The Harsh Reality of Political Unrest

The destruction of companies and livelihoods during periods of unrest is a heartbreaking reality. No amount of media coverage or expert analysis can fully predict the effect of economic and political instability on businesses. 

If there is one takeaway from the turbulence of recent years, it is that the world will not revert to the “normal” we once knew, as increasing geopolitical disruptions create challenges for all, particularly for businesses that thrive in stable market and political conditions.

We know disruption is coming, yet nothing can truly shield our companies from its impact. No amount of media coverage or expert analysis can fully predict the effect of economic and political instability on businesses. The destruction of companies and livelihoods during periods of unrest is a heartbreaking reality. Shop owners stand helplessly as years of hard work are reduced to rubble. Workers wake up to find their jobs and futures erased overnight.

This was the reality of the Durban riots in 2021. What began as political unrest escalated into large-scale destruction, with businesses looted, jobs lost, and economic confidence shattered. In just days, an estimated 150,000 people lost their livelihoods, while the broader economy suffered deep and lasting wounds. A similar crisis recently unfolded in Mozambique, with some disruptions persisting.

The Ripple Effects of Supply Chain Disruption

Political unrest extends beyond individual businesses, affecting broader economic stability. The recent unrest in Mozambique caused major supply chain disruptions, which also impacted South Africa, adding to economic strain.

Border closures brought freight movement to a standstill, severely impacting industries like mining.  Agriculture suffered as delayed transport led to food spoilage and shortages. The automotive sector faced critical shortages, with factories scrambling for parts and air freight costs surging by 600%.  Informal traders, who rely on daily sales, were left without an income as markets shut down. Logistics company Grindrod had to suspend operations in Maputo and Matola, causing major losses due to border closures and violence.  Companies such as Syrah Resources have halted graphite production due to security concerns, incurring significant financial losses, and operations remain suspended to date * (5 March 2025).

These supply chain disruptions present significant challenges, from halted production to financial instability, creating a domino effect that weakens entire industries. As businesses struggle with these disruptions, securing financial support becomes even more critical. However, access to funding during crises is often limited.

Why Funding Dries Up When Businesses Need It Most

During economic downturns, access to liquidity can mean the difference between survival and collapse. Yet, when businesses need funding the most, it often becomes hardest to secure. Banks tighten lending requirements, making credit nearly impossible to obtain. Suppliers refuse trade credit, fearing non-payment. Investors pull back, causing business valuations to decline sharply.

This financial chokehold leaves businesses without the resources needed to stay afloat. The COVID-19 crisis exposed this vulnerability, but Supply Chain Finance emerged as a vital solution, offering an alternative to traditional lending.

Unlike conventional loans, SCF provides immediate liquidity by allowing suppliers to receive early payments based on the credit strength of larger buyers. This stabilises supply chains and ensures businesses continue operating, even in extreme uncertainty.

“During COVID-19, we implemented a record number of new supply chain finance programmes. In times of severe economic disruption, companies struggle to access traditional forms of working capital. The need for cheap, readily accessible liquidity is bigger than ever and urgent.” 

Emuel Schoeman, MD & Head of Working Capital at Addendum

How Supply Chain Finance Supports Crisis Preparedness

SCF optimises cash flow by extending payment terms for buyers while ensuring early payments to suppliers. By leveraging third-party financial institutions, SCF bridges cash flow gaps, allowing both buyers and suppliers to maintain operations.

• The key challenges businesses face during supply chain disruptions:

• Cash flow constraints Liquidity struggles due to delayed payments and restricted access to credit.

• Supply chain breakdowns Border closures, trade embargoes, and tariff changes cause material shortages and rising costs.

• Currency fluctuations Political instability leads to volatile exchange rates, impacting import and export costs.

• Eroded business confidence Suppliers hesitate to extend credit, fearing non-payment risks.

How SCF Supports Recovery

SCF provides practical financial solutions that mitigate challenges and accelerate business recovery:

Improving Liquidity for Suppliers
Political disruptions leave suppliers cash-strapped. SCF ensures they receive early payments on invoices through the click of a button, maintaining working capital for production and order fulfilment.

Strengthening Buyer-Supplier Relationships
A buyer can provide financial stability by making their unutilised funding lines available to suppliers in the form of SCF, thereby reinforcing trust and continuity in business operations.

Mitigating Currency Risks
SCF offers financing solutions in multiple currencies, helping businesses mitigate counterparty risk, and avoid exchange rate and interest rate fluctuations caused by political uncertainty.

Minimising Default Risks and Securing Funding
Financial institutions involved in SCF provide funding lines, reducing risks for both buyers and suppliers, ensuring timely payments.

Keeping Operations Running During Crises
By stabilising supply chains and providing access to working capital, SCF enables businesses to continue operations despite disruptions, minimising downtime and revenue losses.

Preparing for the Future and the Cost of Inaction

Beyond immediate recovery, businesses must consider long-term financial resilience. SCF is not just a short-term solution but a key strategy for future-proofing against economic shocks.

After a crisis, businesses rush to rebuild and return to normal, often overlooking the need for long-term resilience. The real loss is the businesses that could have survived with the right financial tools in place.

Future disruptions are inevitable. The question is not if they will happen but when. Businesses that endure are not necessarily the largest or most established, but those that are financially prepared.

*Sources: Syrah Resources declares force majeure for graphite mine in Mozambique; Grindrod suspends port operations in Mozambique after border closure; SA miners face setback as Mozambique election violence shuts Lebombo border; Grindrod lifts suspension on its Maputo, Matola operations