abuse and loss of dignity and/or self-esteem. Furthermore,
we need to focus on instilling an ethical and risk-aware culture in a future
generation that is also aware of the importance of ethical leadership and
the impact of climate change. We should never underestimate the power
of the human spirit.

Basani further highlights that “deepening inequality has been exacerbated
by the current crisis, and the digital divide has the potential to further
increase the levels of inequality in South Africa”. The challenge to business
is to provide affordable services to all sectors of the population, such as
access to banking services and affordable lending, in an environment
where those who have security typically get the best lending rates.
Organisations are required to actively seek solutions to these societal
challenges in designing the products and services that they offer. This will
require a radical re-think of corporate purpose in general and elevation of
the social transformation mandate specifically.

Deepening inequality has an impact on political outcomes, with wealthier
members of society being more able to influence political outcomes. The
risk of people on the margins of societies, those that are getting poorer,
may feel increasingly marginalised and feel that they are losing political
power, becoming more susceptible to leaders with populist ideas. It is
crucial to focus on initiatives that reduce inequality, by creating more of a
socially and economically inclusive democracy.

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