Takeaways for Africa from World Economic Forum 2024
World
leaders and business executives left the freezing temperatures of the Swiss
mountain resort of Davos after a week of high-stakes meetings about key world
issues.
Davos 2024 presented a timely opportunity to ring the
alarm and delve into the policy and public-private partnerships that could
rapidly scale the African economy.
The meeting saw a keen focus on
economic growth from African delegates and the launch of the Private Sector
Action Plan, a first-of-its-kind initiative between the World Economic Forum
and the African Continental Free Trade Area (AfCFTA) Secretariat. The
initiative is comprised of 40 global companies.
The announcement came after President Paul Kagame of
Rwanda and President Nana Akufo-Addo of Ghana, together with the United Nations
Development Fund, launched Timbuktoo, a start-up fund with an initial $1
billion target to leverage Africa's youth and dynamism.
The fund is expected to provide financial support to
innovative and dynamic startups, spurring economic growth, job creation and
technological advancements across the continent. By encouraging
entrepreneurship, the Timbuktoo initiative aims to contribute to the
development and empowerment of Africa's youth in the rapidly evolving global
economic landscape.
Africa's opportunities for growth,
however, are hampered by well-documented challenges, not least of which is
conflict.
Speaking at the On the Frontlines for Nature session
in Davos, Emmanuel de Merod, Director of the DRC's Virunga National Park, spoke
on the violence, extreme poverty and environmental degradation in Eastern Congo
- byproducts of the scramble for Congo's resources.
Speaking at a session where panellists discussed the
schism betweem the global North and South, Rwandan President Paul Kagame
alluded to capacity building as one way to ensure that Africa remains
up-to-speed with global developments, especially in times of crisis.
During the same session, Ngozi Okonjo-Iweala, Director
General of the World Trade Organisation (WTO), said that we live in a
multipolar world characterised by multiple power points. She pointed to a
bigger role for multilateral organizations, such as the WTO, in shaping
equitable outcomes for people and the planet.
At the same time, she said that the balance of trading
power is shifting towards the South. Whereas North-South trade has remained
stable over the past few years, South-to-South trade is on the rise, with the
South now becoming a power trading bloc.
According to Okonjo-Iweala, this illustrates that the
global centre of power is diffusing, and we need to work together to remain on
course.
Taking a contrarian view, Enoch
Godongwana, South Africa's Minister of Finance, made a case for BRICS, the
recently-expanded intergovernmental organization that comprises Brazil, Russia,
India, China, South Africa, Saudi Arabia, Egypt, the United Arab Emirates, Iran
and Ethiopia.
"The key issue is how do we mobilise savings in the
south in order to ensure a better development agenda? That's the most critical
part. To do this there needs to be reform of the international, multilateral institutions,"
he said.
While considering all these views,
Africa remains a continent with incredible potential, perhaps only lacking the
policies and regulations to steward its abundance of talent and resources.
Which is where the AfCFTA enters centre stage.
According to a World Economic Forum’s Insight Report - AfCFTA: A New Era for Global Business
and Investment in Africa - the free trade
area, one of the world’s largest by number of people and economic size, is
projected to host 1.7 billion people and oversee $6.7 trillion in consumer and business
spending by 2030.
Speaking at the African Economy of Scale session, Wamkele Mene,
Secretary-General of AfCFTA, argued that the agreement has laid the ground for
Africa's potential to be unleashed.
At the same session, Kashim Shettima,
Vice-President of Nigeria, said that Africa is the next global frontier because
entrepreneurship is embedded into the psyche of the average African.
From where he sits, as the vice president of one of
Africa's largest economies, agriculture holds the key. 100 years ago, he said,
people used horses and cutlasses to eke out a meagre existence. Now, farmers
have to embrace modern agricultural practices and increase yields by leveraging
our youthful population.
The continent is poised, he said, to be a driver of growth
and change in the world.
On investment
To become a driver of growth both locally and
internationally, African countries need access to capital, something that Mary
Vilakazi, the CEO-Designate of FirstRand Ltd, is well aware of.
FirstRand Ltd is Africa's biggest lender by market value.
Speaking at Davos, Vilakazi said that banks must prioritise businesses that
create jobs and build the infrastructure required to generate economic capital.
She acknowledged that there were structural and regulatory
barriers to trade and cited stronger public-private collaboration as an avenue
to create environments that support frictionless trade.
