Attending the World Economic Forum’s annual Davos gathering is always an eye-opener – and none more so than this year.
The first in-person gathering we have had since the Covid-19 pandemic threw the world into isolation was a breath of fresh air, not only from the pleasure of being able to discuss and debate face-to-face with colleagues, but also in the subject matter, thinking and a renewed commitment to working towards a planet that we can all share and care for – as one.
The development and investment opportunities around Africa were a particular talking point, with one of the most well-represented showing of African heads of state and business leaders I have seen to date. The exception was South Africa, which was woefully weak in its the delegation, with only the country’s human settlements minister to represent the government and a handful of the usual capital markets businesses.
Once again, South Africa’s black business sector was marginalised – a great pity given that the sessions I chaired or participated in were all to do with building capacity for tomorrow, and a key thrust for the entire conference is the opportunities arising out of the continent.
One of the biggest opportunities is the rise and rise of the services economy, and here, Africa stands to be not only a beneficiary but importantly, a provider of services – to the continent and the world. In much the same way as the Marshall Plan, arising out of World War II, saw investment into Germany and Japan to mitigate the devastation in those countries, and turned them into industrial giants, investment into the services economy across the African continent will have the potential to catapult Africa ahead.
Asked to address the World Trade Organisation (WTO) session on applying a multilateral trade framework to the services industry across Africa, I shared how I believe the continent is at a point where it requires what I call a “harmonisation of services” , specifically in terms of a common regulatory framework, policy, visas, tax and even labour sharing and development.
In collaboration there is power, but also the scope to maintain an independent, non-homogenous identity – very important to Africans. At present, the services industry makes up about 70% of the world’s GDP. Yet for the African continent, the services industry is less than 20%. Therein lies our greatest potential.
If the continent can double this in the next 10 years, it will be a force to be reckoned with. It is more than achievable too, considering that the services industry is heavily geared towards younger generations, and with Africa having the world’s highest proportion of youth, we are well-positioned to take advantage.
While the continent can benefit from a collaborative approach to a harmonisation of services, it also needs investment to kickstart it, particularly when it comes to unlocking capital for sustainable development here.
Sustainability, of course, means different things to different people. In the developed world, it is heavily weighted toward climate change. While a clean planet is essential for all of us going forward, sustainability on the African continent leans more toward bridging the vast economic disparity between the rich and the poor, which quite simply needs job creation to overcome it and bring about a basic level of human dignity. But how to create these employment opportunities?
Investment for sustainability is the opposite of investing to extract. The colonial extraction economy of removing Africa’s wealth to build their own may have brought some income to the region, but it did not invest in future skills and job creation, therefore it was not sustainable.
Today, we need to put sustainability front and centre of any investment strategy, which also needs to be responsible and accountable to not only people, but also the planet. Again, it is a harmonisation of thought and deed coupled with policy, will and action that will secure the future.
Public-Private Partnerships working together with communities are one such instance of how collaboration works to benefit the whole. Take call centres, for example, a development nexus of taking unskilled and untrained community members, providing them with training, which helps them to grow in their personal capacity, but also as contributors to their communities and the country’s economy. In
South Africa, another example of sustainable investment in action is how the country has been able to attract significant monies into its green economy through partnerships in the Independent Power Producers’ green energy sector. This has not only led to greater skill development and more job opportunities, but has also helped South Africa with its move towards cleaner energy.
What about the Congo basin as a possible hydro-power centre as the continent’s next energy upgrade? Sustainable tourism is another key element to Africa’s long-term prosperity. As the largest single land mass in the world, we remain largely unexplored, and for a jaded world population looking for something new, refreshing and exciting, it can get no better than Africa.
Investment into this arena ensures we build long-term capacity here and beneficiate our own people. In the third session, the investment conversation continued. No economy in the world has ever prospered without investment – most especially, the right investment with the right people and the right objective to bring about the right impact.
There needs to be a purpose to investment aside from profitability. By this, I specifically mean the development of people first, which will give rise to the desired result – sustainable profits, otherwise why do it at all? In our group, we speak of “seamless investment” as a prerequisite for any venture we get involved in, the same principle most of us apply to life, as in going with the tide, not against it.
Investment should be effortless, not just from a willing seller and willing buyer point of view, but as I have said before, from the investment environment that promotes ease of doing business.
As a great example of collaboration and forward thinking, Deng Xiaping, who succeeded Mao ZeDong as China’s leader in 1978, opened China’s investment borders to foreign partners. Faced with the ongoing starvation of its people and the downward spiral of any economy, Xiaping made the brave choice that has now resulted in China being the second-largest economy in the world today.
Xiaping allowed China’s investors to have majority control of their investments, plus created tax breaks, the transfer of technology and skills and so on. Socialism with Chinese characteristics. It worked and it could work here too, with a similar approach, although the main challenge we have is that although we have fewer people across the continent than China does, we are 54 entirely independent countries.
There is a real and justified fear on the African continent that opening a continental investment strategy could lead to further exploitation.
However, we must think as one so that we can achieve a seamless investment strategy to harmonise our future – not only in the services sector, but sustainability in its entirety.
* Dr Iqbal Survé, who is the Chairman of Sekunjalo Investment Holdings, reflects on the World Economic Forum 2022 annual meeting held in Davos, Switzerland.