In 1992, one year after the end of the apartheid era in South Africa, the two leaders that would broker the country’s future trajectory appeared together at a forum in Switzerland.
It was the first time Nelson Mandela, then the leader of the anti-apartheid African National Conference (ANC) movement, and President F.W. de Klerk of South Africa appeared outside the country, side by side. The forum was the World Economic Forum in Davos, Switzerland, in an appearance that was the product of months of diplomacy on the part of the organization’s founder, Klaus Schwab.Mr Mandela and Mr de Klerk used the occasion to present a new vision for a unified South Africa to the world. Two years later, Mr Mandela would be South Africa’s first black president. It was the start of a new era, both for South Africa and for much of the region in which it would become an economic and political leader after years of sanctions and political isolation.
This year’s WEF Africa will return to South Africa from 3-5 June, with Cape Town as the backdrop for a meeting that will reflect on WEF’s 25 years in Africa, in parallel with the past 25 years of the region’s history. The theme – ‘Then and Now: Reimagining Africa’s Future’ – seems fitting given the venue.
“From a context point of view, Africa has changed dramatically since about 2000. Over the last 10 to 15 years, its prominence has grown globally as well, and that is also mirrored within the organisation,” Elsie Kanza, WEF’s director for Africa, tells This Is Africa.
“Within the organisation, the genesis of the World Economic Forum on Africa was the opening up of South Africa post-apartheid.”
South Africa’s economic transformation has been remarkable one, though many challenges remain. The country’s GDP rose from $111.1bn in 2002 to $350.6bn in 2013 – a drop of some $50bn from its peak in 2011, according to the World Bank.
Reflecting on the past quarter century of its history highlights the paradoxes of the region’s transformation. South Africa is one of the most advanced economies in Africa, yet it is also wrestles with rampant unemployment and recent xenophobic attacks against migrant workers perceived to be taking up space in an already overcrowded job market.
The country’s mining sector, which accounts will account for a projected 28.3 percent of national revenues in 2015 according to the IMF, has been struggling as low commodity prices and labour strikes cut into company profits. On 26 May, the Financial Times reported miners would cut a further 35,000 jobs in South Africa at a time when employment is already in short supply.
For many, the promising vision presented by post-apartheid South Africa’s leadership and today’s reality are not always congruent. Nevertheless, economic reforms undertaken at that time transformed South Africa’s economy and opened it up to investors from around the world. According to Ms Kanza, WEF played a key role in allowing the country to showcase its new direction.
“[WEF] was part of that vehicle, of their re-emergence, both regionally and globally,” Ms Kanza explains.
“A lot of emphasis in the earlier years was on investment for both growth and development, with an emphasis on South Africa and southern Africa. The focus [at that time] from the country’s point of view was introducing its new leaders to the world, as well as exploring various kinds of reforms that could facilitate investment.”
Earlier themes for WEF’s Africa forums focused on opening up the region to business, with a focus on improving the business environment through internal policy reform. “There was a lot of emphasis on the state pulling out of active economic engagement, and creating space for the private sector,” Ms Kanza specifies.
The results of these conversations show: South Africa now ranks 41st globally according the World Banks’s annual Ease of Doing Business report, and 9th on a list of developing countries. Fluctuations in the rand and ratings downgrades remain an issue. However, many businesses seem willing to put up with these conditions because of the opportunity the market offers.
A holistic approach
After twenty five years of evolution, WEF’s approach to Africa has moved on, reflecting the region’s rapid growth and political maturation. “Moving on 25 years, our emphasis is much more nuanced, it is much more holistic — we are looking not just at the economic aspects related to growth, but also the qualitative aspects by having much stronger multi-stakeholder participation,” Ms Kanza says.
This approach is steeped in pragmatism, and build’s on WEF’s reputation as an influential convenor across sectors.
“Lots of the key challenges the continent faces cannot be addressed solely by civic governments, or solely by the private sector, or solely by citizens. So even what is seen to be a ‘hard’ topic, like infrastructure, actually requires a broad view if you are to be successful,” she points out.
