The Final word from Davos is "Cautionary Optimism"

Renee Horne – London        30 January 2010

The crème de la crème of the world are making their way home from the Alpine Ski resort in Davos.  There have been words aplenty, in fact five days of deliberations at the annual World Economic Forum (WEF).  This year lacked a core theme and it seemed that business heavyweights and political leaders focused on a series of challenges facing the world from global threats and political turmoil to scarce resources. In an exclusive interview with the World Entrepreneur Society (WES), Professor Mthuli Ncube, Vice President and Chief Economist of the African Development Bank said “Davos is about interaction and interconnectivity between business and political leaders”.  Ncube, speaking from Davos said “Of course the dialogues in Davos are necessary to address the challenges”.  And what are these challenges that Ncube speaks of? “We are all aware there is an elephant in the room and that is whether recovery is on its way. There is optimism here in Davos, but we need to be cautious”. So what could derail this optimism? Among the list of worries for political and business leaders are soaring inflation (especially for food), scarce resources ranging from food to energy and government debt, especially in Europe.

Euro optimists versus Euro pessimists 

There was huge debate about the health of the Eurozone, or rather the lack thereof. Ncube said, there was major concern in meetings and discussions about the shaky euro, “Europe is in a lot of trouble, but leaders are determined that the Eurozone will survive”.  Indeed, French President, Nicolas Sarkozy and German Chancellor, Angela Merkel constantly argued that they would do whatever it takes to defend the euro and prop up weaker members of the currency union. However, given the national public outcry over Germany’s recent bailing out of Greece, one might question whether Merkel’s political career could survive any similar future action.  Moreover, billionaire financier, George Soros warned that Europe could potentially fall apart because of the “two speed Europe” – the ‘haves’ and ‘have nots’ that is being perpetuated by the reform of the embattled euro.  Soros said at the side-lines of a newsbriefing in Davos that the currency used by the 17 EU nations is in the process of reform following concerns over the debt crisis that enveloped Greece and Ireland and that is also threatening others.  Greek Prime Minister, George Papandreou emphatically stated that Greece was on the road to recovery. The forum saw a split, optimists argued that the Eurozone will weather the storm, but the pessimists argued that there are still stormy days ahead as another sovereign debt crisis is possible.

The tale of two worlds

While the developed world tries to grapple with its economic woes, the developing world appears to be on solid ground.  Ncube said “There is recognition here that the emerging markets are doing well. Yes the emerging markets are leading the pack; China and India are dominant forces”. However, there is considerable caution as to whether the economic boom in the emerging markets will last. According to the Global Risks Report released two weeks before the Forum, there is a sense of caution as there is the possibility of China’s economy overheating, instead of it helping support global economic growth.
But Africa’s economic tale also took centre stage at the forum, it was noted that most meetings and discussions on Africa were oversubscribed, Ncube said this is due to the investment opportunities on the continent, “Africa is catching up and is seen as the growth pillar illustrated by the development of countries such as Rwanda, Tanzania, Nigeria and so on”.  Since Africa is open for business, which country and sector should one pursue? Ncube advises, “You need to be resource specific. If you talking about oil, there’s Nigeria, Sudan and they’ve just discovered oil in Ghana; when we’re talking about retail it’s likely to be Ethiopia and Kenya; if you want a fully operative business, then your base would be Johannesburg, South Africa – it is a good place to set up a business as it has the necessary infrastructure. There is also a huge Agro-industry throughout Africa, about 70%”. But Ncube warns that although Africa is on solid ground, “We still have an infrastructure deficit, there is a massive inequality gap, and quality skills are a challenge also the need to promote and develop entrepreneurs”.

The insiders' word on entrepreneurship

Ncube also chairs the WEF global agenda on poverty and economic development which also finds strategies to support entrepreneurs.  This comes at a time when government and business are not showing enough support for start-up businesses (see elsewhere on this site for related articles, ‘Where is the magic’ and ‘Enterprise UK to close’).  Ncube admits that there “needs to be more private-public partnerships to support up and coming businesses and in Africa we need the creation of joint ventures between foreign and local investment.” He added that by developing entrepreneurs we can curb unemployment which is a global problem.  So, what’s the advice for those who would like to start a business? Ncube advises that, “creating a good business plan, you also need to network and find good bankable ideas” but he reiterates that nothing comes easy, “the key is stay focused and stay determined!”…. (share your views ..click here)