The 53rd annual meeting of the World Economic Forum is underway in Davos, Switzerland.
The Forum takes place at a critical time in the post-Cold War era. Some parts of the world are in a state of chaos that imperils the entire globe.
The Ukraine-Russia War rages on, and there's no sign that we could see a diplomatic settlement anytime soon. Tensions between the United States and China have intensified in recent years. And poverty remains a great challenge, especially in the world's poorest region, Africa.
This year's theme of the Forum is “Cooperation in a Fragmented World”. It is a good theme. That the world is fragmented is true. That there should be cooperation to confront the challenges the world faces is something I agree with.
I have written two articles about Davos before. It was back in January 2017, and in January 2020. In both articles published on News24, I stressed that the dialogues at the Forum must be more focused on poverty, and less on wealth inequality and wealth redistribution. Because I believe the biggest socioeconomic challenge we face as a humanity is poverty, and the Ukraine-Russia war has worsened poverty in the African continent.
My vision of cooperation, in a fragmented world of the 21st century, is a cooperation that acknowledges the supremacy of nation states and the nation states system
There must be no global public policy or anything closer to global public policy, as nations are different with different challenges and different histories. Hence, my opposition to the “Global Reset” agenda.
I believe that nations must engage in robust competition with one another. They must compete on tax policy, infrastructure, education, financial markets and much more that bolsters economic productivity.
Competition is healthy, not only for individuals, but also for nation states too. While competing, they must also be open to free trade, as that will contribute to rapid economic development.
Don’t listen to Godongwana
South Africa’s delegation is at the Forum, and the very big question is: What will the delegation say to investors in Davos, as the worst blackouts since load-shedding began 15 years ago, have engulfed South Africa? Eskom has totally failed, leaving the country in darkness, and suppressing business activity. With these blackouts, the economy is paying a heavy price.
On the sidelines of the Forum, the Finance Minister, Enoch Godongwana, has said that South Africa has a plan to improve energy provision, a plan that will end the need for any power cuts within the next 12-18 months, Business Day has reported.
That will not happen. These blackouts will be with us for years, and have been with us for 15 years as power stations collapsed and the African National Congress (ANC) governments failed on energy reform.
The National Energy Crisis Committee (NECC), a committee run by President Cyril Ramaphosa, has produced and presented a plan to reduce and end load-shedding.
The NECC's forecasts on power supply are very optimistic, making it hard to believe that they can materialize given the very deep problems at Eskom. Don't be misled by the government officials and government committees, South Africa's electricity problems will take years to fix.
The resignation of Andre De Ruyter as CEO of Eskom has left the country in a perilous position. De Ruyter had brought confidence into Eskom, tackled corruption and crime at Eskom head on, and reduced the company's debt. There is a lot of uncertainty around Eskom and energy supply at this point, which is not good for South Africa.
Whatever South Africa's delegation says to international investors will be hard to believe. South Africa's economy will continue to underperform because of the crippling blackouts, failed SOEs, lack of competitiveness, and so on.
Ramaphosa should have gone to Davos
President Cyril Ramaphosa’s cancellation of his travel to the Forum was an error, and sent a more damaging message on South Africa to investors.
In my opinion, Ramaphosa staying here and not attending the Forum does not fix the power issue. Eskom is a colossal problem that will not be resolved in a few days. He stayed in the country for political posturing, and whoever advised him to do that misled him.
Leon Schreiber of South Africa's biggest opposition party, the Democratic Alliance (DA), fired the shots and tweeted, "By running away from Davos, Ramaphosa admits that South Africa is no longer investable due to the ANC’s destruction of our electricity system and economy."
Schreiber was right, Ramaphosa's Davos cancellation sent a message that the situation is so bad in the country that the President's trip would not be of any value. That there is no case to be made on investing in South Africa. That was damaging!
He should have gone to Davos as the trip was planned a long time ago. Davos is an investment summit, not a security or peace summit.
South Africa is at a crossroad in a year and a few months to the 2024 elections. What the country is going through will determine how South Africans vote at the polls when the election takes place. My prediction is that they will still vote for the ANC, for reasons I will outline in my future columns.
Davos is a tough trip for South Africa's delegation, proving a lot needs to be done to address South Africa’s socio economic problems. And also proving that the ruling party the, ANC, has failed South Africans.
Phumlani M. Majozi is a senior fellow at African Liberty. His website is phumlanimajozi.com. Follow him on Twitter: @PhumlaniMMajozi.
