Thoughts on Africa in Davos
Johannes !Gawaxab, managing director of Old Mutual Africa, was the only Namibian to attend the 43rd World Economic Forum Annual Meeting in Davos, Switzerland. The forum’s AGM brings together business, political, academic and other society leaders from all over the world. It is regarded as the foremost creative force for engaging leaders in collaborative activities focused on shaping global, regional and industry agendas. He shared his thoughts on the experience with RISKAFRICA.
Attending the annual meeting was a great opportunity to be part of the shaping of the greater environment in which we operate; and with finance being such a critical part of how an economy runs and functions, to discuss issues affecting the financial services industry with some very key influential stakeholders.
I had the privilege over the four days in Davos to meet and talk to Raila Ondinga, Prime Minister of Kenya; Dr Henry Kissinger, former US Secretary of State; Joseph Stiglitz, the American economist, and recipient of the Nobel Prize in Economics; Marissa Mayer, the CEO of Yahoo; governors of three central banks; and Clay Christensen, the Harvard Business School Professor best known for disruptive innovation.
It is evident from the many discussions that we are confronted worldwide by major adaptive challenges as well as profound transformational opportunities. To steer this towards successful outcomes, we need to master strategic agility and to build risk resilience. A primary insight for us in Namibia is that we are constantly at a crossroads where our actions or inactions can shape the future of life of many Namibians.
Key issues affecting the world
Global economy, Eurozone fragility, financial system stability, widening inequality, persistent structural unemployment and climate change appear to be key issues affecting the world. To thrive, never mind survive, global competitiveness is increasingly driven by talent and innovation.
Major geographical risks in 2013
The Arab Spring/Winter; the Eurozone crises and the rise of China seem to be among the significant risks facing the globe. China’s behaviour is important as its actions impact the entire world. In Africa, we need to review our relationship with China and change it to one that is mutually beneficial. China has a clear long-term Africa strategy which, understandably, is premised on its own interests. It is time for Africa to review this relationship and approach it in a way that is a winwin for both parties.
Europe will struggle with growth
Europe is experiencing structural problems and is set to struggle for a long time. The continent is one of Namibia’s main trading partners and if economic growth continues at current levels, there are obvious challenges to growth in Namibia. Diversifying our exports to new markets should be a consideration if not already embarked upon.
Risk of unconventional monetary policy
We are entering a risk period in terms of how much central banks can do. Currency wars have become a real possibility. Central bankers are keeping interest rates low and asset prices high, and every country wants to keep its currency down in order to make exports more competitive. To respond to global economic challenges, monetary policy globally increasingly finds itself in unconventional territory.
Although we live in a world of flat money and mostly floating rates, questions are being asked about the current level and value of the Chinese currency as well as the Japanese Yen, including the latest move by Japan to increase its inflation target from one to two per cent – and the decision by Bank of Japan to buy $140 billion of mostly short-term government debt each month. The depreciation of the US Dollar during 2012 also raised questions as to whether countries should keep their currencies deliberately low to improve their competitiveness.
Internet will get closer and personal
The ‘interest graph’ – the set of things I am interested in and that my friends like – will overtake the ‘social graph’ or the social networks. In the evolution of technology we had the Internet-boom era, the second wave revolved around social networks, while smartphones are currently experiencing an explosion. The future of technology is personalisation, guided by daily habits. The ultimate source of growth will be technological progress.
Inequality biggest risk facing the world
Poverty, unemployment, and inequality are not unique in Namibia. The reality is that across the world – for different reasons and histories – inequality and unemployment are aggravating challenges we all face.
The secrets of success and competitiveness
The overarching theme experienced at Davos clearly indicates that success really is about the journey, not the destination. To be competitive, Namibia needs to focus on structural features of competiveness, on its macro-economic policy – fiscal and monetary policy – innovation, attracting FDI and on its export sector. To ensure internal stability, labour-absorbing growth is almost a no-brainer.
But to really focus on ensuring Namibia’s success, we need to get our education system on a track that is supportive of our national aspirations. To do this, we need good leaders. Good leaders lead, great leaders transform. Our generation has everything to lift Namibia out of poverty and transform it into a winning nation.
While many of these observations are known and shared in various forms across Namibia in boardrooms and in huts, I share them with you now with the assurance that we are in good company globally and our growth is their growth and their success is ours, too.