RICHARD WAINWRIGHT: Reimagining globalisation: a unique opportunity for SA

The few days I spent in Davos for this year’s World Economic Forum (WEF) underlined just how different today’s world looks from the pre-Covid-19 era. Since the pandemic we have had a raft of complicated shocks — from Russia’s war on Ukraine and rising geopolitical tensions, to rampant inflation and global supply chain disruptions — all against the backdrop of an existential climate crisis. Collectively, these risks threaten to upend an already fragile global system.

Averting a polycrisis

The consensus among global leaders at the WEF was that we need to change our thinking about globalisation if we are to avoid a “polycrisis” — a word coined by French philosopher and sociologist Edgar Morin. A polycrisis refers to the convergence of multiple systemic shocks happening simultaneously across the world, and the potential compound effect on natural and social systems.

Fortunately, despite a recent spike in nationalist fervour, manifested in movements such as Brexit, America First and, closer to home, Operation Dudula, my impression during the conference was that leaders have recognised that the only way to tackle these problems is through greater global co-operation.

Even the vice-premier of China, Liu He, called for renewed international co-ordination, less protectionism and a global response to climate change. China’s continued opening up to the world is “a must, not an expediency”, he said.

Opportune moment

But while the sentiment on the chilly streets of Davos may have been one of solidarity and co-operation, there is no question that the world order has grown more brittle since the last WEF winter gathering three years ago. A combination of pandemic-related and geopolitical factors has disrupted global supply chains. Companies and countries are having to navigate a web of physical and political bottlenecks to secure strategic inputs ranging from energy to semiconductors, fertilisers and metals.

In the face of heightened systemic risks, corporate and government leaders alike are recognising the need to build contingencies into reconfigured trade relationships. A report compiled by the Biden administration observes that “the US cannot make, mine or manufacture everything ourselves. We must co-operate with our allies and partners to foster and promote collective supply chain resilience.” US treasury secretary Janet Yellen, who is scheduled to land in Pretoria this evening for the SA leg of her African tour, has described this form of selective collaboration as “friendshoring”.

SA too must position itself strategically for the opportunities this presents. As the resource-rich African continent’s most sophisticated economy, SA should be partner of choice for investment and trade, as was evident in the warm reception our delegates and speakers received at the WEF. But as much as the world wants to see us succeed as a viable economic partner, there can be no denying that our domestic failings present grave obstacles to doing business with and inside SA.

The most urgent of these is the collapse of our state-owned enterprises. We are beyond the point where incremental remediation of entities such as Transnet and Eskom can deal with  the systemic rot that has decimated our transport networks and pushed load-shedding to intolerable levels. Needed now is a radical overhaul of obsolete enterprises and the way these essential services — prerequisites to economic growth — are delivered. It is also patently clear that the government is incapable of achieving this overhaul without the direct participation of the private sector.

In listening to various European leaders during the sessions I was struck by how effectively, and collectively, Europe’s private and public sectors have responded to that continent’s untenable reliance on Russian energy. In the space of a year it is estimated that Europe has reduced its need for Russian gas by as much as 60% — an encouraging validation of what can be achieved when the right group of stakeholders comes together with a sense of urgency and commitment to a shared goal. As a nation we need a similar spirit of unity and collaboration across the private and public spheres.

Urgent green tech

Another area in which developed nations are making impressive strides is “green technologies”. Governments in Europe, North America and Australasia are providing incentives to actively encourage private sector investment in technologies that support the sustainable growth of their own economies, while also accelerating the transition to a carbon-neutral world. Examples range from green architecture to industrial carbon capture.

But there is a real risk that the pace of green tech advancement in the developed world will entrench and deepen inequalities in the global distribution of wealth. Developing economies, many of them suffering the worst effects of climate change, often lack the capital for investments that will hasten the transition to net zero carbon. There is thus a general acceptance that multilateral development banks such as the World Bank and the European Bank for Reconstruction & Development must leverage their facilities to finance green technology initiatives in the developing world. After all, the stakes for everyone on the planet could not be higher: climate change stands out as the greatest among the myriad risks within the looming global polycrisis. And we are running out of time.

With SA’s abundance of both natural renewables and mineral resources required for carbon reduction we have the potential to attract significant inbound investment for green technology projects. There are already some small-scale examples of world-class SA green tech initiatives, from green hydrogen to molten salt storage. But scaling such investments to the levels needed for a transition to net zero requires functional infrastructure and a regulatory environment conducive to the success of large-scale projects. It requires a state committed not only to removing the red tape that stands in the way of such initiatives but to actively promoting and supporting them.

I left Davos wary of the many risks besetting the world but reassured by the consensus that co-operation is the only way forward. I arrive home hopeful that SA will find a way to take advantage of this unique moment in history.

• Wainwright is CEO of Investec SA.