Business Tech Africa’s Editor, Greg Stewart (ED), spoke with Trevor Manuel (TM), the previous Finance Minister of South Africa and current Investment Envoy for the African Union, at the TEHA CEO Dialogue happening in Illovo Johannesburg currently form 14-15 Nov.
ED: I asked Mr Manuel about his viewpoint on the investment landscape in Africa currently.
A Crises of Loss of Multilateralism
TM: “I think that the first thing is that Africa must stop being passive about the discussion of investment opportunities. I think that there’s a crisis moment in the world right now. I think the crisis is created by the Trump presidency and the fact that he now has the presidency, the Senate, and the House, and this means that he will do exactly as he pleases. And I think it’s a crisis moment, and I’d like to explain why I think it’s a crisis moment”.
“For all of our lives since 1945, the world has had as a basis multilateralism. Multilateralism has all manner of issues, but it does carry with it, very importantly, principles like symbiosis and so on and so forth and a perspective of “We’d like to attract your investment”.
“This is the exchange, and I think that what we will see now is kind of one-way traffic. And that I think is a crisis moment. It’s a crisis moment for us as Africans if Africa is weak. Now, over the past couple of decades, a lot of work has been done, but you’ve got to bring it to fruition. Included in that is the African Continental Free Trade Agreement, the ACFTA”.
ACTFA Requires Better focus
“But the ACFTA needs to move beyond the accord to what gets traded. We can’t turn to Swaziland and say, you buy our sugar and we buy your sugar. We’ve actually got to look at the content of what gets traded”.
“That, I think, is an important issue, and it’s an issue that is accentuated by the geopolitics of the moment. I think that the geopolitics might push some decision-making out of it, especially for big investors who want to please the Trump presidency and so on. And it will have an impact”.
Africa Must Use The Moment to Strengthen Internal Focus and Infrastructure
“And it’s how we use that moment to ensure that we can be better at what we’re doing. And I think that parts of the moment speak to the need for us to challenge ourselves as Africans on things like infrastructure. We need a better understanding of what the gaps are in our infrastructure, and we need to have a sharper understanding of what the blockages are in our infrastructure”.
“If I think of South Africa, I think of rail, I think of how tonnages have dropped, I think of how our ports are clogged up, and what the impact will be on exports. If we can’t export, it would have an impact then also on the ability to attract investment on a longer basis. It’s speaking to ourselves”.
“I think the same issues arise across the continent. We need to ensure that the infrastructure is there and linked, and this applies to a big network infrastructure, it applies to roads and rail, it applies to our ports, it applies to energy, and it applies to bandwidth. We need this investment to carry us forward”.
Investment in People is Key
“I think we also need to sharpen our investment in people. Again, I apologise for starting with South Africa, but when I look at the fact that only 5% of grade 12s in 2022 passed grade 12 with a maths mark of higher than 50%, we are preparing a generation for technological advance”.
“And if you look at the broad trends of artificial intelligence, and so all of these are mathematically based things, and so if we aren’t teaching it to our children, then we’re going to be left behind”.
“So these are the big challenges I think we must speak, we must be, before we talk to investors, we’ve got to be speaking to ourselves”, concludes Manuel.
Greater Unity In Africa – The big Question
ED: I asked Mr Manuel about the political shifts taking place in Africa and if he believes that this may lead to greater cooperation and unity among African States within the African Union.
Too Much Conflict Currently
TM: “Look, a big challenge right now as Africans is that we must deal with conflict within countries. There are 14 countries on the continent, that’s 25% of all countries in the continent facing upheaval of some or other form”.
And one has to offset this against opportunity. There’s a lot being said about the DRC, and it is a great contributor already with even greater potential for some of the rare minerals, cobalt, coltrane, and so on, that technology needs in the future. But unless peace is secured in the DRC, it’s going to drive that kind of mining into some backward, dark activity where children mine.
“You’ve got to deal with governance challenges, and the DRC is a massive, massive country, incredibly difficult because of jungle and everything else. But similarly, if you look up that band of West Africa into the Sahel, there’s too much violence, too many countries without cause, and some of these countries are mineral rich, and that becomes the staging post for the next. So I’m saying 14 of the 54 countries have conflict with the world.
Ongoing Conflicts and Poor Governance Destabilising Opportunity
TM: “There are 41 million Africans who are internally displaced. And unless we deal with these issues, the world is not going to take notice. You can look, I mean, Sudan was never quite peaceful, but if you look at what is happening at the moment in the way in which people are shooting each other up”.
Right next door (to South Africa) to where we are in Mozambique, the issues in the north of the country, Gabo Delgado, are a problem. It’s gas rich. It could make a hell of a difference to every man, woman, and child into the future in Mozambique. But because of governance issues in the management of the natural resource, you’ve had this war”.
Now it’s low intensity, but it hasn’t gone away for the past five years. And now you’ve had an election result that is where the results of the elections are actually contested by violence on the streets. I look at Mozambique, and I say, it was a post-charter development.
Bad governance took to them. Bad governance resulted in the tuna guns. Bad governance resulted in the country borrowing money that they didn’t need.
And the cost of that borrowing will be carried by future generations. Now, the governance issue, I think, is a precursor to unity. And so, you know, part of my difficulty, part of my difficulty is I’ve seen phenomenally good times on the continent.
History lessons – Africa Needs to see Policy Through to Implementation
If I think of the late 1990s into 2000, when the OAU was replaced by the African Union, and I look at the discussions that went into the constitutive act of the African Union, and I know that governments have worked together so well to bring it to that point, to shake off the past, because by that time, there’d been 37 years of the OAU, and leaders said, we want a better relationship going forward. Leaders said to the world, we don’t want a begging bowl for aid. We want a partnership, a new partnership for Africa’s development.
We didn’t follow through on those things. So, investment will be an outcome, but it’s an outcome of how we deal with our own understanding of the challenges that present themselves.
Two Pot Retirement system in South Africa – Kicking The Can Down the Road?
ED: I asked Mr Manuel, from a perspective of being the Chair of Old Mutual, about the new Two-Pot Retirement legislation that has recently been introduced in South Africa, about his opinion on the new regulations that have already seen R21,4 Billion withdrawn from pension savings, and if this is creating a problem for the future, while creating a current boost for a lagging economy.
TM: “I agree with you entirely”.
“Part of our problem is that what has happened in the lives of working people in this country is people have become highly indebted, very highly indebted. I think the biggest enemy of the good at the moment is gambling. Every major sports event in South Africa is sponsored by one or other betting shop”.
“There are betting shops that are so flush with capital, they can become jersey sponsors for Premier League clubs in the UK. It tells a story. Where are those resources coming from? And I think that what has happened to people, working people, is that they can’t make do”.
“And so the issues that have arisen is that everybody’s focused on the here and now, the instant gratification. Why should I leave money in a pot of pensions when I don’t have food to eat right now? So there’s a side of me that says, let’s try and understand that, but the net consequence of it is that you are actually kicking the can down. It’s sad”.
