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Capitalism is what happens when governments leave people alone.

Capitalism doesn’t result in inequality; rather, socialism and state ownership result in poverty.

These are the views that self-confessed capitalist  shared with �������ý alumni at a talk on 19 February 2014, in which he argued for an economic shift away from ideology and an “obsession” with mineral resources, to capturing the estimated 1-billion African consumers in order to grow South Africa’s economy.

Davies holds four �������ý degrees including a PhD, and he’s the Chief Executive of Frontier Advisory, a consultancy specialising in emerging markets.

His talk, entitled What is Africa’s Future? Arguments in Economics, Democracy and Development, began with a comparison between resource-rich but economically failed Equatorial Guinea, and resource-poor but economically thriving Singapore.

“Politicians are obsessed with resources – with what is in the ground,” says Davies. “The only resource that counts is human capital. What’s in the ground shouldn’t be the focus.”

“Most successful Asian countries are resource-poor,” he points out, “[But] the most successful countries will be those that are educating their people to the max, and retaining that talent within their borders. Let’s not be obsessed with what’s in the ground.”

Another characteristic common to thriving economies is internationally competitive corporations. South Africa boasts the likes of Standard Bank, Naspers, Shoprite, SAB – all of which have a footprint throughout Africa. Davies references the The Economist, which in December 2011 declared, “”, after previously writing off the continent as “hopeless”.  

It’s a numbers game, according to Davies, “There are 170-million Nigerians; economically, what is attractive is the numbers.”

‘Africa rising’ simply means consumer-focussed corporates have woken up to the potential of 1-billion African consumers.

And to many of these billions of African consumers, “The revolution doesn’t matter. People will always buy Coca-Cola, airtime, etc.,” says Davies. “South Africa sees everything through a political lens.” But ideology doesn’t drive economies. “South Africa, Mozambique and Tanzania are more ideological than pragmatic in their economics,” says Davies, “[But] capturing consumers is a-political.”

So what is Africa’s future? “South Africa should be the leader in Africa, but it isn’t,” laments Davies. “South Africa is too internally divided to be globally competitive.” The country’s advantage of competitive corporations is undermined by internal squabbling and fractious government, resulting in economic underperformance similar to Japan.

Davies believes the State’s job is to enable growth in the economy – not to control it. Future growth is up north, he says, pointing out that Ethiopia is the second most populated state in Africa. “Borders are irrelevant; retailers go where the consumers are.” SA needs to exploit the “first-mover advantage” and tap into those millions of consumers, and Johannesburg needs to become a services hub.

Davies is resolute: “SA’s economy needs to grow at seven percent – which it last did in 1967 – and not at 2 percent, as it does today.” Perhaps only then will we see Africa – and South Africa – genuinely rising.

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