SA ‘ghosted’ in austerity Davos
The World Economic Forum is like a speed-dating marathon — you have to be memorable for the right reasons. This year, SA wasn’t
Apart from trying to placate a handful of worried investors, Team SA may as well have been absent from last week’s 50th World Economic Forum (WEF) gathering in Davos, Switzerland. For a country that once proudly boxed above its weight at the world’s foremost billionaire jamboree, it barely made its presence felt.
If anything, Team SA’s showing reflected the mood of a country yet to drag itself out of the morass of the so-called lost decade. At least in those years the team proudly flew its flag from one of the town’s most prestigious pieces of real estate: the Kirchner Museum. That museum is located at a key intersection between the huge, purpose-built convention centre and the bustling Promenade.
The Promenade, the Swiss ski resort’s icy main street, snakes its way through the usually sleepy alpine village where, for one week a year, you are as likely to pass pop star will.i.am or cellist Yo-Yo Ma on the street as you are to see an unchaperoned David Cameron or any one of a multitude of business or political leaders headed off to their next appointment.
This year, however, Facebook took over the Kirchner Museum. This meant Brand SA, whose job it is to showcase the country, shifted its headquarters nearly a kilometre in the wrong direction down the Promenade, to a local pizza joint called Restaurant Excellent. It’s unclear whether it lives up to its name. But the owners figured they would make more money from a single tenant than flogging R300 margheritas to delegates who couldn’t afford the finer fare up the road. Besides, there was no guarantee anyone would even find the isolated venue.
It meant that the famous SA flag scarves were few and far between. And the small team’s presence was a far cry from the rock-star welcome President Cyril Ramaphosa enjoyed at the previous two meetings, where he told the world that SA, while troubled, was open for business.
Davos loves a good story, and while it’s true that the world has a short attention span, it also has a long memory when it comes to those who don’t fulfil their promises. It’s a kind of "ghosting": you can be present, but everyone looks straight through you, on the lookout for something more interesting than you have to offer.
As it was, there were far bigger fish to fry at Davos this year: the issue of long-term sustainability as capitalism fights for relevance, for example, and the climatic consequences of unbridled industrial growth.
One multinational CEO was heard describing efforts to develop a business strategy for climate change as the equivalent of stumbling around in a dark, unfamiliar hotel suite trying to find the bathroom.
Still, significant pledges were made in the fight to slow the effects of climate change. These included raising carbon taxes globally to force a change in behaviour, and supporting the proposal to plant a trillion trees worldwide to slow the rate of global temperature increases.
Teenage climate activist Greta Thunberg made a voluble appearance, but it was Prince Charles who challenged delegates in the only language they understand: money. The ageing monarch-in-waiting warned the assembled CEOs and investors that their accumulated wealth would be entirely worthless if they were unable to do anything with it in the future — other than watch it burn.
It’s little wonder Ramaphosa opted to stay home, where there is plenty of work to do if he is to build the credibility to make good on his promises: like delivering growth, for example, and prosecuting those responsible for state capture.
Perhaps he realised that a lavish showing — trying to keep up the pretense that all is well — would have been inappropriate for a cash-constrained economy like SA’s right now. At the same time, it would have been churlish to not attend at all.
So, instead, it was "Austerity Davos". Just three cabinet members attended — finance minister Tito Mboweni, trade & industry minister Ebrahim Patel and international relations & co-operation minister Naledi Pandor. All three, like several business leaders (whose companies pay to attend), tacked Davos onto the UK-Africa Investment Summit in London the weekend before.
Davos, after all, doesn’t create jobs and investment. It is a talk shop. But it’s a talk shop where it’s worth getting noticed if you have a good story to tell and if you can convince delegates that you might just deliver on your promises. It’s a place to show your wares. And it’s a place for meetings and connections that may lead to future opportunities.
But because it functions at the pace of a speed-dating marathon, you have to be memorable for the right reasons.
Certainly, it’s not like delegation leader Mboweni learnt anything new about investor concerns. The power, though, lies in the fact that the concerns were expressed in Davos. Heineken FD Laurence Debroux, keen on African expansion from the brewer’s existing base at Sedibeng, south of Joburg, told Mboweni: "Power outages really hurt us."
