The South African economy is having a good year. The JSE Top 40 is up 37% over the past 12 months; the rand is 8.5% stronger since January; load-shedding is becoming a memory; corporate lending has risen 8.6% year-on-year to September.
South Africa has regained its status as a “liberal democracy” in the latest V-Dem rankings, returning to the top quartile of countries in terms of political openness and good order.
Three weeks ago, South Africa exited the FATF grey list. The fiscal deficit will stabilise this year at a level far below what had been feared. The Treasury and Reserve Bank have agreed on a lower inflation target — a move welcomed by the market. And the country’s sovereign debt has been upgraded.
The result: the unemployment rate (though still far too high) is getting better; and economic growth (though still much too slow) is improving. On top of all of this, our B20 team — under the inspired and systematic leadership of Nonkululeko Nyembezi, Mxolisi Mgojo and Cas Coovadia — has delivered an excellent B20 year and a world-class B20 summit.
The extremely complicated agenda of the B20 summit ran like clockwork. The Sandton Convention Centre and the Sandton precinct worked perfectly, as did the many venues for side events throughout Johannesburg — proving Joburg is still a very capable city.
At the convention centre, the best of South Africa, and Africa as a whole, was on display. The African “bazaar” of products delighted our international guests with its variety and amazed them with its sophistication. African, and specifically South African, culture was beautifully and meaningfully incorporated into the conference, emphasising our sheer excellence in the creative arts and our unity in diversity. Not only were commercial ties being strengthened, but cultural ones too.
Most importantly, the convention centre and the whole city were packed with businesspeople from all over the world, doing what we do best: making connections and agreeing on plans to trade and produce.
Just as an example, I had several excellent business conversations, including with major investors from our own continent, from the US, Europe, and the Gulf. I know several fellow South African businesspeople who had similarly valuable discussions.
Of course, the B20 also made recommendations to our business organisations and the governments of our countries. The recommendations of the South African B20 have now been successfully submitted to the G20 and — more importantly for us — to the next B20 secretariat, which is the US Chamber of Commerce.
Some people, however, still worry that the B20 is “just a talk shop” or that its recommendations could somehow be negated by geopolitical tensions. Both concerns are misplaced. The B20 summit is never intended to be a binding signing ceremony. As business, we have no authority to bind anyone except ourselves.
By design, the B20 has no permanent secretariat, no enforceable key performance indicators (KPIs), no legal status beyond that of the voluntary associations that choose to run it. The annual summit is no more — and no less — than an important symbolic moment in an ongoing multi-year dialogue, which we have had the privilege of guiding this year.
In truth, the B20 is, quite openly and even proudly, a “talk shop”. It works by gradually shaping the climate of opinion and by making suggestions to policymakers in many meetings, held in many multinational task forces, throughout the year.
To give concrete examples: Over the year, the B20 has clearly helped change the nature of the global debates on the accuracy of credit ratings and on how much capital banks need to hold for lending to infrastructure projects.
It’s notable that, for instance, the G20 finance track communiqué calls for better data on the riskiness of infrastructure projects. There’s also now considerable alignment between the recommendations of South Africa’s G20 expert panel and the B20 finance and infrastructure task force on these issues.
Governor Lesetja Kganyago mentioned excessive risk weights on bank lending to infrastructure in Africa in a speech in September. I’ve recently heard these views echoed by other policymakers in Africa and beyond. In other words, there is a growing consensus on these issues.
US businesses in particular have been very well represented both in the B20 task forces and at the summit itself
As for geopolitics, the B20 has not been directly affected: it is an advisory structure run by and for business, not directly linked to the G20 and not accountable to it. US businesses in particular have been very well represented both in the B20 task forces and at the summit itself. So have businesses from many African countries — and from every region of the world.
Now, the duty of being the secretariat of this ongoing global business conversation is being passed — as usual — from one country’s organised business community to another’s. From the perspective of the B20, conversations, meetings, and contributions to policy processes continue as normal.
Having said all that, the South African B20 co-chairs and secretariat have certainly not been blind to the heightened tensions of the past year. The main ways we have addressed them are by aiming to be as inclusive, as factual, and as non-ideological as possible. Our goal has been to make suggestions that every rational businessperson is likely to support.
The B20 year has been a triumphant one for South Africa, for Africa, and for emerging markets as a whole. Our voice has been heard and respected — and policy is starting to follow. Perhaps, even more importantly, we’ve shown many thousands of international businesspeople that our continent and our country are great places to invest.
Our reputation has been improved, our networks have strengthened, and our economy has gained valuable momentum. We have shown ourselves what we can do when we plan carefully, when we are systematic and inclusive, and when we come up with sensible suggestions and practical action plans. We can — and should — continue in this spirit and apply it to accelerating structural reform.
In my view, the government should continue to reform and expand the energy and water sectors and accelerate the good progress that has been made in improving the performance of rail and ports. In all of these areas, it will be essential to keep expanding the role of the private sector by way of public-private partnerships and concessions.
South Africa should also stay open to global talent in a world where openness is becoming an increasingly competitive advantage.
Among the current seven Operation Vulindlela priorities, I’m not alone in rating local government reform as the area where improvements are most pressing in order to increase confidence and stimulate investment. Over the past few weeks we have seen what can be achieved in Johannesburg with the right level of attention.
We should now expect every week to contain just as much effort at making Joburg truly a world-class African city, motivated by the duty to deliver services professionally, on time, and on budget, all year round.
• Tshabalala is group CEO of Standard Bank and was chair of the B20 finance and infrastructure task force
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