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Africa Left In The Cold

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Many of the thousands of delegates at Davos, Switzerland, wonder how long this gathering of the world’s elite can go on in its present form, in what must be one of the world’s strangest locations for an economic conference. It must have looked a great venue, albeit from left field, when it was planned here back in 1971, but then again gas guzzling cars and Richard Nixon also seemed a good idea at the time. The face of the World Economic Forum (WEF) in Davos is changing. In the last decade, the number of delegates from countries like Germany and Britain has fallen, while those from China have increased by 283% and Russia by 57%.

One of the big hitters at this year’s Davos was Narendra Modi, who became the first Indian prime minister to attend in 20 years. He made a stentorian speech defending globalization, criticizing protectionism and urging swift action over climate change. Surely, it is only a matter of time before WEF will be hosted by emerging markets like India, Russia and China.

Davos, a small village in the Alps of eastern Switzerland, is perfect for skiing and even better for taking photographs for a Christmas card – the snow-topped forests cascading down the steep mountainsides are a wonder to behold; the crisp air is as refreshing as a cool drink on a hot day. It is a place where you can clear your head, in seconds, with a lung full of Alpine air.

Yet, as the years wear on, it looks ill-suited for the gathering of the clans of globalization. Thousands of delegates and heads of state from 70 countries, plus more billionaires and business owners than you can poke a stick at, packed out the village this year. Throughout the day, you could see European Central Bank President Mario Draghi and his cohorts picking through the snow, or highly-paid executives slipping on the ice, or Bill Gates sliding through the sludge as the long, cold Alpine night gripped the streets.

Most of the people who live in Davos threw their hands up years ago in the face of the annual invasion by the suited elite. They rent out their homes and flee to better climes. It is a good job that they do because in WEF week Davos is bursting at the seams. This year the traffic jammed around the conference; security was as high as the mountains, with soldiers and police everywhere; there were more snipers on the roof than there were golf carts on the ground transporting delegates over the packed snow the like of which many people in Davos said they hadn’t seen for years. The heavy snow was a reminder that extreme weather and natural disasters were the top concern among delegates this year, according to a WEF survey, followed by cyberattacks and data theft.

One of the reasons for the tight security, in this crowded village, was the visit of the controversial leader of the free world Donald Trump. It was a surprise visit to say the least; for years Trump derided the intellectual globalists of WEF. Now he wanted to come and sell his “America First” policy as the first US president to set foot in Davos since Bill Clinton in 2000. Along with an 827-strong US delegation – out of 3,000 delegates – he came to laud his tax cuts and reforms that delivered growth, forecast at 2.7%, this year, a fillip for the world economy after a decade of torpid growth.

It is a bright spot, on a brighter horizon, unveiled by the great and the good at Davos. The International Monetary Fund (IMF) predicts global growth of 3.9% this year and next; 0.2% higher than expected thanks to US tax cuts and a sterling performance from emerging economies like Russia and Brazil. Better, but no time for complacency says IMF head Christine Lagarde, who wants to push growth harder by cracking down on tax evasion and corruption.

“When the sun is shining it is time to fix the roof,” says Lagarde. “Or when the snow stops it is time to clear the road. That is how it seems to work in Davos.”

Despite this glimmer of hope you get the feeling optimism is running out at WEF. For a start, you could argue that Trump’s strident one-nation populism – that appears to have spread to a score of other countries – is one reason why the liberal WEF ethos of working together to ease investment and fix the world is struggling to stay afloat.

“It is America First meets We are the World,” quipped the Wall Street Journal on the eve of the visit.

US President Donald Trump at the World Economic Forum in Davos, Switzerland (Photo by Getty Images)

Before Trump set foot in Davos, he ruffled feathers with disparaging remarks about Africa. Many of the African delegates told me they were going to boycott his speech in protest.

“There has never been a better time to hire, to build, to invest and to grow in the United States,” says Trump in his speech that this time took a swipe at the press instead of Africa.

“It wasn’t until I became a politician, that I realized how nasty, how mean, how vicious and how fake the press can be.”

If you want to get an idea of how far Africa is under the US radar right now, you should have been at the press briefing held by the urbane US Treasury Secretary Steven Mnuchin. I asked about the future of Power Africa under the Trump administration; a fair question given the America First policy and the power plan’s origins. It is a legacy of Barack Obama and aims to blend US aid with private investment to create 30,000MW of electricity, enough to power an industrialized nation like South Africa. The fast-talking US lobby correspondents whipped around to look at me as if I had asked the source of the Zambezi.

