With more than 2500 of the world’s top leaders including heads of state, central bankers and representatives from most of the world’s top companies Davos remains the premier conference for making contacts and incubating ideas. It certainly remains relevant from an African and South African perspective.
So what good comes out of these conferences?
Let’s go back and revisit Davos 2014 where the main theme was the “reshaping of the world”. The issue of inequality and how to achieve inclusive growth was front and centre. While no “quick fixes” were identified there was general agreement that with the global economic environment improving it would provide more “breathing space to tackle these long term concerns. The main questions posed were whether the right reformswere being initiated and whether there was sufficient collaboration among countries to address issues such as the environment, and the need for food energy and water security. It was acknowledged that growth had to be inclusive and address disparities in income, skills, and access to technology and opportunities. Major long term goals included job creation especially for young people, boosting economic resilience, and controlling risks that may lead to another financial crisis. Action points included addressing the global deficit in infrastructure by taking advantage of low interest rates and high cash holdings, promoting small and medium sized enterprises through easier access to finance, boostingcreativity and innovationthrough increased investment in education and Research and development, and promoting greater investor confidence in Governments (not changing the rules after investment is made.
From an African perspective there was a concern that whilst Africa may be growing there was still a significant concentration of wealth which could cause instability. Security and political stability was a key goal as was the need to have an enabling platform for business. Because of its very large youth population education and the development of an entrepreneurial mind set were key goals.
From a South African perspective delegates set out to promote South Africa as an investment destination and the NDP took centre stage.
So did any good come out of all of this talking?
There is no doubt that a global meeting of minds and having common cause is always beneficial as there needs to be an agreement on what the problems are before embarking on co-ordinated solutions. So to that end the talking was beneficial but we need to bear in mind that there were no quick fixes and goals set are very long term. The relevant authorities nevertheless appear to be moving in the right direction.
So what was the impact on the SA economic landscape?
Last year’s focus on Africa and the promotion of SA as an investment destination was certainly beneficial but unfortunately subsequent domestic issues and industrial action undid much of the good work initiated at Davos.
There is no doubt that a global meeting of minds and having common cause is always beneficial as there needs to be an agreement on what the problems are before embarking on co-ordinated solutions.
What about this year?
This year’s theme is “the new global context” and participants will seek to evaluate the immediate and long-term implications of critical trends, including escalating geopolitical tensions, the expected normalisation of monetary policy, and the economic and social repercussions of unabated climate change, youth unemployment and income inequality.
Discussions around divergent monetary policy and growth prospects, Africa, slowing growth in China, and the future of the fossil fuel industry will likely dominate discourse during the four day conference. Another key consideration will be how these factors impact on the world in its entirety since there is a real and growing interdependence between countries.
From an African perspective there are a number of topics such as “reimagining Africa’s future”, “Africa’s growth markets”, and “achieving Africa’s growth agenda”. In addition there are some sessions that will be of particular interest such as “the Resource Recession” and how the end of the commodity super-cycle is likely to affect economies industries and markets. South Africa is likely to factor strongly in these discussions as its economy constitutes about a third of economic activity in sub Saharan Africa and around 80%of the SADC region
From a pure South African perspective the SA delegation will likely, following recent damaging industrial action, be looking to boost SA’s investment destination appeal. To do this it will need to demonstrate commitment to fiscal discipline, the NDP, and to private sector friendly policies that are designed to create wealth. We will be looking closely at the performance of SA participants such as new finance minister Nhlanhla Nene, Trade and Industry Minister Rob Davies (there will be a special gathering of trade ministers)and Economic Development minister Ebrahim Patel. Perhaps Deputy President Ramaphosa will also attend to support the cause.
Are “BRICS “still relevant?
In 2015 there will be a discussion on south-south (India, South Africa and Brazil) cooperation in trade and investment, as well as the BRICS agenda. South Africa in itself has improved trade and investment relationships with these countries – especially China.
The BRICS group of countries have had a tough year to say the least… China’s growth has slowed and Russia has suffered a significant geopolitical setback. This has had an impact on its global standing but not necessarily its long term investment merit. We are still positive on the long term prospects of these regional power-houses – especially from a consumer perspective.