South Africa’s economic future is increasingly linked to its climate resilience. As climate-related disasters increase in frequency and severity, the combined pressure on economic activity, government finances and long-term growth is becoming more material. Worryingly, available indicators suggest that the country’s level of preparedness is not yet keeping pace with the scale of the threat.
Data from the World Bank Climate Change Knowledge Portal shows that the country experienced more than 100 climate disasters between 1900 and 2017, resulting in more than 2,200 deaths. More concerning is the country’s global positioning, with the University of Notre Dame Global Adoption Initiative index (ND-GAIN) placing South Africa 102nd out of 181 countries for climate vulnerability and vulnerability to other global challenges as of 2023.
This suggests significant challenges relative to its adaptive capacity and demonstrates that the risk is escalating faster than the country’s ability to respond. There was noticeable progress between 1998 and 2004, when South Africa’s score on the ND-GAIN Index improved, but it has regressed consistently since.
Climate-related disasters already have measurable impact on economic performance. The World Bank notes that climate shocks negatively affect South Africa’s GDP growth, which is a big concern in an economy that has averaged only about 1% growth annually over the past 15 years.
The 2025 Eastern Cape floods illustrated this impact, having claimed more than 100 lives and about R5bn in damage to infrastructure such as roads, bridges and healthcare facilities. Yet, the National Treasury is estimated to have allocated just R580m for disaster response in its main budget, which is much lower than estimated infrastructure damage costs, highlighting the funding gap.
Climate disasters are emerging as an economic and fiscal risk
The World Economic Forum (2024) identifies two major fiscal consequences of rising climate disasters: a slowdown in economic activity, which reduces tax revenue, and increased higher public spending on disaster response and reconstruction. The 2022 KwaZulu-Natal floods help illustrate this dynamic.
According to the eThekwini municipality economic development team, the April 2022 floods reduced Durban’s local economic output by 1.5%-1.8% for the year. Businesses estimated it would take months to reopen and resume normal operations, with immediate disruptions felt far beyond the province. As home to South Africa’s largest and busiest port, responsible for about 60% of the country’s container traffic and primary gateway for imports and exports, Durban’s shutdown due to the floods caused major supply chain disruptions.
KwaZulu-Natal, the country’s second-largest provincial economy, contributes about 15.9% of the national GDP, with Durban accounting for about 60% of that output. Disruptions of this magnitude have the potential to affect national supply chains, manufacturing capacity, trade flows and overall economic stability.
A 2025 report from the Human Sciences Research Council painted an even more worrying picture. It estimated 80 reported disasters in the previous two years, with an estimated impact of R113bn on the economy and 22-million people affected.
The impact on government spending
From a public expenditure perspective the financial burden of the KwaZulu-Natal floods was initially estimated at R2bn to rebuild critical infrastructure in affected areas. However, this estimate was later revised to about R17bn, largely due to the extensive rebuilding required for public infrastructure and housing.
To put this into perspective, the KwaZulu-Natal provincial budget for the 2024/25 fiscal year was about R150bn, while the eThekwini municipal budget for the same period was about R67.2bn. These estimated costs of R17bn therefore represent just more than 10% of the provincial budget and roughly 20% of the metropolitan municipality budget.
Beyond the public sector, the impact on the private sector was also significant. The department of trade, industry and competition estimated total damage to companies at R7bn, with 826 companies and nearly 32,000 jobs affected.
This dynamic highlights that climate disasters can extend beyond short-term damage, undermining economic performance and complicating long-term development planning, with implications for growth predictability and fiscal management.
What the government can do to build climate resilience and support GDP growth over the medium term:
- Plan for the future. Climate projections and impact assessments are well established; therefore, spatial and economic infrastructure should play a more central role in decision-making to help disruptions to lives, livelihoods and economic activity.
- Strengthen long-term, resilient economic growth, including climate considerations. The government should prioritise sustainable economic growth as the foundation for building a fiscal buffer capable of mobilising resources to support responses to climate-related disasters. Regulation should be strengthened with a clear focus on climate adaptation and protection. The Just Energy Transition continues to be viewed as an important policy instrument, alongside mechanisms such as carbon credits and policies that discourage the use of fossil fuels.
- Increase preventative investments. Public expenditure should include not only responsive measures (such as insurance and relief funding) but also preventative investments in resilient infrastructure and development designed to better withstand climate risks.
- Introduce more stringent sustainability guidelines and disclosure protocols for corporates, particularly for high-emission sectors, to support accountability and improved alignment with national sustainability goals.
- Support household sustainability. Develop sustainability-inspired guidelines for households to promote sustainable living. Practices such as recycling, energy conservation and waste reduction could move from being recommended towards more widespread adoption over time.
Climate resilience is increasingly viewed as an economic priority
Climate change is a material economic and fiscal risk shaping South Africa’s growth trajectory. Strengthening climate preparedness is increasingly recognised as an important strategy to support GDP growth, strengthen public finances and reduce economic volatility. Investment in resilience has the potential to support public safety, contribute to development objectives and strengthen fiscal resilience over the long term.
The relationship between climate resilience and GDP is becoming better understood and increasingly relevant to the country’s economic outlook.
• Mazwai is investment strategist at Investec Wealth & Investment International.
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