On wielding power
Speaking at the Middle Powers in a Multipolar World session,
Demeke Mekonnen Hassen, Deputy Prime Minister and Minister of Foreign Affairs
of Ethiopia, said that Africa needs to prepare itself to compete in a
multipolar landscape. He spoke about a continental shoring up in the areas of
peace and security, the African economy and digitalization.
The deputy prime minister acknowledged Africa's
challenges, including climate change and the energy transition,
under-development, the technological divide, the reskilling imperative and the
debt burden. All that notwithstanding, he said that Africa is rising and
African countries are quickly evolving to compete on the global level.
On 1 January 2024, Ethiopia joined the BRICS pact.
Mekonnen Hassen added in his remarks that Africa is poised to "play a
pivotal role internationally when it comes to trade, investment and other
economic activities."
WEF 2024 and rest of the World
MIDDLE
EAST
Gaza
dominated the agenda of the World Economic Forum (WEF), but leaders failed to
produce clear details on any practical pathway to Palestinian statehood, or a
ceasefire between Israel and Gaza's Palestinian militant group Hamas.
The war
is slowing down the economy of the entire region, said Qatar's finance
minister. The head of the Palestine Investment Fund estimated at least $15
billion would be needed to rebuild houses in Gaza alone. Arab states said
they would not fund reconstruction unless there was a lasting peace.
"We
agree that regional peace includes peace for Israel, but that could only happen
through peace for the Palestinians through a Palestinian state," Saudi
foreign minister Prince Faisal bin Farhan told a WEF panel.
RED SEA
Attacks
by Yemen's Iran-aligned Houthi group on ships in the Red Sea would drive the
cost of goods from Asia to Europe much higher, logistics giant DP World said. Chief
executive officers who attended Davos said they were gaming out alternative
supply routes. Yemen's vice president and Iran's foreign minister said the
attacks would not stop until Israel ended the war in Gaza.
"If
it's in the short term, tankers might be available ... But if it's longer term,
it might be a problem," said Amin Nasser, chief executive officer of oil
giant Saudi Aramco.
CHINA
Premier
Li Qiang said at the meeting that China's economy was open for business
and highlighted its potential for foreign investment, but investors remained
cautious amid sluggish post-pandemic recovery and tensions with the United
States. Asked how helpful a closed door lunch with Li was, one CEO said
"medium", underscoring the scepticism about China's charm offensive.
"I'm
glad that people are all talking," JPMorgan CEO Jamie Dimon after the Li
lunch.
ARTIFICIAL
INTELLIGENCE
Talk of
AI rippled through Davos meeting rooms and panels, its promise touted on signs
and its security risks invoked by China's premier. While conversations included
how to regulate the burgeoning technology and how to apply it to scientific
discovery, the question of how to monetise persisted.
ECONOMY
Heads
of global banks warned of inflationary pressures from increased shipping costs
and the possibility of oil price rises. Bank executives fear the market is
mispricing interest rate cuts, and that geopolitical risks could cause
volatility.
"It's
a big year in general with many elections around the world which could change
potentially the way fiscal stimulus is handled around the globe," said
Suni Harford, President Asset Management and Group Executive Board Lead for
Sustainability and Impact at UBS.
BANKING
Consolidation
of European banks was discussed behind closed doors, but executives say
cross-border mergers are difficult to achieve without uniform regulation across
the region. Selective mergers of national players were seen as more likely.
ENERGY
While
several panels focused on the end of fossil fuels, the head of Aramco told
Reuters demand for oil would not peak any time soon. The number of energy
executives in Davos was smaller than in years past. Oil bosses from Shell,
TotalEnergies and Aramco met on the sidelines to discuss how to help
decarbonise industries they supply, three industry sources said.
UKRAINE
With
other crises jostling for attention, President Volodymyr Zelenskiy put Ukraine
on the Davos agenda early. Talks with more than 80 national security advisers
from around the world led to Switzerland offering to host peace talks.
Zelenskiy also met with Wall Street's Jamie Dimon and other bank leaders to
seek financing for Ukraine's reconstruction.
"Ukraine
can prevail in this war but we must continue to empower their resistance,"
European Commission President Ursula von der Leyen said, urging Kyiv's Western
allies to continue arms deliveries and financial support.
GENDER
The WEF
said that around 28 per cent of the total of 3,000 participants, including 350
heads of state and government and ministers, who gathered in Davos this year
were women.
"This
year marks a significant milestone in the 54-year history of the Annual
Meeting, as we expect to welcome more than 800 women to Davos — the highest
number in our records," it said.
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