HOW should SA position itself at the 2012 World Economic Forum in Davos, Switzerland, this week? This is the question the International Marketing Council of SA (Brand SA) has been debating with the government and business.
This annual event brings the presidents of companies and nations, heads of nongovernmental organisations, media grandees and luminaries of all sorts to the tiny Swiss town. There, they largely abandon their titles and pretences and simply discuss and debate solutions for our tumultuous world.
Of course politics is discussed but this not just a political forum; it is an economic forum or forum for economic dialogue and business. Business is done, but this is not just a business event. The challenge Davos sets leaders is to think creatively and collaboratively to propose practical solutions to the complex problems of our time.
This year's overall Davos theme, The Great Transformation: Shaping new models, will be explored in further sub-themes relating to how this transformation will drive new models of growth and employment, leadership and innovation, sustainability and resources, and society and technology. This is particularly relevant for SA and Africa. Not only is the world in the greatest state of flux since the end of the C old W ar, but Africa is now emerging as an increasingly important player in the global economy and international structures.
Let's look at some statistics. According to the International Monetary Fund (IMF), for the first decade of this century, six of the 10 fastest-growing economies in the world were in sub-Saharan Africa. The IMF projects that for the period 2010-15, seven of the 10 fastest-growing economies will be in the region. Similarly, the IMF believes sub-Saharan Africa grew at an annual average rate of 5,1% last year, compared with a world average of 3,9% and an average of 1,6% for advanced economies. There are many reasons for this sustained growth, including greater stability and the increasing prevalence of democracies, global demand for Africa's commodities, and improved economic regulatory and governance regimes.
This growth trend is likely to continue. According to Standard Bank research, the five enduring factors driving this are: a growing, younger and more affluent population; urbanisation; improved information and communications technology; sustained demand for Africa's natural resources; and a deepening financial sector as Africans use more financial services.
Davos presents South African and other African delegates an opportunity to highlight this transformation and to change the conversations we have about our prospects.
Ever since the global financial meltdown of 2008, the transformation of global power and economic relations has become irreversible even as the stability of the international economy remains at risk. This transformation continues to gain momentum thanks to developed economies' stagnation, the European sovereign debt crises, structural weaknesses in the financial sector and continuing political crises in many advanced economies. Moreover, the relative decline of the west's traditional political and economic power, and the rise of new emerging market powers and groupings, are changing the way the world understands and relates to itself.
Wealth, investment and even financial rescue packages now also flow from the developing to the developed world. In the west, ageing populations and sustained low economic growth rates are creating a desperate need for higher investment returns for their institutional and individual investors alike. Given these demographic shifts and the constrained growth prospects of their home markets, a large proportion of these returns will probably have to be achieved in the developing world. Likewise, in the future, the largest reservoirs of productive workers and growing consumer markets will also be found in the developing world.
In Davos, SA should not only stress the importance of increasing the voice and role of Africa and the developing world, but also position itself as an investment destination of choice. Joining Brics (Brazil, Russia, India, China and SA) has opened the door to enormous opportunities for trade and investment and this links to the broader development of the continent. While SA has a population of about 50-million and an economy worth $527bn, the negotiations currently under way to establish a 26-country, $1-trillion African free trade area for east, southern and central Africa within three years will expand this market to 600-million people.
This will put us in the same market-size bracket as our Brics counterparts. Coupled with new regional road, rail and port infrastructure projects, this will facilitate a more efficient flow of goods, skills and investment within the region and dramatically enhance our export growth potential and competitiveness.
While confidence in financial markets may have been eroded in many other parts of the world, in this area SA has a relative advantage. The 2011-12 World Economic Forum's global competitiveness index displayed a high level of confidence in our financial market development, ranking us in fourth place globally on this measure.
The regulation of the JSE was ranked first in the world, as was the strength of SA's auditing and reporting standards.
Additionally, SA is ranked second for both the soundness of its banks and the efficacy of corporate boards.
In short, SA is a source of exceptionally sophisticated professional services and financial expertise.
Regarding foreign direct investment, we must highlight SA's considerable mining and resources potential. While we are the world's largest producer of platinum, chrome, vanadium and manganese, and the third-largest gold miner, we also offer highly sophisticated mining-related professional services. Other areas of growth are minerals beneficiation; water; agri-processing; the development of a green economy; energy generation; infrastructure; and manufacturing.
As an investment destination, SA must also highlight its relatively stable political environment and adherence to the rule of law. With direct access to the rest of the continent and situated between the east, the Americas, Europe and the Middle East, SA has many structural advantages that make it an excellent investment destination and ideal partner in the African growth story.
At Davos, SA has a key role in shaping dialogue about the new models for business, growth and investment using Africa's increasing importance and SA 's many competitive advantages.
. Matola is CEO of Brand SA.