As the World Economic Forum in Davos, Switzerland, reaches its climax; J. BROOKS SPECTOR takes a moment to contemplate what it all means for South Africa.
But first, as always, a small story. Some years ago, while the writer was working in Lagos, Nigeria, he became friends with a small group of young South African businesspeople – African, white, Indian – all trying their luck in Lagos. They had moved there because, to them, South Africa had become too tame and too predictable, and so somewhere else, something rather less tame, seemed to offer a better chance for fame and fortune.
While we were together in Lagos, a couple of them flew to Monrovia, Liberia to see what the opportunities might be like for them over in a still-more challenging terrain. But, once they returned, and everyone had gathered for dinner and everyone had had a round or two of beer, one of them looked up, and he began to describe the precise nature of their Liberian business negotiations. He then said a little too quietly, “They all had guns on the table, big ones.” While Lagos was perfectly fine as far as business challenges went, for some, it seemed Liberia was just one ratchet too far to carry on a reasonable negotiation over the sales and servicing of off-the-shelf telecommunications equipment.
In truth, of course, there have always been some entrepreneurs who are not to be deterred by such things. Even through the worst excesses of criminal governance, kleptocracy and civil war, mining operations have continued in the Democratic Republic of the Congo. Some people are just prepared to carry out, even if it means they have to supply everything themselves and treat the whole thing like something out of a Joseph Conrad novel, or perhaps one of the more dyspeptic books by VS Naipaul. By contrast, South Africa’s efforts to stand out should be a walk in the park, a piece of cake. Right?
As The Economist noted this week regarding the insatiable demand for investment in Africa, “Given the huge shortfall in capital, the returns to investors who do dare to venture into Africa can be enormous. Shareholders in Uganda’s privatised (and now publicly listed) electricity grid, for example, get a state-guaranteed return of 20% a year in dollars on all capital invested in the network. And the macroeconomic story is an appealing one: many African economies have grown by 5% a year or more over the past decade. Africa has the youngest population in the world. By 2060 the continent’s middle class is expected to triple in size, to more than a billion people.” That should be still more of a rationale for the South African government to send the whole team out on to the field in that scenic village in the Swiss Alps.
Now, from that earlier little Liberian vignette, it really is just a hop, skip and a jump to the current frolics of the World Economic Forum (WEF) in Davos-Klosters, Switzerland. From the 21 January until the 24th, thousands of the world’s super rich, the ridiculously powerful, and all those who yearn to be globally influential, can be found gathered in the chichi Swiss town to hear speeches and panel discussions on worthy topics – as well as to huddle in the hallways, over dinners, in receptions, and in the more intimate, discreet private roundtables – rather than just wandering into the meetings of the rather rarefied hoi polloi that has overrun Davos.
The brainchild of Swiss business professor Klaus Schwab, over the years his World Economic Forum has grown into a major industry with the main event in Davos and periodic, subsidiary meetings around the world in each of the various global regions. It is also something of a media circus, with all those big noises jostling for face time with the international broadcast media, and reporters and analysts trying to find unifying themes.
Each event – the main Davos programme and all the regional ones also attract the great and powerful, and all of them aim to reassure their attendees that they are getting the real inside scoop, the skinny, sufficient to allow them to own the knowledge that allows them to do the rough equivalent of drawing successfully to an inside straight in life’s poker game. This time around, the WEF has proudly, and slightly obscurely, defined the theme of this year’s event as ‘The New Global Context’.
By this, they say they mean, “Complexity, fragility and uncertainty are potentially ending an era of economic integration and international partnership that began in 1989. What is clear is that we are confronted by profound political, economic, social and, above all, technological transformations. They are altering long-standing assumptions about our prospects, resulting in an entirely ‘new global context’ for decision-making. Leaders are looking to strengthen their situation awareness and contextual intelligence. The World Economic Forum’s Annual Meeting convenes global leaders from across business, government, international organisations, academia and civil society in Davos for strategic dialogues which map the key transformations reshaping the world.”
To be honest, this writer has virtually no idea what that really means in concrete terms either. Actually, Greek philosopher Heraclitus seems to have got there first, and more succinctly, way back, when he taught his disciples, “Everything changes and nothing remains still… and… you cannot step twice into the same stream.”
In any case, from South Africa, President Jacob Zuma and a whole gaggle of cabinet members – finance, trade and industry, planning, monitoring and evaluation, health, water and sanitation, economic development and the country’s brand ambassador (otherwise known as the governing party’s treasurer Zweli Mkhize) – came along for the fun. They, in turn, were accompanied by yet more officially recognised folks, mostly bankers, insurance and communications company execs and a sprinkling of real manufacturing and mining company heads. All of these were poised to spread the word about that good story to tell.
Of course, presidents have, notoriously, always taken to the international diplomatic and conference circuit when times become tough at home and as the wolves are closing in. Think Richard Nixon, as Watergate became something more than just the name of a ritzy office building in downtown Washington. Zuma, too, can probably be forgiven just a bit for wanting to get out of Dodge for a while, to hobnob with the rich, famous and powerful, and without those pesky minority parties that litter the landscape in South Africa, with their increasingly unpleasant but pointed questions. Of course, in the meantime, there is that question of who is minding the store back home, as civil unrest takes hold across Soweto.
