Southern Africa faces a full-scale revolution: Davos 2018

The economic imperative means the region is a place investors would do well to watch

There is a great upheaval, not to say a full-scale revolution, going on in southern Africa. This week, the spearheads of that change are setting out their stall in Davos. The new leaders of three of Africa’s most established liberation movements — in Angola, South Africa and Zimbabwe — will use a visit to the Swiss Alps to try to persuade the assembled money-wads that their countries are back in business.

The best known of the three is Cyril Ramaphosa. Having supplanted Jacob Zuma as president of the African National Congress — though not yet as president of South Africa — expectation is high that he can reverse the rot of the Zuma years. Mr Ramaphosa, whose party is ideologically split, has moved quickly to prod the ANC in a new direction. Sensing the shifting tide, the ANC’s national executive committee is seeking to ease Mr Zuma from the state presidency. If it acts quickly enough, it could even clear the way for Mr Ramaphosa, a former union boss turned wealthy businessman, to make the state of the nation address in two weeks’ time.

Mr Ramaphosa, who was Mr Zuma’s deputy, has been criticised for being overly cautious. But following his narrow victory in ANC elections in December, he has moved swiftly. In his first big speech, earlier this month, he excoriated his own party for allowing corruption to eat away at its moral core. He has cleared out the board of Eskom, the state power utility, appointing a strong, competent chairman. 

Meanwhile, Mr Zuma has been obliged to allow a judicial inquiry into “state capture”, the alleged manipulation of his government by crony business interests. The Gupta family, who are at the centre of those allegations, have had assets seized and seen the prosecutor’s noose tighten.

All three new leaders want to attract foreign investment

Perhaps the African leader who will attract most interest in Davos is Emmerson Mnangagwa, aka the Crocodile, who in November ousted Robert Mugabe as president of Zimbabwe after 37 years in the wings. So grateful is the international community to see the back of Mr Mugabe that it has been strangely reticent to point out that Mr Mnangagwa owes his position to a military coup.

The new president’s task is, in some ways, easier than Mr Ramaphosa’s. Zimbabwe has reached rock bottom. It has no currency, no relations with multilateral bodies and precious little foreign direct investment. Yet Zimbabwe is one of Africa’s potential success stories. It has good, if dilapidated, infrastructure, a manufacturing base and a long history of agriculture at scale. 

Most important, it has one of the best-educated populations on the continent. Several million of its most talented have gone abroad to seek opportunity and many are just waiting for the right signal to bring their know-how and money back home.

Mr Mnangagwa could quickly nudge things in the right direction. He needs to convince the world that elections, to be held by June, are free and fair. He will also have to establish a stable business environment. 

So far, Mr Mnangagwa, no cuddly liberal under Mr Mugabe, has been more impressive rhetorically than in practice. His inaugural speech would not have sounded out of place at Davos. But subsequent cabinet appointments suggest he wants to consolidate power around Zanu-PF party and the army. 

Least known of the three new leaders is Jo?o Louren?o, president of Angola. So far, he has been the most daring. Mr Louren?o was the handpicked successor of José Eduardo dos Santos, who had run oil-rich Angola — Africa’s third-biggest economy — like a family business for 38 years.

Mr Louren?o had been widely expected to be a dos Santos stooge. It has not turned out like that. Since he became president in September, he has removed both of Mr dos Santos’s children from senior positions, including Isabel, Africa’s richest businesswoman, who was head of state oil company Sonangol. Like Mr Ramaphosa, he has talked about combating corruption and extending economic development to the impoverished majority. Like Mr Mnangagwa, he has begun to woo foreign investors, particularly the oil majors. 

In all three cases, there is a business element to the story. All three new leaders want to attract foreign investment. Mr Louren?o knows that existing oil wells will soon start running dry. Mr Mnangagwa needs multilateral institutions to work out an arrears deal so money can start flowing again. He also needs to convince investors that Zimbabwe is a place where it is safe to put one’s money to work. 

Mr Ramaphosa, too, is desperate to get his country’s economy going again. Without more job-creating industry and a healthier tax base, he will have nothing to work with to satisfy the pent-up expectations of the black majority.

The economic imperative means that southern Africa is now a place investors would do well to watch closely. Yet amid all the flurry of change, one thing remains constant. The three liberation parties that brought us to this point are not going anywhere.

Source: FT