A predictable business environment is crucial for making investment decisions.
On January 15, but from different perspectives, two gatherings will take place—one in the northern hemisphere and the other in the south, in an attempt to make sense of these increasingly turbulent times which make investment decisions more difficult.
According to the World Bank, global growth is set to slow further during 2024 amid tight monetary policy, restrictive financial conditions, and feeble global trade and investment.
As usual, the Swiss resort of Davos will play host to the World Economic Forum (WEF), an annual high-profile mingling of powerbrokers in politics and business, entrepreneurs, activists, academicians, and showbiz personalities all seemingly intent on shaping a better world by the sheer will of their presence.
Critics like to describe WEF as an expensive talking-shop. Unless you are specially invited, a non-WEF member, has to part with at least $35,000 to cover all expenses. However co-founder, Klaus Schwab insists the gathering is maintaining its tradition of “improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas.”
WEF is grounded on five pillars, trade and capital flows, innovation and technology, climate and natural capital, health and wellness, and peace and security. The theme for this year’s Forum is ‘rebuilding trust’; another bleak reminder of the present state of world.
In light of the transition to the green economy, competition for markets and resources has never been fiercer. Complicating things is the question of refugees and economic migrants, many coming from member states of the Non-Aligned Movement (NAM).
Frightened by the onslaught of mostly darker-skinned people banging at their doors, there is a steady shift to the political right in several wealthier countries, giving rise to eloquent hate-mongers with quick-fix solutions.
The gains from globalization are being gradually dismantled as too many events spiral out of control. A quiet panic has also set in– not least of all at the possibility of Donald Trump returning to the White House.
The WEF theme is appropriate. But as long as the Americans cannot shake off China-phobia, Putin remains besotted by past Soviet greatness, and the besieged Europeans’ reluctance to accept their decreasing global clout, ‘rebuilding trust’ may prove elusive.
Meanwhile in Kampala, the 19th Summit of the Non-Aligned Movement will start initial deliberations on the same day as WEF and probably end with renewed demands for greater influence in the way the world is run.
‘Deepening Cooperation for Shared Global Affluence’ is the theme of this year’s NAM Summit. Speaking last year, host President Yoweri Museveni said, “The Summit will provide a platform for global cooperation and solidarity and for advancing our common goals.”
Underlining this theme is the strong belief that the rich have become too self-centred to care or understand the problems facing the rest of the world, irrespective of their good intentions that often make matters worse.
According to Oxfam, the richest one percent grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020; almost twice as much money as the bottom 99% of the world’s population.
Oxfam also reported that the world’s 2,153 billionaires have more wealth than the 4.6 billion people who make up 60% of the planet’s population. In 2019, the richest one percent produced as much carbon pollution as the five billion people who made up the poorest two-thirds of humanity.
Increasingly indebted Sub-Saharan Africa continues to pay the heaviest price. The World Bank says in 1990 people who were living in extreme poverty were 13% of the total population, but in 2022 (and in the aftermath of the Covid-19 pandemic), the figure had reached an estimated 62%.
On the other hand, the proportion of people living in extreme poverty in the East Asia and Pacific region has significantly decreased in recent decades. In 1990, 53% of people living in extreme poverty lived in East Asia and the Pacific; this contrasts with only four percent in 2022.
For Africans, the biggest elephant in the room is war and other armed conflicts which lead to persistent declines in the productive capacity of an economy. The continent maybe stuffed full of natural resources and vast opportunities, but for many investors, doing business in Africa is full of real and perceived risks. The return on investment can frequently be above the global average, but the pain can also be just as acute, with Sudan being the latest case in point.
NAM evolved from Cold War politics. Back then, overshadowed by the threat of nuclear war, the world was firmly divided between the liberal-minded capitalist philosophy of the West and the more rigid control and central planning of the East.
At the same time, in 1961 when Yugoslav President Josip Broz Tito, Indian Prime Minister Jawaharlal Nehru, Egyptian President Gamal Abdel Nasser, Ghanaian President Kwame Nkrumah, and Indonesian President Sukarno sat down to found the Movement, a big chunk of Africa was under colonial rule.
The five basic principles of NAM are mutual respect for each other’s territorial integrity and sovereignty; mutual non-aggression; mutual non-interference in domestic affairs; equality and mutual benefit; and peaceful co-existence.
After the United Nations, NAM was the most inviting and convenient vehicle to talk issues and express occasional outrage amongst other like-minded people. The countries that joined NAM, did not want to be labeled pro-West or pro-East. They preferred to walk the middle ground, frequently playing one off against the other if it benefited their countries in some way, specifically in terms of economic development.
The classic example is when Nasser could not get the World Bank to finance construction of the Aswan Dam he turned to the Russians instead.
Then in November 1989 things drastically changed with the collapse of the Berlin Wall, leaving one superpower—the United States. NAM had to also change, becoming a platform for south-to-south economic cooperation with a membership today of 120 countries.
The most urgent concern across the majority of NAM countries is that the global institutions, specifically the UN Security Council, the World Bank and IMF, along with the financial and trading systems, are skewed to the advantage of the wealthier nations. Yet, the bulk of the natural resources that drive the global economy and the fastest population growth are found in the South. AI will not solve everything nor can the rich think they can build castles then simply pull in the drawbridge.
‘Deepening Cooperation for Shared Global Affluence’ is easier when there is a genuine desire for ‘Rebuilding Trust’ from all sides.