CEO of Business Leadership South Africa (BLSA), Busisiwe Mavuso, in her weekly newsletter of 22 January 2024, looked back at the annual meeting of the World Economic Forum which concluded at the end of the previous week.
The WEF focused attention on the risks facing the global economy. Extreme weather events driven by climate change and risks related to artificial intelligence featured strongly. More immediately, the wars between Ukraine and Russia, and Israel and Hamas were top of mind, as well as the wave of elections this year as more than half the world’s population go to the polls. “The global lodestar is a lack of certainty,” she highlights.
Mavuso views the event, which several BLSA board members attended, as a reality check on how the issues that preoccupy us in South Africa are overshadowed on a global stage. “With so many elections taking place in the year ahead, the risks that artificial intelligence will unsettle information flows and manipulate democratic processes is huge, from the United States to India,” she notes. She reminds us that South Africa too has been subjected to social media disinformation campaigns, most obviously during the state capture years, and she flags the risk of such tactics, now supercharged with AI, being used in our elections process this year.
In the context of the WEF, South Africa does not get much attention. She says the SA delegation was there to engage in global debate, and to take the South African story to the world. There is much in the global conversation that resonates locally. “We are one of the many countries holding elections of course, and we also have a unique role in the climate change debate. We are a carbon intensive economy, yet we have limited resilience to the extreme weather events that we can now expect. As is seen globally, we have had significant floods, droughts and fires but we have limited infrastructure to withstand their effects.”
Mavuso comments that the country’s energy transition plans are a good story in that global context. She highlights as a positive the rapid pace at which we are building renewable energy, driven by private sector investment, which has been enabled by regulatory reforms to open up the electricity system. “I am told that our renewable energy story was widely noted at the WEF.”
She emphasises that this, as an example, shows there is a point to be made about opportunity within the global context beset by risks. “We do have a positive trajectory to show, underpinned by a good relationship between government and business focused on overcoming the barriers we face. Obviously that momentum must continue, particularly the next steps to reform the electricity sector, including the establishment of an independent grid operator.
“We must also show that electricity is not a once-off,” she adds. “The logistics sector is the next front for reforms to turn around the dismal performance of our port and rail infrastructure that is directly constraining economic output.
“We must also show we are serious about reforms to other constraints on business like access to visas. There is no good going into a global forum telling investors they can come and invest their billions but expect to wait six months for their visas to be processed. Investors look at the country holistically – the opportunities are there, but they may not be enough if we don’t resolve the frictions they face.”
Mavuso also makes the point that climate change has shown that the country’s bulk water infrastructure needs urgent investment. “We should remember that Cape Town was the first major city in the world to nearly run out of water in 2018, becoming a global example of the risks of climate change.” She notes good progress is being made to establish a National Water Resources Infrastructure Agency that will drive the major investment needed to ensure our national water supply is resilient, “but we must maintain momentum with key enabling legislation still progressing through parliament.”
The need for significant flows of global investment to deliver the infrastructure we must build is widely recognised. However, Mavuso says, we can’t expect our investment case to rise above the clamour over global risks. “Instead, we must show that we are a part of the solution and that investment here is a good way of confronting those risks. Our infrastructure needs, including electricity, water and logistics, are clear opportunities for global investors to back the fight against climate change. We don’t have to perform miracles, but we need to show that we are making steady and stable progress.”
She also highlights that as a country South Africa is a part of the African story, a continent where development needs are obvious. She notes that the African Continental Free Trade Agreement was one topic that did get attention in Davos. “AfCFTA is gradually becoming a reality as countries ratify the required treaties and begin trading on the new terms. The potential benefits for the continent are enormous and I hear the Minister of trade, industry and competition, Ebrahim Patel, positioned the agreement and South Africa’s role in it well at the WEF.” She reiterated that “the AfCFTA is an opportunity South African business must be alive to, and the world is taking note of its potential.”
She closed her comments noting that the WEF provided an opportunity for reflection on the global context. “I hope we take from it the need to stay committed to reforms, to show we are serious about making steady progress. That is how to rise above the extreme risks that the world is grappling with and show we are a part of the solution.”
For more information visit: www.blsa.org.za