“It is still going. We have created about 400MW in Ghana, which it not even 1%. But we are going to visit in the second quarter,” says the Commerce Secretary Wilbur Ross without much interest.

I was encouraged by Nigerian multi-millionaire Tony Elumelu who later assured me African investors would see Power Africa through.

Contrast that with the fire and enthusiasm of one of Africa’s future leaders who saw WEF as a stage to launch his campaign to clean up his country and bring back investors. Cyril Ramaphosa, the man set to be the next president of South Africa if the African National Congress wins the 2019 elections, is already behaving with that statesmanlike assurance of power. In many ways he was Africa’s man of the moment at Davos.

It was not always so. For more than a quarter of a century the lawyer-activist, who founded the biggest union in Africa, the National Union of Mineworkers, was the nearly man of South African politics. He nearly became deputy to Nelson Mandela in 1994 and went off to business instead. Now he is on the cusp of real political power and appears to respect this.

With a ready, beaming smile that could melt the Davos snow, Ramaphosa has a deft common touch. On the cold night we sat for dinner in Davos, Ramaphosa staged a charm offensive for the gathering of millionaires and a number of South Africa’s most powerful CEOs. These are among the people he needs to win over if the country’s economy is to slip back into gear. The sad story of the last year has been downgrades to junk status by the ratings agencies and minuscule growth from the once cooking, commodity-rich South African economy.

Avuncular and cracking jokes, the future president changed seats over and over again until he had spoken to everyone on the long table. It was more like a South African wedding than a formal dinner at which he hammered home his anti-corruption message.

“There are no holy cows. Anyone who is caught doing wrong things will end up behind the bars of a jail,” says Ramaphosa.

Most of the business types agreed that this was what they wanted to hear after years of economic struggle and a host of corruption scandals. Ramaphosa has been busy since his ascent, prompting corruption investigations and the freezing of assets. It was enough to send the rand soaring above 12 to the dollar, which warmed many South African delegates in the snow.

Ramaphosa helped the rand further by telling the world that the nuclear power deal – that the present incumbent is pushing – is off the table for now because it is too expensive. He also promised to sort out the disputed Mining Charter – the document that guides efforts to increase black ownership of the mines; uncertainty and court challenges over rushed amendments to the document have choked investment.

South Africa’s President Cyril Ramaphosa at the World Economic Forum at Davos, Switzerland (Photo by Getty Images)

In all, according to Ramaphosa and finance minister Malusi Gigaba, their utterances at Davos had unlocked hundreds of millions of dollars from investors in South Africa who were holding back because of concern about corruption and political uncertainty. Ramaphosa believes the ratings agencies are likely to give South Africa a better score when he meets with them.

“We are going home happy with bags full of millions of dollars of promises from investors,” says Ramaphosa with a smile before he flew home.

Most around the dinner table in Davos agreed that Ramaphosa’s words were fine as a starter, but wanted to see the main course.

Elsewhere in Africa, Nigerian entrepreneur and former FORBES AFRICA cover Tonye Cole, the co-founder of the Sahara Group, was as optimistic as ever.

“Africa will play a role. The world has to look at Africa as the last place to make a difference and they will do that,” says Cole.

Rwanda was in fine fettle, according to its finance minister Claver Gatete in Davos, with 8% growth expected this year on the back of increasing exports – a rate that most countries in the world would do anything for right now.

“We are trying to remain an open and attractive economy,” says Gatete.

Nigeria, after years of suffering under falling oil prices and the decline of the naira, is looking up at long last. Growth is expected to be 1.4% this year, according to Vice President Yemi Osinbajo. Also expected is a 40% increase in exports, and better revenues from oil.

“It is a bullish period for us in terms of attracting business and we are excited,” says Osinbajo.

The words of hope that said it all for Africa on one cold Swiss afternoon came from South Africa’s Reserve Bank Governor, the tall and enthusiastic Lesetja Kganyago.

“This time last year I was pleading with investors to keep confidence in South Africa and keep their money in the country. This year I do not have enough time in the day to meet people who want to put their money into the country,” says a smiling Kganyago.

Bring on the main course – we’re hungry.

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