The World Economic Forum in Davos will provide President Cyril Ramaphosa with a platform for arguing in favor of increasing investment in SA, but he should be ready to answer questions about the independence of the Reserve Bank of SA and the SA Revenue Service, as well as how he intends to fix the debt Eskom Power Station, according to analysts.
“Considering all the revelations of corruption and unfair management during various investigations in South Africa, Ramaphosa should show potential investors that the country is on a different trajectory compared to previous years,” said political scientist Ralph Mathekga.
Ramaphosa heads the SA delegation at the annual meeting of heads of state, financial leaders and industry captains in the context of low economic growth in the SA. In 2018, the country’s economy experienced difficulties, falling into recession after GDP fell during the first two quarters of 2018. Growth accelerated in the third quarter, but the Reserve Bank SA still believes that the economy will grow only by 0.7% in 2018. Although Ramaphosa has already participated in the WEF in Davos, this will be his first visit as president of the SA. Ramaphosa is likely to discover in the WEF that “the world does not revolve around South Africa and the understanding of the renewal that it (Ramaphosa) brings,” said Mathekga.
“I think that Ramaphosa will find that the world community will be more susceptible to SA, given the change in leadership that has occurred in the country since the end of the Zuma era. Many will seek assurances from him in such policies as land expropriation and the independence of the Reserve Bank SA, said political analyst Daniel Silke. WEF is a chance for Ramaphosa to prove himself, but there will not be a global leader to hand him a check.”
Since US President Donald Trump and British Prime Minister Theresa May do not attend the WEF this year, Silke said that other developed and developing powers have the opportunity to come to the fore. Mark Appleton, head of multi-asset strategy at Ashburton Investments, noted that there was a negative reaction to international cooperation led by populist political leaders such as Trump, who claim that globalism is sometimes contrary to national interests. The global risk report, recently published by the WEF, emphasizes the aggravation of economic and political confrontation between major powers as a key risk in 2019, Appleton noted.
Investec economist Annabel Bishop told Fin24 that the SA delegation will have to explain how it intends to resolve the financial crisis on the debt-burdened Eskom power grid.
“SA public finances may also come under scrutiny on the eve of the budget in February, while general elections are likely to spark debate, given the comments of left-wing political parties that weakened business and investor confidence at the end of last year,” she said. “SA must also explain its low growth rates and key plans in order to change this and thus instill investor interest,” she said.
She said that global growth is likely to be relevant in Davos, especially due to the slowdown in growth in China and the United States and the impact on stock markets. Climate change, geopolitics, human capital and society will be other priority areas. Momentum Investments economist Sanisha Packirisamy, meanwhile, said that Ramaphosa noted that SA is joining the WEF 2019 on a “more solid basis”, given the continuing restoration of the lack of trust between business, government, labor and communities.
The topic of this year is “Globalization 4.0: the formation of a global architecture in the era of the fourth industrial revolution”.