SA supports calls for co-operation to address global 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 slowdown and rising inflation could be resolved if nations addressed global supply disruptions that are leading to commodity shortages and driving up energy and food prices.

The delegation was led by Finance Minister Enoch Godongwana, accompanied by leaders of South Africa’s major corporations operating in various sectors of the economy. The delegation also included Trade, Industry and Competition Minister Ebrahim Patel; International Relations and Cooperation Minister Naledi Pandor and

Human Settlements Minister Mmamoloko Kubayi.

This year’s event 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 commodity markets, skyrocketing cost of living caused by rising inflation and monetary policy tightening by central banks, climate change, and the growing impact of artificial intelligence on workplaces and labour markets.

Attractive investment destination

“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 financial markets, and a skilled workforce,” says Brand South Africa Acting CEO Sithembile Ntombela.

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 economy.

“The structural reforms that are currently being implemented by 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.

African Continental Free Trade Area

The AfCFTA, which officially 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 the AfCFTA is projected to create a 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 opportunities 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 the 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.

Reskilling Revolution

With the green energy transition and digital transition in full motion around the world, the delegation that represented South Africa at WEF 2023 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

Climate change also took centre stage at WEF with world leaders and business executives committing themselves to supporting the implementa- tion 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 new Coalition of Trade Ministers on Climate, which brings together over 50 countries, was also a highlight of this year’s WEF.

The coalition aims to tackle climate change by promoting trade and investment that encourages the 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 different directions. These challenges require collaboration and unity by the nations of the world, where countries are working together to find solutions in an integrated global economy,” concludes Ntombela.