If there was a theme that was top of the agenda for day two of the Thomson Reuters Africa Summit in Cape Town, it was political leadership.
Attendees were informed first thing in the morning that South Africa’s finance minister, Pravin Gordhan, would be addressing the summit via Skype, in one of his first public speaking appearances since the country’s National Prosecuting Authority charged him with fraud earlier in the week.
The minister’s appearance was likely in order to help quell fears of a ratings downgrade for South Africa in light of perceptions of political instability fuelled by the charges, which are widely believed to be unfounded.
Before Gordhan’s address, Colin Coleman, MD of Goldman Sachs sub-Saharan Africa, spoke on a panel called “What’s Keeping Africa’s Business Leaders up at Night?”.
There were three things, he answered, keeping him from sleeping soundly.
“The first is political leadership, second is political leadership, and third is political leadership,” he said, to not much laughter.
Coleman explained the worries he had in specific countries, citing political divisions within South Africa’s ruling party; Angola’s “superstructure, which has a military family leader in place”; a Nigerian leadership that “hasn’t grasped the economic and structural problems around the currency”; Kenya’s corruption, security threats and the “scrambled egg between business and government”; and finally the management of Mozambique’s economy – in particular the loans “that caused the IMF to step in and effectively put that country into a situation of cardiac arrest”.
However, Coleman felt that the continent did still have long-term investment appeal.
Scott Eisner, president of the US-Africa Business Centre was due to speak about what Africa could be doing to attract more investment from the US.
However, his speech focused as much on the importance of leadership from African heads of state when it comes to predictability and transparency, as it did on getting Americans to realise that Africa in fact had more than one head of state – that it is not a country – and that the bad experiences one company has had in one country do not mean that all companies could expect the same. He used misconceptions around where the Ebola crisis took place as an analogy.
“We must do more in the trade space,” he added. “Most of our eggs are in the Asia basket. That has to change or tomorrow we’re going to lose our ability to trade across the continent, as we already have to China, Europe, Turkey.”
The audience was keen to hear his thoughts on the Republican Party’s Presidential Candidate.
“How would you convince Donald Trump that investing in Africa was important, were he to win?” asked one audience member.
Eisner replied – and it’s an answer that is illustrative, perhaps, of the abnormal forms reason might take in the unlikely event of a Trump victory – that the centre would “make the security case” to Trump, explaining that investment in Africa would create jobs, and that those jobs would mean a lower chance of people joining terrorist organisations.
Finally, it was time for the audience to hear what Minister Gordhan had to say.
“I have every intention of delivering that medium-term budget policy statement in the 26th of October 2016,” he stated, alluding to the fraud charges.
“I thought you’d applaud that one,” he added, to sudden applause.
The threat of South Africa’s possible downgrade to junk status falls largely on the finance minister to mitigate. In light of this, his speech focused on fiscal policies and progress. He discussed the government’s work on inclusive growth and strengthening partnerships with the private sector, before turning to the downgrade, saying that all of the questions that ratings agencies would want a ‘yes’ answer to in order not to reconsider the country’s current grade – BBB- with a negative or positive outlook, depending on whether you’re asking Standard & Poor’s (S&P) or Moody’s – he could answer in the affirmative.
He addressed the question of the fraud charges after being asked about it by Axel Threlfall, Reuters editor-at-large, who was moderating the summit.
“Every credible legal expert in South Africa has commented – and I think it’s important for an audience like you, and the people who report to you, to know – that those charges do not constitute fraud.”
“And as far as the persecution, and what I call ‘political mischief’, that I’ve been subjected to, it remains political noise. These are contesting forces, as you would have them in any political party, formation, or society, and it’s for the public ultimately to judge… who ultimately wants social justice in this county more than anybody else. And this is not to put flowers on the lapel of any individual, it’s about which cause is the right cause.”
Asked at the summit the day before about the fraud charges, S&P MD for sub-Saharan Africa, Konrad Reuss, said, “I think it just highlights that political risk has come to the fore more than ever.”