South Africa supports calls for global co-operation to boost trade, address economic challenges

The 53rd Annual Meeting of the World Economic Forum (WEF) in Davos, Switzerland, concluded on Friday, 20 January 2023. World leaders and corporate executives expressed hope that the looming recession facing the global economy could be avoided if countries collaborated to boost global trade and investment.

A high-level South African government and business delegation has returned home from the meeting more upbeat than before that the current economic slow- with the Government of Ghana with the aim to resolve these disputes on a mutually acceptable basis".

Tullow is the second multinational company to dispute a tax bill from the GRA this month.

Tullow reported revenues of £1.38bn ($1.7bn) in 2022, at an average realised oil price post-hedging of $87 per barrel, with a free cash ow of $469m. This was ahead of guidance and driven by the increased equity interest in Ghana ($126m) and excluded the impact of the down and rising in ation could be resolved if nations addressed global supply disruptions that are leading to commodity shortages and driving up energy and food prices.

Meanwhile, cost cuts and a focus on its elds in Ghana means Tullow is now presenting a guide of $700-$800m in free cash ow for the 2024-2025 period – if an oil price of $80 a barrel is realised.

“Strong operational delivery, rigorous focus on costs and capital discipline, the increased equity in our key operated elds in Ghana and higher oil prices drove material, expectation-beating free cash ow generation in 2022, accelerating the group’s deleveraging towards a net debt to EBITDAX ratio of 1.3 times by the year-end,” said Tullow Oil Chief Executive, Rahul Dhir.

The delegation was led by Minis- ter of Finance, Enoch Godongwana, who was accompanied by leaders of South Africa’s major corporations operating in various sectors of the economy. The delegation also included Minister of Trade, Industry and Competition, Ebrahim Patel; Minister of Inter- national Relations and Cooperation, Naledi Pandor; and Minister of Human Settlements, Mmamoloko Kubayi.

This year’s WEF Annual Meeting was held under the theme “Cooperation in a Fragmented World” and covered many interconnected topics including the impact of the ongoing Russia-Ukraine war on the commodity markets, skyrocketing cost of living caused by rising in ation and monetary policy tightening by central banks, climate change, and the growing impact of arti cial intelligence (AI) on workplaces and labour markets.

“The South African delegation did a fantastic job in Davos where it sold our country to global investors as a favourable market to do business and invest in. Notwithstanding the energy supply constraints that our country is currently grappling with, South Africa remains an attractive investment destination given its excellent infrastructure, sophisticated nancial markets, and a skilled workforce,” says Sithembile Ntombela, Acting CEO of Brand South Africa.

The South African government is currently implementing structural reforms that have opened the energy sector to private investment to boost energy generation and bring an end to load-shedding that is constraining the econ- omy.

“The structural reforms that are currently being implemented by the government are making progress in removing investment bottlenecks and reducing the cost of doing business. These reforms will enable South Africa, a preferred destination by local investors and global multinationals looking to expand across Africa, to take advantage of the opportunities presented by the African Continental Free Trade Area (AfCFTA),” says Ntombela.

The AfCFTA, which o cially launched in 2021, will create the world’s largest free trade area, stimulate intra-African trade, develop regional value chains, and promote industrialisation across the continent.

The AfCFTA Secretariat and WEF revealed in a report unveiled at this year’s Davos meeting that AfCFTA is projected to create single market that will grow to 1.7 billion people and $6.7 trillion in consumer and business spending by 2030.

By 2050, the continent is estimated to be home to 2.5 billion people and a market with a combined business and consumer spending of $16.12 trillion.

The report titled “A New Era for Global Business and Investment in Africa” lists four high-potential sectors that hold lucrative oppor- tunities for companies looking to invest in Africa.

These sectors are automotive, agriculture and agro-processing, pharmaceuticals, and transport and logistics, which are all expected to see rapid growth in terms of production and trade volumes under AfCFTA.

“Given that South Africa is the most industrialised and sophisticated economy in Africa, it is well positioned to take advantage of opportunities presented by AfCFTA. The development of the free trade area will require massive investment in logistics and telecommunications infrastructure to reduce the cost of doing business and enable free movement of people, goods and services,” explains Ntombela. With the green energy transition and digital transition in full motion around the world, the delegation that represented South Africa at WEF2023 expressed support for calls to reskill and upskill workforces, particularly the youth, to prepare them for future workplaces and to mitigate job losses.

The delegation is impressed by the progress made by the WEF’s Reskilling Revolution; an initiative launched in 2020 to empower 1 billion people. So far, the initiative has reached 350 million people.

Climate change also took centre stage at WEF with world leaders and business executives committing themselves to supporting the implementation of the Paris Agreement, which calls on all countries to cut carbon emissions to limit global warming to around 1.5 degrees celsius and strive towards attaining net zero emissions by 2050.

This commitment requires countries and businesses to move away from using fossil fuel energy sources like coal and crude oil and adopting clean and environmentally friendly energy sources such as wind and solar power.

The launch of the new Coalition of Trade Ministers on Climate, which brings together over 50 countries, was also a highlight of this year’s WEF annual meeting.

The coalition aims to tackle climate change by promoting trade and investment that encourages adoption of goods, services, and technologies that mitigate climate change in both developed and developing countries.

“However, the global challenges that were highlighted at WEF 2023 cannot be resolved in a fragmented world in which countries are pulling in di erent directions. These challenges require collaboration and unity by the nations of the world, where counties are working together to nd solutions in an integrated global economy,” concludes Ntombela.