South Africa is heading into its summer season under what the country’s own ENSO Reference Group, a panel of leading local climate scientists, describes as an exceptional El Niño, one that could become the strongest on record. Forecasters are pointing to a very strong event peaking between November 2026 and February 2027. The real risk isn’t only the heat, it’s what that heat does to an already fragile economy. El Niño, the periodic warming of Pacific Ocean waters that tends to bring hotter, drier conditions to Southern Africa, is now a mature, intensifying ocean-atmosphere event, with sea-surface temperatures unusually high for this stage of the season. The South African Weather Service has also already warned of rising temperatures and greater climate variability this season.

The timing could hardly be worse. In its May 2026 Monetary Policy Committee statement, the South African Reserve Bank (SARB) identified El Niño as an additional inflation risk, warning that a severe event could pile further pressure on growth and prices, at a time when the economy has little room to absorb another shock.

Where La Niña brings flood risk, El Niño’s danger is drought: lower agricultural output, strained water resources and a higher risk of wildfires, though, as South Africa’s ENSO Reference Group notes, a strong El Niño does not always translate into a uniformly dry season, and even severe events can bring a short, wetter spell in late spring. Two consecutive good rainy seasons mean dam levels are healthier and 2025/26 delivered record maize yields, offering some cushion but scientists caution that these buffers do not guarantee against losses this season, and agricultural and business interruption remain real threats.

What makes the 2026/27 cycle concerning, then, is not the climate event in isolation, but the environment into which it is arriving.

When Climate Risk Becomes Economic Risk

The growing economic cost of extreme weather is already being felt globally. Over the past 50 years, the economic toll of disasters has nearly tripled, while the United Nations Office for Disaster Risk Reduction estimates that global disaster losses now exceed USD 2 trillion a year, when cascading and ecosystem costs are taken into account.

This vulnerability is particularly stark in Africa. Africa accounts for less than 4% of global greenhouse gas emissions, but its reliance on climate-sensitive sectors such as agriculture – combined with infrastructure constraints and limited capacity to adapt – leaves many countries disproportionately vulnerable to drought and flooding.

For South Africa, specifically, climate shocks cannot be viewed purely as environmental events when their effects reach directly into food security, livelihoods and economic growth.

Agriculture is among the sectors most directly exposed to a prolonged dry period. Reduced rainfall can affect planting decisions and crop yields, while pressure on water resources can increase operating costs and constrain production. Moreover, lower agricultural output can filter through to food prices, placing further pressure on household spending.

Businesses, too, will feel the knock-on effects. A prolonged dry period can disrupt operations and supply chains, particularly where businesses depend heavily on water or agricultural inputs. And when losses do occur, an already inflationary environment makes recovery more expensive, with rising fuel, imported parts and repair costs feeding directly into the cost of claims.

But perhaps it is the consumer who will ultimately feel the impact most acutely. The 2026 DebtBusters’ Money-Stress Tracker found that 72% of South Africans report money-related stress, with 53% spending more than 40% of their take-home pay servicing debt. If food and other essential costs continue to climb, households will have less room to absorb unexpected expenses and may look for ways to cut monthly costs, including reducing or cancelling insurance cover.

This creates a disturbing paradox: people can become less financially protected at exactly the point when their exposure to risk rises.

Preparing Before The Crisis Arrives

South Africa’s ENSO Reference Group now believes this event could become the strongest El Niño on record, but precisely how severe it gets, and how evenly its effects will be felt across the country, remains uncertain. However, this uncertainty should not become a reason for complacency, and it is critical that we build the capacity to withstand a range of possible outcomes before an event becomes a disaster.

For Santam, this has meant investing in resilience alongside our role as a risk carrier. Through the Partnership for Risk and Resilience (P4RR), established in 2012, we work with government, state-owned entities, academia and community organisations to strengthen disaster-risk management at municipal level. Our partnership with the South African Weather Service has strengthened early-warning capabilities through a growing network of automatic weather stations

None of this removes the need for a wider, coordinated response. The National Disaster Management Centre has begun its own planning; government at every level should now resource and accelerate these efforts, treating early-warning infrastructure and municipal disaster planning as urgent investments, rather than discretionary spending and ensuring they are funded and scaled before the season peaks, not after the damage is done. Businesses exposed to water or agricultural inputs should be stress-testing their supply chains now.

El Niño may begin as a weather phenomenon, but its consequences can travel much further. Good water reserves and a record 2025/26 harvest give South Africa a head start this time. But as the country’s own climate scientists put it, those buffers do not offset the risk of severe drought and heat. That does not diminish the need to prepare; if anything, the growing interaction between climate risk and economic vulnerability makes resilience more important than ever. How effectively we prepare for the potential ripple effects will help determine how much of the eventual cost is borne by the South African economy.