There were other similar concerns. "We can’t have stop-and-go policy," said another executive, echoing the universal concern about the lack of policy certainty. Water quality and the safety of expatriate executives in SA were also key issues.
PepsiCo — probably six weeks from finalising its acquisition of Pioneer Foods — already has a significant potato chip business in SA and is worried about whether it will be able to keep its deep fat fryers going.
"We indicated without any spin that the problems will not be solved immediately," Mboweni told SA journalists at the traditional Friday morning debrief on what had been achieved at the meeting.
He also indicated that the sorry state of the country’s fiscal position, and measures to address it, will be spelt out in the February budget, where he will be looking to stave off a Moody’s downgrade to subinvestment grade.
Notably absent from the room during Mboweni’s debrief, however, were potential investors. Perhaps they came last year or the year before, but without measurable improvements in key economic metrics, they concentrated elsewhere this year.
Still, the SA delegation needed to be in Davos — if only so that Mboweni, who has successfully leveraged ratings warnings to convince his less economically minded colleagues in the ANC of the seriousness of SA’s economic crisis, can do the same with the concerns expressed to him at the gathering.
The most common mistake made by those who have never attended the WEF in Davos is to think that it’s an investment conference at which deals are struck. If they are, they are few and far between. What Davos does is make connections.
For those, like presidential investment envoy Jacko Maree, the gathering remains worthwhile, as it enables South Africans to meet the CEOs of multinational suppliers and client companies, rather than just deal with country heads. There is merit to that argument.
The event is also useful for measuring the global mood.
But none of it ultimately matters if the lessons gleaned are not acted on. At least Mboweni promised investors — those who attended sessions where he was involved — that steady (if slow) progress is being made on many fronts.
Davos is far from perfect. It was designed by elites for elites. Those who attend do so because it enables them, in just a few days, to quickly assess for themselves just how the world is faring. And they return home better able to navigate the inevitable complexities that arise in the global economy. In an increasingly fragmented world, it would be easy to dismiss Davos as a pointless talk shop, but it does in many ways set the global agenda.
Team SA’s showing reflected the mood of a country yet to drag itself out of the morass of the so-called lost decade
Take Patrice Motsepe: while his appointment to the board of trustees of the WEF was overshadowed by his effusive comments to US President Donald Trump, Motsepe used the platform afforded him to effect a change in the US attitude towards Africa. The continent, previously dismissed by Trump as a "shithole", needs investment. So, it would seem, does Motsepe, whose own interests on the continent are expanding rapidly, mainly through African Rainbow Minerals and African Rainbow Capital.
Considering that Trump is likely to secure another four-year term at the helm of the immense (and expanding) US economy, Motsepe no doubt was looking to open the door to US investment by playing to the president’s ego.
For Sipho Pityana, the president of Business Unity SA and a leading critic of Jacob Zuma’s state capture-ridden administration, Davos was equally useful. Pityana has been tasked with co-ordinating corporate support for African small businesses, and he will be required to report back at the WEF Africa in Ethiopia in September.
The continent, expected to be home to one in five people on the planet in the next decade, needs investment and growth to ensure that its economies are in better shape to deal with the inevitable demands that will be placed on them.
Business executives attending Davos were warned that Nobel laureate Milton Friedman’s assertion that "the business of business is business" no longer holds sway. You cannot have high-functioning companies in dysfunctional societies, and certainly not in a world where climate change is costing corporations billions a year — which means CEOs have to approach how they run their companies differently.
On climate concerns, it helped that midwinter daytime temperatures reached a balmy 6°C and that the December snow was melting on the Davos mountains. Delegates could hardly ignore the warning that they need to act fast.
It was, in some way, the same for SA business leaders and Mboweni, who couldn’t have mistaken the signals at one of the most downbeat participations in 30 years of attending.
"We put our best foot forward," said Mboweni. "I can say without fear of contradiction that our engagements have been fruitful."
Let’s see how we fare next year.