Ninety One: SA could get shut out of capital markets

According to Ninety One CEO Hendrik du Toit, products from carbon-intensive economies such as South Africa face punitive measures in large markets like the EU. However, the move to net zero also offers opportunities.

‘South Africa is facing the challenge of climate change. We could lead on climate change and accessing capital [to deal with it]. If we don’t, we could be shut out of capital markets, and capital flows to South Africa could be penalised. As a result, the cost of capital will rise, and economic growth will stall further,’ he added during a webinar.


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Ninety One advocates for South Africa to use this once-in-a-generation opportunity to reposition its economy for long-term growth, Du Toit said.

IPCC report 

The latest Intergovernmental Panel on Climate Change (IPCC) report, which scientists from 195 countries put together, highlighted the environmental challenge South Africa and many emerging markets faced.

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‘It is unequivocal that human influence has warmed the atmosphere, ocean and land,’ the report stated.

‘It is a consensus report,’ said Ninety One marketing director Jeremy Gardiner. ‘It is not a couple of alarmist scientists or professors making these statements. They agreed that human-induced climate change leads to more frequent and more extreme weather and fires.

‘So, let there be no doubt that this is affecting our planet. The evidence is all around us. We have just had the hottest July in 146 years.’

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According to The Washington Post, the report, released earlier this month, is nearly 4,000 pages and includes 234 authors and about 14,000 citations to existing scientific studies.

Considering this information, Gardiner said that South Africa had to act fast.

‘There is a massive threat or a massive opportunity. We have to make sure it is an opportunity,’ he added.

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Carbon penalties and scores 

Du Toit said the drive to net zero was resulting in larger markets imposing punitive measures. The EU has introduced border taxes for imported carbon-intensive products, for example, penalising countries like South Africa.

Gardiner said that from 2023, Europe was going to have carbon scores on every imported product.

‘You will see the sugar, carbohydrate and carbon content on every product,’ he added.

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Such carbon scores could harm South African exports, as the country is one of the highest carbon emitters in the world.

‘It gets worse,’ Gardiner said. ‘Each citizen will also be under pressure to keep their personal carbon footprint down. So, do you go on holiday to a place with a high carbon footprint, or do you go to Sweden? Do you buy your oranges from South Africa, or do you buy them from Spain?’

Enormous pressure 

Gardiner added that countries were going to be under enormous pressure to cut carbon emissions. South Africa faced particular strain, as it has the world’s twelfth highest emissions.

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‘We are one of the most carbon-intensive economies in the world,’ Du Toit said. ‘But there lies an opportunity. If South Africa grabs the opportunity to be one of the first large emerging markets to do the right deal, we could access finance. That could give us the right capital injection.’

Disclosure: Justin Brown owns five shares in Ninety One Ltd.

This article was first published on Citywire South Africa here, and republished with permission.

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