What’s it all about and what does it mean for the South African investor?
It’s that time of year again where more than 2,500 of the world’s top leaders including heads of state, central bankers and representatives from most of the world’s top companies converge on the little town of Davos in Switzerland to share ideas, promote agendas and generally just network.
Last year, the theme was ”responsive and responsible leadership” and it was particularly relevant given the apparent threat to globalisation from a rising tide of populism, nationalism and protectionism. Brexit, the recent election of Donald Trump and impending European elections made the theme particularly relevant at the time.
The theme of this year’s show piece “creating a shared future in a fractured world” suggests that the threat to globalisation remains alive and well. While anxiety regarding a break-up of the eurozone may have subsided following various European country elections, the stance of the Trump administration continues to cause jitters. This is evidenced by the US withdrawal from the Trans Pacific Partnership and the potential withdrawal from the North American Free Trade Agreement (NAFTA). President Trump will be attending the conference this year which should make things particularly interesting given his strong “America first” stance.
Is Davos just an elitist “talk shop” with little real impact?
As always, these conferences typically achieve no “quick fixes” but there is little doubt that a global meeting of minds and having common cause is always beneficial.
A broad agreement on what the problems and opportunities are is necessary before embarking on any kind of co-ordinated solution. The real value in conferences of this nature, however, is about making contacts, presenting cases and influencing influential people.
What does it mean from a South African perspective?
Davos has always been a great opportunity for the SA delegation to put the country’s best foot forward.
Last year, Pravin Gordhan, the then minister of finance, made a very favourable impression in promoting commitment to good governance and enhancing South Africa’s appeal as an investment destination. His subsequent dismissal unfortunately undid much of the good work achieved at the conference.
South Africa badly needs to improve its global image. It has dropped 14 places in the global competitiveness index this year (to 61st) and faces significant economic challenges. The ability to attract foreign capital at competitive rates is crucial from an economic growth perspective.
Davos this year represents possibly the best opportunity to promote SA given the recent election of Cyril Ramaphosa as President of the ANC and the apparent new found commitment of the ruling party to root out corruption, restore good governance and roll back “state capture”. Mr Ramaphosa will be leading “Team SA” this year and it will be incumbent on the delegation to meaningfully engage on these issues and convince the global community that it is committed to good governance at all levels.
Establishing credibility in this area is critical in boosting SA’s investment destination appeal.