This year has been marked by significant geopolitical instability. As the conflict in the Middle East continues, South African importers face pressure from three sides. Fuel costs are rising. Supply chains are disrupted. In addition, the Rand, already one of the world’s most volatile emerging market currencies, now carries a war premium on every international transaction.
These costs are hitting the bottom line. Therefore, safeguarding South African margins has become a strategic priority. To mitigate the impact, businesses must lock in their currency exposure. They must also review their contract terms.
Defending the Rand
In a global risk-off environment, the Rand often acts as a proxy for emerging market sentiment. When regional conflicts intensify, investors move to safe-haven currencies. As a result, the Rand becomes vulnerable to sudden and sharp devaluations.
For businesses with international invoices, this volatility acts as a silent margin killer. If the Rand devalues between the time an order is placed and the time it is settled, the cost of goods can increase sharply. Consequently, a profitable deal can quickly turn into a loss, undermining efforts at safeguarding South African margins.
A contract is only as stable as the currency used to pay it. For South African businesses, the triple threat goes beyond the price of goods or fuel. It includes the risk that the Rand devalues by 10% between placing an order and settling the invoice.
To mitigate this risk, we advise the use of forward exchange contracts. These contracts lock in exchange rates for future transactions. By doing so, you effectively fix your margins. Even if the conflict escalates and the Rand weakens further, your costs remain at the agreed level. This ensures that global uncertainty does not translate into domestic insolvency.
Financial pain isn’t force majeure
While currency volatility creates financial strain, physical trade disruptions and rising logistics costs add further pressure. As a result, many businesses are reconsidering their commercial agreements. However, exiting a contract due to geopolitical shock is more complex than many realise.
The escalating volatility in the Middle East has created a perfect storm for importers. Fluctuating exchange rates and rising fuel costs are colliding. When geopolitical shocks disrupt the economic basis of a deal, businesses often look to force majeure clauses. However, the legal threshold for impossibility of performance remains high.
It is worth noting that commercial onerousness rarely qualifies as force majeure. This applies when a contract becomes more expensive or less profitable. This principle holds under South African law and in many international jurisdictions.
To trigger force majeure successfully, performance must be objectively impossible. It cannot simply be financially painful. Rather than focusing on existing contracts, businesses should prioritise renegotiation where possible. They should check for hardship or material adverse change (MAC) provisions. These provisions can trigger negotiations when a contract’s economics shift fundamentally.
Additionally, businesses should move away from fixed-price models. Instead, they should implement indexed pricing that reflects fuel cost changes and currency volatility. This approach distributes risk more equitably. Similarly, businesses should review delivery obligations. If trade routes are blocked, contracts must allow for alternative routing. This flexibility prevents breaches of ‘time is of the essence’ clauses.
Don’t wait for the bill
The key lesson of 2026 is clear. Reactive management is a failing strategy. Businesses that wait for invoices before addressing currency risk expose themselves unnecessarily. Likewise, those who delay reviewing legal terms until supply chains break increase their vulnerability. Instead, organisations must act proactively. By combining financial foresight with legal agility, they can strengthen resilience.
Forward contracts provide cost certainty. Meanwhile, robust contract structures allow flexibility. Together, these measures are essential for safeguarding South African margins.
In the current environment of escalating regional conflict, the objective remains straightforward. Businesses must ensure that geopolitical shocks do not translate into financial crises. In other words, safeguarding South African margins requires preparation, not reaction.
The bottom line is clear. Lock in costs. Review contractual clauses now. Otherwise, the next escalation will significantly increase the cost of delay.
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| Andre van den Berg | Director | Banking and Finance | CMS South Africa | mail me | | Harry Scherzer | CEO | Future Forex | mail me | |