In any case, in the president’s pep rally of a speech to all these business types, he used the kind of language that sounded more like it had been copied from one of the speeches from the rally in the Cape Town Stadium the other week than a charge to “now go get us some of that FDI lying around!” As Zuma said to his people, “Our quest for inclusive economic growth is designed to help us achieve that type of society where everyone has a better life, as proclaimed in the Freedom Charter which says all shall share in the country’s wealth. Our message to our people this year is that we should continue working harder to build a country that belongs to all of us. We should build a country without poverty, inequality and unemployment.
“We have developed the National Development Plan as an instrument to help us achieve these development goals. We have committed ourselves to achieve five percent growth by the year 2019, which is necessary, if we are to create the much-needed jobs.
“Our target to attract investments for the year 2013-2014 was R50 billion. We have achieved an investment pipeline of R60.5 billion of potential investment projects, reflecting both domestic and foreign projects. This indicates that our country remains an attractive destination for investments. South Africa remains fully open for business. We are inviting both domestic and foreign business partners to invest in the South African economy.”
Once again the inevitable litany of grand projects being planned, and more planning being projected. The president then sent his troops out to conquer the WEF meeting with his ringing peroration, telling them, “We are here in Davos to invite more development partners to join us in moving South Africa forward towards prosperity and a better life for all. And we offer many opportunities in return.”
The problem, of course, is that of those would-be objects of desire, all those rich, famous and influential conference goers, who might be interested in taking a whirl on South Africa’s investment dance floor, well, these folks are just difficult to confuse and deceive. They have their sources of information, they read the newspapers, all the investment blogs, those reports from international lending agencies, and so many more, and they know things too.
So far, at least, the public rhetoric emanating from this vast gaggle of South African representatives has seemed somewhat out of pitch with the realities at home. As Dr Jakkie Cilliers of the Institute for Security Studies (ISS) noted to the writer, “Certainly my view, from talking to Anton [du Plessis, ISS Managing Director] and from watching some of the coverage, is that the South African government is trying to put an unrealistic rosy picture on South Africa that does not accord with the numerous domestic challenges that we face. Instead of trying to say ‘you all just don’t understand that this is a (Western) media conspiracy to undermine a black led-South African government’ (which seems to be the pitch), a much more appropriate response would have been to acknowledge the manifold challenges that we face and to lay out government’s planned response in some detail. So more mea culpa and less the (media) blame game. Of course the main problem is that government is the problem.”
And the government almost made it worse with the planned attendance in Davos by Eskom’s three most senior officials and its participation as a corporate sponsor, even as the country’s power grid continues to teeter on the very lip of the abyss. The symbolism of the three most powerful people responsible for the nation’s energy supply, gallivanting around Switzerland while schedules of power cuts were being circulated, finally proved too much to bear and their visits were cut. But those planned attendances, in spite of everything, were just a symptom of a larger disconnect.
This gaggle of attendees at Davos with their seductive song has come in tandem with the country’s continuing financial ratings downgrades, the slide in the country’s currency exchange rate, the increasingly anemic (and worsening) national economic growth rate, the widening tales of corruption, and growing concerns over an avoidance of concern for the economic fundamentals. The “good story to tell” is rather overwhelmed by these tales. But, worse, it also suffers in the competition for that Davos oxygen from other African states (let alone other emerging economies in other parts of the globe) that have more successfully re-oriented their government apparatus and national mindset towards attracting investment, countries such as Rwanda. (Rwanda, for crying out loud!)
As political scientist Peter Vale observed, “South Africa (and its issues) are a small player at Davos these days: this is in sharp contrast to the times when Mandela was the belle of the Davos Ball. Serious conversations in those corridors are focused, I imagine, on the terror issue and what the plans of the European Central Bank (ECB) are on QE (quantitative ease: now we know what the ECB has decided, of course). Interest in South Africa will be on three things: Eskom, the Rand and the issue of succession – they’re linked of course. At the present moment all three are precariously balanced with no firm, or satisfactory, answer/s on the table!”
Given the list of the actual hot topics percolating in the meeting rooms of Davos, maybe it is for the best that very little concrete business is actually concluded at the WEF, given the short shrift South Africa is actually going to receive at that meeting, in contrast to those really big issues – and perhaps even in the competition for the leftovers. The cost-benefit analysis from two minutes of a South African cabinet officer on a CNN business show, answering a couple of pedestrian questions, should call into question all the energy spent on taking that whole posse to Davos for the week, what with the newly sky-high Swiss franc exchange rate. Imagine, instead, what all that time, money and energy might have achieved in focusing high-level attention on the country’s problems, rather than in pursuing the chimera of unrequited international love and attention among the millionaires of Davos. DM
Photo: President Jacob Zuma and his wife Bongi arrive at the Zurich International Airport in Switzerland on Tuesday, 20 January 2015. Zuma is visiting Davos, Switzerland to attend the World Economic Forum. Picture: Department of communications (DoC)/Sapa
For more, read:
World Economic Forum Annual Meeting 2015 at the organisation’s website;
Private equity in Africa – Unblocking the pipes, in The Economist;
South Africans get special treatment in Davos, on the Fin24;
What Davos means for South Africa, on the Fin24.