Africa’s infrastructure deficit remains a key, and thorny, challenge . The logistics of building and upgrading roads, ports and airports across the continent are daunting. Financing is the other hurdle. The African Development Bank (AfDB) estimating that the continent has an annual infrastructure funding gap of $50bn.
However, stakeholder consultation is also an essential – and often underemphasized – part of ensuring that projects are effective.
“Whether it is looking at the impact on the environment, or else looking at how infrastructure will be used, you also need to connect with citizens. What the forum does is to create the space for these different actors to come together so you have a better sense of what the consequences are and what roles everyone needs to play to be able to move forward,” she says.
These are the kinds of big, cross-sector conversations she wants the forum to galvanize in Cape Town this year. “It is great to have people who are looking forward 25 years. We are able to benefit from their hindsight: what assumptions did they make, where weren’t they bold enough?”
Bold thinking is needed. While the changes across much of the region over the past decade have been remarkable, the next 25 years are going to be challenging as Africa’s population grows exponentially. Absorbing this population into the workforce will be both a tremendous challenge – as demonstrated by unemployment figures in South Africa and elsewhere – as well as an opportunity.
“As a fast-growing continent, we expect to add another billion to the work force, and that would be larger than China and India combined. That is a huge, daunting challenge to deal with as we go about this business of growth and development,” Ms Kanza remarks.
In order to catalyze innovative thinking, the Forum will look at regional issues across Africa through three lenses. The first is marshalling resources – and while preserving and managing the continent’s abundant natural resources will be part of the conversation, Ms Kanza also wants to look at the term more broadly.
One facet is the changing context of development finance, as foreign investment and remittances outpace aid as sources of revenue across Africa.
“This is a subtext where you are seeing a big shift from reliance on aid — that was quite heavily emphasized in the past decade — to other sources of investment. It can be straightforward direct investment, but you also have remittances [and] countries are issuing bonds so they are able to raise their own funds both domestically and internationally,” she explains.
Managing human resources is another important aspect of this conversation.
“Some people said applying resources to people is a hard one. But if you think about it, it applies whether it’s closing the gender gap, where you still have women whose full potential is not fully realised, or youth, and these make up the bulk of the informal economy for instance, so if you’re able to have them become more productive,” Ms Kanza explains.
The second lens is perhaps more familiar territory for WEF: enabling markets as the emphasis shifts towards private sector-led growth, and away from state-led development. Part of this story is progress on reforms, which goes back to conversations that began 25 years ago.
According to the World Bank, between 2013 and 2014 African governments undertook the most reforms to improve its business environment of any region in the world. Now, Ms Kanza wants to see this progress translate into the development of the private sector.
“We still have much fewer globally competitive companies [in Africa], so we need to look at what it would take to grow the private sector. You still hear lots of concerns about the complexity and challenges of doing business in Africa, so despite the reforms the feedback is: much more still needs to be done”
“These become important questions if you’re going to rely on the private sector to do more,” she adds. “There are new markets, new opportunities, as well as new pressures on the private sector. There are also questions about what the role of government will be. If you are going to start shifting more responsibility to the private sector, that also needs to be interrogated further.”
Inspiring creativity is WEF’s third lens this year. Ms Kanza is particularly excited by the idea of applying ‘design thinking’ to development solutions.
“It is a user-centric approach which is much more common in industries such as the fast-moving consumer goods industries where they pay a lot of attention on what people want, and how they want it, and when they want it. We don’t usually see this applied in the development field,” she says.
This approach could go beyond goods and services to policy, she posits. Consultation and greater citizen involvement in policy formulation, facilitated by technology, could catalyze new approaches to long standing problems that move away from what Ms Kanza characterizes as “cookie cutter” solutions.
She points to the ways that food and beverage companies such as Diageo and SABMiller have built models across Africa that recognize unique, local conditions and desires. These business models have taken off. And while policy and rolling out local beer brands may not appear to have much in common, they both tie back to the idea of thinking differently about solutions over the next quarter century.
“There clearly will be limitations and trade-offs, and that’s something we need to be mindful of,” Ms Kanza reflects. “I think that speaks very well to the aspect of assumptions, however: what assumptions are we making about what’s doable and what isn’t, and what the limits are?